PARK KIELY
San Jose, Calif.
PARK KIELY
ROOM RENOVATED: Kitchen
SIZE: Mostly galley-style, but about 50 square feet
CHANGES: White and maple cabinet finishes; new laminate countertops that resemble granite; laminate floors and backsplashes; new, energy-saving appliances; new lighting
COST FOR IMPROVEMENTS PER KITCHEN: $4,200
INVESTED PER APARTMENT UNIT: $7,370
RENTS AFTER REHAB: At the time when the company still owned the project last year: One-bedroom, average 709 square feet, $1,612; two-bedroom, 1,072 square feet, $2,005; two-bedroom with den, average 1,253 square feet, $2,385
RENT INCREASE PER UNIT: $210
PRE-REHAB OCCUPANCY: 95 percent
POST-REHAB OCCUPANCY: 95 percent
COST PER SQUARE FOOT/ROI: $8.58/34.2 percent
MFE ARI: A-
THE SITUATION: After The Laramar Group, based in Denver, purchased a 949-unit complex on 32 acres in 2009, it knew it needed to remodel everything—all the exteriors, all the shared amenities, and all individual apartments.
THE CHALLENGE: After the deal closed and Laramar honed its renovation plan, the economy collapsed. The company decided to suspend work redoing apartments and focus on improvements to common amenities—a clubhouse, fitness center, pool, tennis court-to-sport-court transformation, outdoor eating area, and landscaping. “We realized we wouldn’t be getting the needed rents, but the common areas had to be addressed,” says Justin Sato, senior vice president of financial management. By late 2010, improvement in the job and apartment markets convinced Laramar executives to proceed with unit rehabs yet be sure not to overimprove them and only do so on a case-by-case basis as tenants moved out.
THE RESULT: The kitchens became a prime focus because of most residents’ interest in that space, says Sato. To date, more than 160 units have been completed, and the results are a high building occupancy with monthly rent increases of $210. The company sold the property last year.
