Cottonwood Residential Rides San Antonio’s Growth Wave with New Purchase

Taking advantage of San Antonio's job growth, Cottonwood Residential has grabbed a class A multi-family community in the area.
Cottonwood

Cottonwood Residential, of Salt Lake City, has purchased Legacy Heights, a 258,200-square-foot, 306-unit Class A multi-family community in northeast San Antonio, adjacent to affluent Alamo Heights and near Fort Sam Houston, it was announced Monday by CBRE Capital Markets, which represented the seller.

Neither the identity of the seller nor the terms of the sale were disclosed, and both CBRE and Cottonwood declined Commercial Property Executive’s requests for this information.

According to two online reports from 2010, however, in October of that year a venture between Nationwide Insurance Co. and Embrey Partners Ltd. sold the property to Crow Holdings Realty Partners V, L.P., a fund of Crow Holdings, Dallas, for an undisclosed amount.

The latest sale closed on Dec. 15, a CBRE spokesperson told CPE.

Located at 1320 Austin Highway, the property sits on 22.47 acres and consists of one-, two- and three-bedroom units with nine floor plans.

Apartment amenities include 9-foot ceilings with crown molding, wood-style flooring, designer carpeting and two-tone painting. Community amenities include a clubhouse with game room, fitness center, resort-style swimming pool, picnic area, playground and dog park.

CBRE’s vice chairman Charles Cirar, executive vice president Ryan Epstein and sales associate Michael Wardlaw represented the seller.

“Embrey Partners developed the asset in 2009, and today there is a great opportunity for unit interior upgrades, which will allow it to better compete with new development along Austin Highway,” Epstein said in a release.

“The community’s location, in-place value-add program, favorable demographics, resort-style amenities and custom home features make Legacy Heights an excellent acquisition with long-term stability and great value appreciation,” he added.

Both the Class A and Class B/C multi-family sectors in San Antonio are likely to benefit from substantial job growth among professionals, and among blue-collar and leisure/hospitality workers, respectively, this year, according to a 2015 market forecast by Marcus & Millichap.

Average vacancies and rents are expected to remain relatively stable, however, with a 4 percent (6,750-unit) increase in apartment inventory roughly balancing employment growth.

On the investment side, the forecast noted: “Value plays remain, especially in the northeast portion of the metro [i.e., around Legacy Heights], where opportunities to purchase underperforming assets, raise occupancy and rents, and exit one year later are attracting buyers.”