$32M investment will result in nearly 200 apartments for Portland
Courtesy / Porta & Co.
The $20.85 million off-market purchase of a former student housing development at 132 Marginal Way in Portland will be followed with another $11 million budgeted for redevelopment, ultimately yielding 196 market-rate apartments.
The $20.85 million off-market purchase of a former student housing development, along with another $11 million budgeted in redevelopment, will result in an additional 196 market-rate apartments being added to the downtown Portland’s multifamily inventory.
West Bayside Partners LLC bought 132 Marginal Way from Blue Atlantic Portland LLC. Joseph Porta of Porta & Co. and Biria St. John of CBRE New England brokered the transaction. The project just got permits for renovations last week, and the deal closed Sept. 24.
West Bayside Partners LLC is led by Portland developer Tom Watson, owner of Port Property Management.
The property covers 1.33 acres and the building is 238,301 square feet, including a parking level, two retail storefronts and four floors of apartments, consisting of 100 units configured as four-bedroom/two-bath quads.
Known as Bayside Village Apartments, the building is located in the Bayside neighborhood near Interstate 295 and the Back Cove, a popular recreation and running area.
West Bayside Partners LLC is a local partnership formed to convert the building into 196 rental units, said Porta, who represented the buyer.
Porta submitted an unsolicited offer on behalf of the purchasers to initiate the transaction. The asset had been briefly marketed for sale in 2018 by St. John, but was subsequently pulled off the market, Porta told Mainebiz.
Developed by Rockport-based Realty Resources, the complex opened in 2008 as Portland's first private housing development for college students. But in 2010, developers defaulted on the nearly $21 million mortgage. The property was taken over by the lender, Key Bank.
In December 2010, Key Bank sold the property to the Federated Cos., a national real estate investment corporation. Federated stabilized the property and overhauled marketing and pricing strategies, which led to a 100% occupancy rate for fall 2011, compared with fall 2010's rate of 45%. In 2012, Federated sold the property to Chicago-based Blue Vista Capital Management.
By the time West Bayside Partners LLC bought the property in September, most of the units were occupied by tenants receiving general assistance, who rent single bedrooms but share each quad’s common space.
“While that configuration works for college students, it doesn’t work for the broader rental market, and is not how a single room occupancy (SRO) is or should be designed,” Porta said.
“The way the structure of the units is set up, people have to share their living spaces with people they don’t know, and end up being restricted to their bedrooms as the only private space in the dwelling,” he said.
Plans include reconfiguring and updating the spaces as they become available, Porta said.
Ten quads will retain their configuration but will be completely renovated with things like new kitchens, bathrooms, fixtures and flooring; laundry facilities added to each unit and upgraded finishes.
The other quads will be split in half. Half of those will be redeveloped as one-bedroom apartments. The other half will be configured in a variety of spaces, including two-bedroom apartments and large one-bedrooms with dens.
Exterior renovations include installation of patios for first-floor apartments facing an inner courtyard, and Juliet balconies on upper-floor apartments. An upgraded lighting system will be installed in the parking garage.
The project received city permits last week, Porta said.
“The units will be renovated over two years as they become vacant, to create clean, safe, ADA-accessible housing with increased amenities, and help solve for the city’s workforce housing rental rates,” he added.
It’s expected that renovations will begin in the first quarter of 2020.
“To ensure a positive experience for current tenants, the new owners have placed a dedicated housing coordinator onsite to provide information and resources to help each individual meet their long-term housing goals, whether they wish to remain at the property, relocate within the owners’ portfolio or secure housing with other partners and landlords,” he said.
Currently, he explained, tenants are paying $650 to $699 a month per room. The redeveloped quads will rent for $700 per room and the two-bedroom units will range from $750 to $850 per room.
Rental rates for the rest of the reconfigured apartment units will fall within Portland’s workforce housing guidelines of 100% of area median income, he said.
“The one thing that our multi-family market needs, to protect the consumer, is more inventory,” said Porta. “No solutions will have more long-term impacts on the health of the market than inventory.”
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