Lexington of Southfield Apartments Lists for $59M

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SOUTHFIELD, MI-The Lexington of Southfield Apartments is on the sales block for $59 million, or approximately $51,982 a unit, according to Sperry Van Ness. The commercial real estate investment brokerage was recently tapped to market the 1,135-unit apartment community at 27350 Franklin Road to potential buyers.

Robert Pliska of Sperry Van Ness tells GlobeSt.com that he expects the property, which has a cap rate of 8%, to attract investors from the East and West coasts, who are accustomed to half that rate of return for multifamily properties in their own backyards. He adds that the property also carries a higher rate of return than some properties that have traded in the Detroit market recently. Those sales include a major acquisition with a cap rate of 7.34% as well as other sales with cap rates around 6.5%, Pliska says.

In recent years, the Detroit market like the rest of the country has experienced a lot of apartment to condo conversion and little new apartment construction. As interest rates continue to rise, Pliska says, the demand for apartments in communities such as the Lexington of Southfield should also increase. The property is currently 88% occupied.

A two-year, $8.5-million renovation was recently completed on the six-building property, which was built in 1972. The community has 716 one-bedroom/one-bathroom units, 378 two-bedroom/one-bathroom units and 41 three-bedroom/two-bathroom units ranging in size from 650 to 1,150 sf. Monthly rents range from $535 to $932.

Property amenities include a pool and spa, business center, clubhouse, courtyard, fitness center, playgrounds, and basketball, volleyball and tennis courts. The 32.45-acre community also features 2,640 surface parking spaces as well as easy access to Interstates 696, 96 and 275. “It’s about a half hour from everywhere in the metro area,” adds Pliska, who is marketing Lexington of Southfield along with Jonathan Jayson, also of Sperry Van Ness.