CityWork Turns 1 + Rent is On the Rise.

Rent is on the rise. Hampton Roads continues to experience rent hikes across all unit types. The average asking rent in August was $1,802 / month. That’s up from $1,771 in July. Below we’re digging into some of the crosstabs to help make sense of the rent spikes we’re seeing in the region.

The average rent for each unit type:

Studio: $1,454
1-Bedroom: $1,535
2-Bedroom: $1,736
3+ Bedroom: $2,296

Who Owns What?

Studios had a noticeable spike in asking rents in August, $1,454 / month compared to $1,336 in July. What’s driving that? A couple of things. On the whole, studios tend to be newer builds, and newer builds tend to be ‘luxury’ builds, or what the industry calls “Class A.” These are apartment buildings with lots of amenities: gyms, pools, grills, etc…

So who's asking the most for studios in the region? The Streets of Greenbrier Apartments, in Chesapeake.  In August, Greenbrier was asking over $2,000 a month for studio apartments. The Lumen Apartments, in Hampton, and the Alexander at Ghent, in Norfolk, were also asking over $1,600 for studio rents.

"Substantial room to increase rental rates."

Streets of Greenbrier is owned by Capital Square 1031 a real estate investment firm based in Delaware. That name might ring a bell because in July we brought you news of Capital Square’s vaunted %161 profit on the Saltmeadow Bay apartments in Virginia Beach. All that money came from renovations and rent hikes on tenants. Their investment prospectus notes "substantial room to increase rental rates," as a key part of their strategy. Looks like it might be working in Chesapeake.

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The Lumen Apartments are owned by Kushner Companies, the real estate investment firm headed by Donald Trump’s son-in-law, Jared Kushner. Kushner Cos. has been fined numerous times by courts for their landlord practices. ProPublica recently reported on the unusually generous $786 million loan Kushner Cos. received from Freddie Mac, which he used to buy apartments in Maryland and Virginia.

The Alexander at Ghent was recently sold to an “unspecified” buyer for an “unspecified” price.

Starwood Capital Group

One bedroom rents were up in August. Asking rent came in at $1,535, up from $1,515 last month. A handful of newer apartment buildings are asking over $2,500 / month for a one bedroom apartment.

At the top of the list is The Reserves at Arboretum, in Newport News. In August, they were asking over $3,500 / month for one bedroom apartments. The Streets of Greenbrier wasn’t too far behind, with one bedrooms going for over $3,000.

The Reserves at Arboretum is owned by Starwood Capital, the largest landlord in the United States. A private investment firm based in Miami, Starwood gained notoriety after a Washington Post piece profiled their aggressive rent hike strategy (up to 93% in some apartments) while implementing cost-saving strategies such as not returning security deposits.

Starwood owns eight properties across Newport News, Chesapeake, Hampton, and Virginia Beach, making them one of the largest landlords in the region.

Shell Game

Looking at property records, you would never know that Reserves at Arboretum is owned by Starwood. On paper, they’re owned by “SREIT Arboretum Place LLC,” a Delaware-based shell company.

But a little digging in Starwood’s SEC filings clears up any confusion. Still, it doesn’t give us the whole picture. Starwood lists “Various Properties” in Hampton Roads as part of its holdings with no additional information. For now, it’s impossible to know exactly which properties Starwood owns in our community.

Piecing together who owns what is like trying to build a puzzle with no box and no pieces.

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