Daniel Hertzberg
Avana La Jolla
La Jolla, Calif.
Owner/operator: Greystar Real Estate Partners, Charleston, S.C. Selected renovations: New kitchens and bathrooms; new flooring; exterior improvements; landscaping; pool decking; outdoor kitchen; clubhouse update Project cost: $2.3 million Investment per unit: $3,000 for common areas; $7,500 for in-unit renovations Rent increase per unit: $200 Rents after rehab: $1,611 to $2,107 Pre-rehab occupancy: 93% Post-rehab occupancy: 97% Target ROI: 20% to 25%
The Situation: This 312-unit property, formerly known as Las Flores, joined the Greystar Real Estate Partners portfolio in 2012, when the South Carolina firm picked it up in a four-property deal. “We liked it because of its location. It’s a wonderful submarket with a high quality of life, high employment, students, and a lot of biotech exposure,” says Wes Fuller, Greystar’s executive director of investment. But the 1980s-era property in San Diego County was more tired than wired.
The Decision: Greystar, which renovated 1,700 units in 2012 and plans to do another 5,000 this year, began with the basics: painting the exterior, changing the name, and upgrading the landscaping, especially where the newly rechristened Avana La Jolla backs up to a local greenway. Greystar also refreshed the common areas on the inside and outside, redecking the pool, building an outdoor kitchen, buying new machines for the fitness center, and reconfiguring the clubhouse with a new, more open plan that includes a wireless café. “We wanted to modernize the clubhouse in its form and function,” Fuller says. Lastly, Greystar also gave individual units their own face-lifts, installing new appliances, cabinets, countertops, flooring, and bathrooms. “New appliances have a huge impact, and because we manage so many units and purchase so many products for renovation and new construction, there are huge economies of scale, and we are able to get pricing that is very competitive,” Fuller says.
The Result: Avana’s occupancy rate has climbed four percentage points, to 97 percent, despite the hassle of renovations for residents. Rents have climbed by $200 per unit, and the median income of those residents has also gone up, according to Fuller.