Mukilteo apartments sell at profit

MUKILTEO — On the Green at Harbour Pointe, a 294-unit apartment complex, has changed hands for the second time in less than two years, this time for $47 million.

The property, bought in early 2006 by California-based Legacy Partners, sold to Pacific Property Co., which paid nearly $160,000 per unit.

That’s a relatively high per-unit price for Snohomish County, though two other recently-sold complexes have commanded similar or higher prices. The 516-unit Mill at Mill Creek Apartments fetched $155,000 per unit, or $80 million total, in a deal announced last month. And the 344-unit Millington Apartments, a luxury complex built just last year on Everett’s Merrill Creek Parkway, brought in $74 million, or more than $200,000 per unit.

Legacy Partners paid less than $124,000 per unit last year to buy 558 units at On the Green in Mukilteo. It then began transforming 264 of those into condominiums overlooking Harbour Pointe Golf Club. That development, called Front9, is selling well, said John Hatton, a local project manager for Legacy Partners.

The landlord also began upgrading the remaining apartments, a program that California-based Pacific Property intends to continue. The new owner intends to keep those units as apartments rather than convert them.

Prices for local apartment complexes have skyrocketed in recent years, thanks to investor interest in the Puget Sound region’s strong rental market.

“The feeding frenzy we saw even just 60 to 90 days ago has slowed because of the credit crunch in the capital markets,” Hatton said. But, he added, this region is still considered one of the top five nationally for commercial real estate investments.

In its midyear report on demand for apartments, GVA Kidder Mathews in Seattle predicted the number of vacant apartments will continue to go down in the coming years. That could keep pushing rents upward at a noticeable pace.

Just more than 4 percent of apartments in Snohomish, King and Pierce counties were without tenants as of this spring. At the same time that more people have moved into the area, the number of apartments has shrunk because of condo conversions, and the number of new apartment units under construction or planned between now and the end of 2009 is fewer than 600, according to Dupre+Scott Apartment Advisors.

Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.