By Allen Aldridge, asset manager of Park Central Apartments, senior vice president and co-director of asset management at KBS
Sometimes the best part of creating something new is the ability to enhance it with an existing feature.
For example, in the historical renovation of the Meier & Frank Building, a KBS property, in Portland, Oregon, the redevelopment team stripped down old lobby flooring to reveal the building’s original terracotta tile floor – and this tile became a new outstanding element for the mixed-use asset.
One of the most interesting aspects of completing Park Central Apartments is separate from the building itself: it provides a view of next door’s Midtown Park, a recently upgraded outdoor mixed-use plaza in the prime North Hills neighborhood that’s known as the defining presence of Midtown Raleigh, North Carolina.
KBS recently updated the park with more weather tolerant artificial grass and an amphitheater as part of a project to develop the 286-unit ground-up apartment community with 41,069 square feet of ground-floor retail space – the firm’s third joint venture with developer Kane Realty Corporation. The outdoor amenity has become a distinctive highlight for residents of Park Central Apartments. Prior to the pandemic, the amphitheater offered more than 450 annual events, including the Midtown Farmers’ Market, Midtown Beach Music Series, Kickin’ it Country, and a five-week Christmas celebration.
The Collaboration – A Growing Development Partnership
KBS began partnering with Kane on projects in North Hills several years after the development firm’s leader, John Kane, had set his sights on reinventing the submarket in 1999. Kane has since taken what was originally a mall and completed a billion-dollar redevelopment of the area that covers 165 acres, a district called Raleigh’s Midtown.
Following its strategy of investing in markets with strong job, economic, and population growth, along with solid infrastructure and the propensity to attract top talent, KBS recognized North Hills’ tremendous potential.
In 2013, the firm recognized this potential in CAPTRUST Tower, a 17-story office and retail building that stood as the only existing North Hills office asset and purchased it from Duke Realty Corporation in an off-market transaction. KBS made a great property even better through enhancements including a renovated lobby with a glass wall highlighting a new innovative office-furniture tenant, a renovated conference area, and new walkable access to the property through design and participation in an architectural stairwell from Six Forks Road.
After the renovation was completed, the asset was sold to Preferred Office Properties in 2019 for an undisclosed amount, setting a per-square-foot price record in the market.
KBS’ first development joint venture with Kane was Bank of America Tower, which was developed 100% speculatively. The property was 72% leased at delivery in January 2016 and 100% leased 12 months after delivery.
Then, in 2015, KBS and Kane collaborated on the development of Midtown Plaza, a 12-story, 330,000 square-foot office tower anchored by the Allscripts company. After finishing the development and leasing the property to 94% occupancy in March 2017, it was sold in mid-2018.
Park Central Apartments was the companies’ most recent project together. Completed in 2017, the asset was stabilized within two years, and – aside from one retail space – is currently 95% leased. Several retail tenants at the property are health-oriented, including Orangetheory Fitness and Midtown Yoga, which takes advantage of the property’s close proximity to Midtown Park by holding large-scale yoga events at the outdoor venue. There is currently only one retail space remaining, and KBS expects to have a lease signed for this space by mid-January.
The Property – Outstanding for its Amenities
Featuring a contemporary architectural design and luxury finishes, Park Central Apartments is considered to be one of the highest-end multifamily communities in Raleigh, known for its exceptional amenities.
KBS and Kane built the property to feature both mid-rise and high-rise units at two different price points. The 134 high-rise units offer 10-foot ceilings with 8-foot doors and more square footage, while the 152 mid-rise units offer similar finishes and fixtures to the high-rise units but at a slightly lower price point.
In-unit amenities include 42-inch kitchen cabinetry, walk-in closets, granite countertops, stainless steel appliances, full-sized washer/dryers, pre-wired high-speed data (phone and cable included), ceramic tile backsplashes and walk-in showers. Select units feature built-in bookcases, built-in and movable kitchen islands, floor-to-ceiling windows, deep soaking tubs and shelved pantries.
The team also provided luxurious common-area amenities at the property that are rarely found in the Raleigh market. In addition to a clubroom that overlooks Midtown Park, the development features a rooftop saltwater pool, three distinct resident-only outdoor courtyards with TVs, grills, fire pits, free WIFI and dining areas, a fitness center, sauna, 8th-floor lounge with indoor/outdoor bar, professionally equipped pet spa, work-from-home cubicles, a conference area and a billiards room. The location also offers an urban quality of life with walkable access to over 80 retailers and more than 40 restaurants from casual to high-end including a Capital Grille steakhouse and Yard House.
Adding to the accessibility and transportation amenities in the area, KBS recently purchased an association-run shuttle, an amenity that runs from one end of North Hills – where the office and multifamily buildings are located – to the other, which features retail, entertainment and parks. The shuttle services Park Central Apartments and Bank of America Tower, which is also in the company’s client property portfolio.
The Forethought – Project Oversight, Strong Development Team, Business-Friendly Market
Challenges to the development of this property were few, thanks to KBS’ forethought in a number of areas.
First, KBS credits Kane for its expertise in operations and acumen as a partner for the investor’s development ventures. In addition to allowing KBS to invest in the project via a sovereign wealth fund equity partner, Kane was meticulous and adept at handling any issues that arose while keeping a keen eye on costs.
The firm also hired a third-party consultant to help oversee project construction. The consultant attended all construction meetings and reported on the project’s progress to KBS’ asset management team for the property on a bimonthly basis. Having a dedicated project manager on site ensured that the asset was built on time and on budget.
Choosing a business-friendly market was another wise choice for KBS. North Carolina is very amenable to development – much like Atlanta – unlike some states where the permitting process is difficult, and regulations and changing requirements can add delays to the construction timeline.
With its excellent location, luxurious on-site and nearby amenities, and choice in apartment sizes, Park Central Apartments’ ability to capitalize on Midtown Park was the icing on the cake for KBS. The property meets a demand for high-end apartment living in a burgeoning submarket that is attracting increasingly more residents to the Raleigh area.
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