is expanding its business into ground-up development. The firm, which typically invests in value-add multifamily, has completed its first new construction project, a 28-unit apartment complex in Culver City called 5012 Apartments.
“Value-add multifamily will always be our core business, but we have always wanted to get into ground-up development to grow our business,” Max Sharkansky
, a principal at Trion Properties, tells GlobeSt.com. “We bought this land site a few years ago. It was on a street where we already owned a building, and we saw the transition in that pocket with that building. As we were improving the property and improving the units, we saw that we were getting really strong residents, and we felt really good about buying a development site there.”
Culver City has evolved rapidly this cycle, and Trion has had success with other investments in the market, making it ideal for their first ground-up development. “We bought two more development sites in that area. One is shovel ready, and the second is currently going through entitlements,” says Sharkansky. “We are also under contract on a third site that is scheduled to close in April—but we’ll see how that goes.”
The property is rich with tech amenities, including Amazon package lockers, Nest thermostats, ButterflyMX smart video intercom system and Sonos smart speakers. “Renters in that market tend to be younger and work in the healthcare and tech industry,” says Sharkansky. “That demographic likes technology-forward assets. That is a huge selling point and makes the community that much more functional.”
The amenities no doubt help to amplify rents compared to nearby competitors, but by how much is unknown. Instead, Sharkansky says that these amenities help to secure new residents. “It is hard to quantify the rent increase, but we definitely get better velocity,” he says. It turns someone from a maybe into a yes.”
Trion is delivering the project 55% pre-leased, which is a relief in the current market. “Where we stand right now—and things might change when we get into early April—we are getting leasing activity,” says Sharkansky. “We are doing video calls, and it has worked. Some of our onsite managers have been able to sign leases online after a video tour of the property. They might not move in April 1, but April 15 to May 1 is a popular time to make a move given what is happening in the country.”
For now, Trion is preparing for obstacles ahead. “We are in a mode where we are trying to get occupancy as high as possible so that we can get collections as high as possible,” says Sharkansky. “Come April and May, collection loss is inevitable.”