Retro on 32nd is a 61-unit, boutique, legacy asset, situated in the desirable Arcadia Lite submarket, one of the Phoenix’s MSA’s most sought-after locations. Phoenix continues to experience unprecedented job growth and major economic developments in the area, which are fueling robust demand for multifamily housing in the market. Arcadia Lite is considered an extension of the prestigious Arcadia neighborhood in Phoenix and is beloved for its proximity to trendy local boutique shops, restaurants, and nightlife, its beautiful neighborhoods with unique, single-family homes situated on spacious lots, and its central location as it is within a 10-minute drive of Phoenix, Scottsdale, and the Phoenix Sky Harbor International Airport. The Arcadia Lite neighborhood also features stunning views of the iconic Camelback Mountain. The gap between renting and owning in Retro on 32nd’s zip code is substantial as median home values exceed $922,000, a more $6,000/month difference to own a home in the neighborhood versus rent. This delta further signals the organic rent growth opportunity.

Additionally, the property benefits from the sheer lack of supply of new construction inventory, validating the demand for renovated multifamily assets in the Class-A submarket. Within a 3-mile radius of Retro on 32nd there are only three market rate properties under construction. Retro on 32nd comprises studio, one-bedroom, and two-bedroom units with 84% featuring renovated interiors with vinyl plank flooring, new shower enclosures, new kitchen cabinets with electrical or gas range stovesand microwave rangehood, new refrigerators, vanity sinks and mirrors, garbage disposal, plumbing pipes, mini split AC units, and some units with ceiling fans. Ownership achieved a $300-$350 rent increase on the remodeled units and the non-remodeled units achieved an organic market rent increase of $200-$250 when the work was complete. In addition to interior upgrades, ownership invested over $1 million into major capital items including installation of an automatic gate, parking lot resurface, replaced the boiler with a tankless water heater, installed a new transformer and meter for HVAC, laundry room remodel, exterior paint, as well as replacing windows, doors, and adding window screens.

The community is positioned for further organic rent increases as the market rents at the property are significantly below submarket competitors by as much as $173 for the unrenovated studios. Ownership also recently implemented a RUBS program of $50-$60/unit/month to realize some of the utility expenses, which will be captured in operations going forward. There is also an opportunity to renovate the remaining 10 units to the current upgrade scope and capitalize on the current rental premiums.