A stylish Royal Oak, Michigan, multifamily complex that was built on a former industrial site sold last year for the highest per-unit price on record in Oakland County. In recognition, the deal earned a 2023 CoStar Impact Award for sale/acquisition of the year in Detroit, as judged by real estate professionals familiar with the market.
Project developer Robert Wolfson built the 75-unit Harrison Residences in 2016 on a former lumber yard near the Detroit Zoo, at 1210 Morse Ave. in Royal Oak, an inner ring suburb that sits about 12 miles north of downtown Detroit. Wolfson spared no expense, using top-end construction materials and incorporating such high-end amenities as a pool, rooftop patio, hot tubs, gym, private garages and a concierge service. Following completion, Wolfson took up residence in the property.
In September, he sold the property to VennPoint Real Estate for $29.1 million. The deal came out to roughly $388,000 per unit, the highest per-unit sale price on record in the county for an apartment building with at least 20 units, according to CoStar data. The deal also marked the first investment in Royal Oak for VennPoint, a multifamily investor based in suburban Chicago that owns properties in the Detroit, Chicago and Columbus, Ohio, markets.
The buyer and seller had to overcome several obstacles to close the deal as the debt markets were changing daily and the property's income initially did not support the debt needed to close. An existing tax increment financing package, or TIF, from the environmental clean-up also added to the complexity of the transaction, as did the need to review and research easements and environmental records from when the property operated as a lumber yard. Additionally, the property is technically a condominium complex, requiring the need to negotiate and approve control of the homeowners association, and it shares amenities with the townhouses being constructed next door.
As part of the deal, Wolfson agreed to a long-term lease on his personal residence that added another $60,000 to the Harrison's annual net operating income.
About the project: The Harrison consists of one-, two- and three-bedroom townhouse- and loft-style units. It is 98% leased.
What the judges said: "The Harrison is such a cool and unique project — ground floor flat living residences in a great market selling at a record per-unit price," said Luke Bonner, CEO of Bonner Advisory Group.
The Harrison is a "unique project that sold in a debt-challenged market at a potentially significant price greater than current value," added Dennis Bernard, president and founder of Bernard Financial Group.
They made it happen: Kevin Jahnke and Gregory Coulter of Income Property Organization represented the seller.
