Deal could set a record in Sarasota market for a multifamily rental transaction
The DeSota apartment tower in downtown Sarasota is likely to fetch more than $80 million if it sells early next year.
If that estimate from commercial real estate brokerage Cushman & Wakefield reaches fruition, the 10-story project’s deal would become the largest multifamily rental transaction in Sarasota history.
Brad Capas, a senior director in Cushman & Wakefield’s Florida Multifamily Investment Sales team, says he expects the 180-unit complex to trade at about a 5% cap rate.
“It’s a new property, so we believe that’s a pretty reasonable cap rate,” Capas says. “We think investors, if they understand the dynamics of the Sarasota market, will respond well to this offering.
“We’re anticipating that the property will sell for at least $80 million, somewhere in the eighties. DeSota was designed to appeal to the top tier of the rental market — almost all of the people living in the building are renters by choise.”
The DeSota was developed by a joint venture between Atlanta-based Carter and the Hunt Cos. of El Paso, Texas, and completed in March at 1415 Second St., the site of the former United Way Building.
Capas says the units are roughly 90% occupied or committed and that 15,350 square feet of retail space on the complex’s ground floor is fully leased. Tenants are completing build-outs now and expect to open in early 2019.
Carter officials had said during construction that they expected the DeSota to garner rental rates well above $2 per square foot, a significant premium to the average $1.45 per square foot for downtown Sarasota rentals.
“The units in the DeSota are larger, averaging 1,139 square feet, whereas the competition’s unit sizes come in at about 950 square feet,” Capas says.
“DeSota’s rents average about $2.40 per square foot, but a lot of that stems from the finishes and its amenities, and the building is concrete block, so the construction quality is better than some others.”
He notes, as well, that the pending Dec. 31 sunsetting of the city’s Rosemary Overlay District, which granted developers density bonuses to encourage apartment development in a section of the city that has traditionally been bypassed, should help spur investors’ interest in the DeSota.
“The finite development pipeline, in part as a result of the district sunsetting, should certainly be an attraction,” he adds.