Passco Cos., a California-based real estate investment firm located in Irvine California, has purchased Canal Crossing for $120 million. The high-end apartment complex is located on upper Canal Street and is part of the revitalization.
“We found it to be a great market for job growth and migration with all the education and health care employers moving in,” said Stacy Stemens, a senior vice president at Passco. “That’s who’s renting there, and the rents are aggressive.”
The nine-story building has 330 units along with a 500-space parking lot. There is also a clubhouse, a business center, a fitness center, a rooftop putting green, a courtyard entertainment area, a covered outdoor dog park, and a communal kitchen with an espresso bar, a lounge, and a resort-style heated swimming pool. The company has changed its name to Canal 1535. They said that the name fits it due to its location.
The complex is close to the biomedical district in New Orleans. The rent for a unit is now around $2,500 to $5,500 for a one or two-bedroom unit. This is not a surprise since the New Orleans area has seen an 8% increase in rent in the last six months.
Even though the company paid a little over $400 per square foot, they feel it is cheaper than building from scratch. According to Mike Siegel, president of Corporate Realty, the price was justified by the low cost of the acquisition compared to the cost of land and building.
“It’s a spectacular price and has to be close to a record if it isn’t, in fact, a record,” he said. “It’s largely a reflection of demand for multi-family (dwellings) and a vote of confidence in downtown New Orleans and the medical district, notwithstanding what happened with the Hard Rock.”
“We were able to take advantage of a truly once-in-a-generation opportunity to acquire a property of this caliber for a basis far below today’s replacement cost,” he said.