Call it the rise of the secondary markets.
The Solomon Organization LLC, a New Jersey-based operator of multifamily assets, has closed on the purchase of the newly built Ivy Ridge Apartments in Swatara Township, according to a news release from California-based Marcus & Millichap Real Estate Investment Services, the firm that brokered the deal.
The 218-unit complex, which is near the Harrisburg Mall and was developed by Lower Paxton Township-based Triple Crown Corp. Inc., sold for $25.7 million, or $117,913 per unit, the highest in the Harrisburg market this year, according to Marcus & Millichap.
“The marketing process for this asset went very quickly due to the demand for quality assets and the increased returns that can be achieved in a secondary market,” said Zachary Pierce, one of the directors of the firm’s National Multi Housing Group in Philadelphia.
The firm has sold about a dozen properties representing more than 1,000 units in Central Pennsylvania in recent years.
“The sale of Ivy Ridge is evidence that large private investor groups and institutions are willing today to move beyond primary markets into secondary markets in order to purchase quality assets with higher yields,” Pierce said. “Two of the top three interested parties in this transaction were New York-based institutional investment groups. In previous years, institutional investors would typically forego opportunities in the Harrisburg market, but with pricing in core markets like Philadelphia, New York and Washington, D.C., reaching 2007 levels, it has become necessary for buyers to expand their horizons.”
Secondary markets can offer investors a cash-on-cash return that is 100 to 200 basis points better than in core markets, he added.
Ivy Ridge has 192 two-bedroom, two-bath units with private entrances and patios, most of which have skyline views of Harrisburg. The remaining 26 units are townhomes adjacent to the main complex.