Motiv Apartments - 2320 Colfax Avenue S

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RailBaronYarr
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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby RailBaronYarr » October 6th, 2015, 9:05 am

[rube post alert: don't read if you don't care about small scale development details]

All of those things are probably true. And to keep this from just being a back and forth discussion about abstract concepts, let's talk the Motiv development as a case study. It's being built as rental apartment units (not condos or townhomes), it has an elevator for ADA access, it has structured parking (21 spaces, though not below ground), has a 0.84:1 parking:unit ratio (above current code but received a variance from the old code that would have required 38 spaces for 42 units). It's on 2 oversized lots totaling 0.48 acres, or 4 standard Minneapolis lots. It is 3 stories with a setback fourth, and two ground-level units have individual entrances facing the street (in addition to a back entrance to parking). We're getting reports that finish material on the exterior is fairly nice though not with extravagant detailing.

Setbacks all meet code but for the front (F: 15' vs 19 required, corner = 14', side = 11', rear = 20'). It's barely above half the zoning's height limit (46' vs 84' allowed), and lot coverage is 51% to the allowed 70%. It doubles the required landscaped area, has 6 canopy trees to the 4 required (plus an additional 7 ornamental), and has 5.5x the required number of shrubs. This is all given the R6 zoning, which is admittedly much more relaxed than the R4 we were talking about earlier. Unit sizes are small-ish but in the mid 500 sqft for the smallest 1BR units with a few larger and 2BR units sprinkled in there. Hardly spartan compared to micro-apartments or even studios (which aren't hard to find in older buildings).

Long way to say.. certainly not the 1 or 2 lot skinny-style, no-frills, higher lot-coverage development we were talking about but well smaller and of higher quality urban design/architecture than many of the projects going up in the area. He certainly didn't build something right up to the zoning envelope and skimp on every possible detail, though if these lots were R4 that may have been the case from a footprint perspective.

We know Lander purchased 2320 Colfax for $950k. I can't find an official record for 2316 Colfax sale. So let's be conservative and say the $950k covered both lot purchases since they were both owned by the Crows and were combined as part of the sale.

We know the 4th floor is 7,304 sqft, and floors 1-3 are 10,565 sqft, for a total of 39,000 sqft. Knock out the parking and other areas that require hardly any finishing work, let's just assume there are 30,000 finished square feet in this thing. If I use the methodology described in my post with very low marketing costs (thing sells itself) and construction costs below Minneapolis average ($110/sqft vs $165 avg)... You don't have to make many tweaks to see how Lander could rent these out profitably at $1,000-1,200 per month (which is what he's stated the price point would be). Basically if you can find a loan to build this thing (estimated at $5.7m total cost) at 4% for a 20 year term with no equity and takes an annual 6% profit off the top (of operating costs, etc as well), you could charge $1,240 per unit and make it all work (that misses the extra rent from the 2BR units, so I'm being conservative).

Of course, building this at $110/sqft given the structured parking, elevator, and nicer finishes seems a bit tough. It's likely he self-financed or had a major equity stake expecting a 20 year payback at no interest and bumped up the finish budget. Anyway, yes, this is a lot of work and headache and expertise required to net a 6% return on money (something that could likely reliably had by investing it instead). But past the financing term you net a whole lot more, even as the building depreciates and rents drop. I picked low rents purposely to show that if you wanted to do this style building in an outlying neighborhood that doesn't command such high rents, it's not really that crazy (but still room for error, of course).

I really would be interested to see if the smaller 4-plexes, etc could be financed by younger, less experienced folks without a ton of up-front capital. My model spit out $1-1.4m to construct a building depending on purchase price and total size, assuming low construction costs (no elevators, basic exterior materials, and surface parking only). I follow the small scale developer group, which is a great resource to help streamline the process/avoid design pitfalls & tips on project management blunders to avoid. But if you can't get the money, none of that matters.

Archiapolis
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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby Archiapolis » October 6th, 2015, 11:39 am

While the bulk of the city may be zoned R1-R2, there are certainly hundreds and hundreds of parcels out there with zoning that would allow redevelopment under their current classification.
I'm legitimately interested in how many parcels there are zoned R3 or above with something less than what the zoning allows. My guess is there are very few where a duplex or SFH makes it so demolition and rebuild at small-scale infill is financially viable. Even more challenging if you try finding 2 contiguous lots to make it a little easier.
Go up and down the supposed "Commercial Corridors" and you'll find a lot of R-3 (max) which makes it impossible to do anything of any density that would be financially feasible IF you could assemble several parcels across multiple landowners. Zoning IS a major barrier to "the missing middle" and anything up to the 50 unit range...

grant1simons2
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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby grant1simons2 » October 30th, 2015, 6:33 pm

ImageDSC_1612 by grant.simons, on Flickr

ImageDSC_1611 by grant.simons, on Flickr

ImageDSC_1613 by grant.simons, on Flickr

EOst
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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby EOst » October 30th, 2015, 7:44 pm

Rather unlovely.

Wedgeguy
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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby Wedgeguy » October 31st, 2015, 10:18 am

Rather unlovely.
That is what happens when you have to spend a shit load of money on lawyers, You get industrial chic. I like the fact that they did some nice brick work texturing of the south end of the building. I give it a 7 on the 1-10 scale.

I'm sure we would have had quite a different building if we did not have the Nicole roadblock taking away the development budget for lawyers.

EOst
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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby EOst » October 31st, 2015, 10:39 am

Is that gray really the final color though? It is so very flat.

Wedgeguy
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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby Wedgeguy » October 31st, 2015, 10:45 am

Is that gray really the final color though? It is so very flat.
I think that is just the natural color of the stucco. If I get a chance this weekend I'll try and get closer and see if it has been painted yet or not. The color looks pretty much like the sections I saw done a few weeks ago. But the scaffolding is down, and I would have thought they would have done the painting before they took them down and put up the wood siding. Maybe they plan in using a lift bucket to spray paint instead?

seanrichardryan
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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby seanrichardryan » October 31st, 2015, 12:43 pm

It's the brown coat for the Stucco.
Q. What, what? A. In da butt.

RailBaronYarr
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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby RailBaronYarr » November 19th, 2015, 2:54 pm

Floorplans & pricing are up on the website: http://www.motivapartments.com/floor-pl ... or-plan-a/

Prices don't look that much different than other #luxury things going up in Uptown, maybe $50-100/mo cheaper on the 1 & 2 BRs, no difference on the pseudo-studios. Gotta admit, I'm a little disappointed. Maybe construction came in a little higher than expected?

David Greene
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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby David Greene » November 19th, 2015, 2:57 pm

I'm sure we would have had quite a different building if we did not have the Nicole roadblock taking away the development budget for lawyers.
That's preposterous. Developers budget that stuff in. I highly doubt legal costs were a big percentage of the budget, especially with the lawsuits dismissed so quickly.

Either the construction was way over budget (possible, with everything else going on) or the developers just went cheap (more likely).

In any event, this poor look doesn't bode well for further development in the Wedge. With all the angst on this one, they really needed a solid hit on design.

David Greene
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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby David Greene » November 19th, 2015, 3:00 pm

Prices don't look that much different than other #luxury things going up in Uptown, maybe $50-100/mo cheaper on the 1 & 2 BRs,
YIkes. Yeah, that's quite a bit more than I was expecting given all the talk about keeping rents down by building near transit, etc.

Sadly, this gives the opponents lots more ammunition on future projects.

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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby MNdible » November 19th, 2015, 3:26 pm

It doesn't look to me like they "cheaped out" on the design or the materials. It's definitely a more restrained, minimalist design aesthetic, but the detailing and materials look to be first-rate.

As for rental price points -- obviously, if you're a landlord you rent the place for as much as you think the market will bear, right? It doesn't really have anything to do with how much it cost you to build; whatever the market will pay, that's what you get, and hopefully it's enough to cover your costs and leave you some profit at the end of the day.

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FISHMANPET
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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby FISHMANPET » November 19th, 2015, 3:27 pm

Newsflash: market rate apartment developer rents apartments at market rate, water wet, sky blue, film at 11

Archiapolis
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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby Archiapolis » November 19th, 2015, 4:00 pm

Newsflash: market rate apartment developer rents apartments at market rate, water wet, sky blue, film at 11
-1

HiawathaGuy
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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby HiawathaGuy » November 19th, 2015, 4:08 pm

It doesn't look to me like they "cheaped out" on the design or the materials. It's definitely a more restrained, minimalist design aesthetic, but the detailing and materials look to be first-rate.

As for rental price points -- obviously, if you're a landlord you rent the place for as much as you think the market will bear, right? It doesn't really have anything to do with how much it cost you to build; whatever the market will pay, that's what you get, and hopefully it's enough to cover your costs and leave you some profit at the end of the day.
Agreed. I like the look of this building. If they can get the rent they're asking, good for them. If they can't - they'll lower rent prices.
Last edited by HiawathaGuy on November 19th, 2015, 4:28 pm, edited 1 time in total.

RailBaronYarr
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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby RailBaronYarr » November 19th, 2015, 4:20 pm

Well, yes on the market-bearing price. But does anyone think this building has the same level of amenities as Lime or Elan? No pool, no gym, no community room, no dog run, fewer parking spaces than units so you're likely to be on a wait list in a year once people are in, etc. Those are things people do pay more for, even if they only add marginal cost to a giant stick-six apartment building. I'm saying lower costs allows you to profitably meet lower market segments who care less about that stuff, and it's surprising to me the gap in pricing isn't a bit higher since people can likely find a unit in a "nicer" building 6 blocks away (though maybe being this far north has a slight location advantage? I dunno.)

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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby MNdible » November 19th, 2015, 4:25 pm

It may be that they're anticipating another round of rent increases at the other properties.

Anyway, if their rents are too high, they'll figure that out soon enough.

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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby Wedgeguy » November 19th, 2015, 6:16 pm

Not everyone is into living in a high energy building with the noise that can be associated with it. Some may like a smaller more low key building to live in. AS has been siad, if hey get what the market will bear, good for them. If not they will be giving away free months I think instead of actually lowering their rents.

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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby RailBaronYarr » November 19th, 2015, 9:06 pm

I agree with both of your posts, and more specifically to WG's thoughts it's why I support (advocate for) more density in neighborhood interiors, not just along major corridors. I'm just saying it does seem odd to charge those rents now. If the big projects start increasing rents or Motiv needs to drop theirs, everything makes sense.

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Re: Motiv Apartments - 2320 Colfax Avenue S

Postby David Greene » November 19th, 2015, 10:27 pm

Obviously rents will be what people will pay.

My comment was more to pointing out the potential blowback from this project. At the neighborhood meetings, the developer repeatedly touted how the proximity to transit would lead to lower rents because no underground parking, etc. Certainly that's a sales pitch but as I said, it's ammunition.


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