NAI Wisinski Great Lakes (member NAI Global) is pleased to exclusively present the Village Square Apartments, a 90-unit garden style residential community located in Oshtemo Township, a suburb of Kalamazoo, Michigan. Village Square is a well-maintained Class “B” asset, complete with covered parking, a playground and outdoor pool. The property is located just west of US 131 and just north of Interstate 94, the connector highway between Chicago and Detroit.
Although Village Square is not a student-oriented community, it is extremely well located and just a short distance from Western Michigan University, a Division I university. The main artery from Oshtemo to downtown Kalamazoo, Stadium Drive is a well-developed commercial corridor, complete with a mix of shops, hotels, restaurants, bars, car dealerships and office buildings. A vibrant downtown Kalamazoo is just minutes away.
Exceptionally Well Performing Asset - Strong Rental Submarket
The property has a strong operating history and continues to perform very well, in part due to a strong rental market. In the past 12 months, year over year rents in Kalamazoo rose by an incredible 10.78% and occupancies held strong at 96.9% in the same time frame. The unemployment rate in West Michigan is at 4.9%, which is lower than the national average. Job growth was strong at 11.73%.
Village Square Apartments presents a compelling opportunity to further increase existing rents by implementing unit finish upgrades with additional rent premiums for each option package. Current management has been adding modest finish upgrades upon unit turnovers. Items such as six panel doors, wall colors (paint), brushed nickel hardware and fixtures, LVT flooring, new cabinets and counter tops, plus stainless steel or black appliances will all draw a premium. Plumbing and adequate space are available for in-unit washers and dryers. There is a clear opportunity to modernize all units to a standard that justifies significant rental premiums.
Currently rents on in-place leases remain under market in most all cases. This built-in loss to lease represents an easy path to increase revenue as units are turned over or leases extended. The current variety of rents for similar unit types at Village Square provides an easy means of adjusting rates.
In general, all units are in very good condition. Most of the apartment homes have received some level of upgrade. All residences may be open to certain upgrades in order to maximize rents. Organic rent growth will further enhance revenue as long as occupancy and annualized rent growth in Kalamazoo remain strong.
Currently, one of the one- bedroom apartments is being used as a non-revenue producing model and leasing office. There is existing space available in the pool building to convert the former rental office back into the leasing office, allowing for the generation of additional rental income from what is now the model.