By Paul Schwedelson – Reporter, Philadelphia Business Journal
The $172 million sale of a high-rise development in Logan Square marks one of the largest Center City apartment transactions in recent years and could indicate more deals are on the way.
New York investment firm Briar Capital Management acquired the 572-unit NorthXNorthwest from Boca Raton, Florida-based apartment owner Mill Creek Residential, according to industry sources. The Arizona State Retirement System bought a 50% stake in Mill Creek Residential in 2018.
The development, at 450 N. 18th St., includes two towers and 16 townhomes with a combination of studios, one- and two-bedroom apartments. It was 95% leased when the property was put up for sale in early February.
The property was most recently assessed at $104.4 million.
While suburban multifamily portfolios have sold for higher prices, this sale is one of the largest recent deals in Center City and Philadelphia overall. The 45-story building at 1500 Locust St. sold for $233 million in late 2021. The St. James, a 45-story, 304-unit apartment building in Washington Square West sold for more than $220 million in 2022. Outside Center City, the four-building, 1,015-unit Presidential City property along City Avenue sold for $357 million in 2022.
This year, aside from several local properties being part of Blackstone's $10 billion acquisition of AIR Communities in June, there have been few Center City apartment building transactions as interest rates forced a slowdown in sales volume.
According to CoStar, Blackstone's acquisition included four multifamily buildings in and around Center City. Though the price of each is unclear given the nature of the acquisition, the portfolio included 534-unit Sterling at 1815 John F. Kennedy Blvd., which was most recently assessed at $185 million.
Earlier this year in Center City, the 151-unit Packard Motor Car Building at 317 N. Broad St. sold for $39.7 million and a nine-story, 54-unit building at 1530 Chestnut St. sold for $12.3 million. Neither of those deals came close to the price of NorthXNorthwest.
A 34-story, 321-unit building at 2116 Chestnut St. was put up for sale more than a year ago but hasn’t been sold.
The last major institutional Center City apartment acquisition was in July 2022 when Sentinel Real Estate Corp. bought The Republic at 1930 Chestnut St. and The Broderick at 400 Walnut St. for a combined $68.5 million. That was in the early months of the Federal Reserve's interest rate hikes — and institutional buyers have pulled back since.
Industry experts believe the sale of NorthXNorthwest could be a sign of more transactions in upcoming months. Institutional investors' return to quality properties typically signals market confidence, CoStar Associate Director Brenda Nguyen said. Since institutional buyers usually wait until interest rates stabilize and prices reflect market conditions, Briar Capital Management's purchase could foreshadow how other similar buyers might soon act.
"We are either at or have passed the cyclical market bottom," Nguyen said.
The NorthXNorthwest property encompasses two towers. The 17-story, 286-unit northwest tower has 13,000 square feet of commercial space and was built in 1987.
Cleveland-based Forest City Residential Group doubled the residential complex in 2017 when it completed the 16-story, 270-unit north tower. The $110 million second phase included 16 townhouses and a 400-space parking garage, according to the Center City District. Forest City Residential Group was bought by Brookfield Asset Management Inc. in 2018 for $11.4 billion.
NorthXNorthwest, originally known as Museum Towers II, was the only Philadelphia property in Mill Creek Residential’s portfolio. Briar Capital Management doesn’t list its properties on its website.
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