Is This Project Likely To Be Successful?
Location, Product, Pricing
Given the information, this project seems promising for success assuming high occupancy levels. The Millegan Creek Apartments would be a 390 unit apartment project in Williamson County, for a proposed $15,715,000 loan. It would be about 11 miles northwest of the CBD and close to many of Austin’s high tech companies. This location would be beneficial because it can service many of the high tech companies’ employees and since the apartments are being built as a typical luxury apartment complex, it will be more appealing to these employees. JPI had begun to search for the ideal location for the Millegan Creek Apartments in 1993. They sought an area with employment growth. They had first noticed that existing apartment complexes on Jollyville Road had outperformed many other apartments in Austin during the economic downturn in the mid-1980s. However, the expensive price for sites in that area steered JPI to consider the area to the North of Jollyville Road and outside of the Austin City limits. Since it was outside the City of Austin, property taxes would be lower and zoning approval would be easier. JPI decided to further investigate and negotiate with Texas Commerce Bank, which had foreclosed on the property in the late 1980s. JPI manages and develops apartments and continually tries to refine and improve their buildings and amenity packages. JPI is focusing on making the Millegan Creek Apartments as one of their typical luxury apartment complexes. Therefore, it would target renters with high discretionary incomes whom chose a lifestyle choice to live in rental apartments but could most likely afford a single home. The site amenities would include two swimming pools, a clubhouse, fitness center with sauna and steam rooms, and laundry facilities. Each apartment would have the standard features of nine-foot ceilings, security system, crown molding and upgraded white on white appliances. During the design process, JPI noticed that they had an opportunity to charge a premium on optional amenities if they limited their availability. Therefore, the created 160 detached and in-line garages so that only 40% of the renters could have them for an extra $70 a month for each garage. This premium also applied to those units that had fireplaces and vaulted ceilings. The Millegan Creek Apartments would have seven different sized units consisting of 1bed/1 bath, 2 bed/1 bath, 2 bed/2 bath, and 3 bed/2 bath. The square footage of the units would range from as small as 602 square feet to as big as 1,352 square feet. Base rent per month would range from as low as $535 for the smallest 1 bed/1 bath, all the way to $1,050 per month for a 3 bed/ 2 bath. The most units available were the 1 bed/1 bath and the least being of the 3 bed/ 2 bath. A considerable amount of 2 bed/2 bath units were also going to be made. These prices are reasonable for the area and its comparables. Also considering that they were luxury apartments as well. The location also complements the price per unit since it’s close to the CBD and just barely on the outskirts of the City of Austin. The apartment units also have desirable features such as the typical kitchen package with microwave oven, frost-free refrigerators with ice-makers, mini-blinds, ceiling fans, wiring for master antenna TV, wiring for intrusion alarms, and washer/dryer connections. Competition
Four comparables were given for the Millegan Creek Apartments. All of these comparables are located near the subject property and have similar amenities and features that make them good competitors to the Millegan Creek Apartments. The first is Hard Rock Canyon located on 10100 Jollyville Road. It consists of 246 units and was built in 1993. The average unit size is 961 square feet and the apartment complex has a net rentable area of 236,406 square feet. This comparable is very similar in terms of age, quality, and location. Hard Rock Canyon...
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