REVERBerating in the KC Crossroads

Opening a multifamily community and a cocktail lounge during a pandemic presents a unique set of challenges, as told by panelists during last week’s CREW KC event.

The virtual presentation featured REVERB, a 14-story, 132-unit multifamily complex and The Mercury Room, a 800-SF cocktail lounge atop of REVERB, located at 18th and Walnut in the Crossroads Arts District.

Bri Swanson, REVERB community manager; Kyle Bennett, The Mercury Room general manager; Charles Rotter, staff architect at Burns & McDonnell; and Trevor Hoiland, design manager at Burns & McDonnell; joined moderator Andrea McClain, portfolio analyst at CrossFirst Bank, to discuss how the team was able to rise above the challenges of the project during a pandemic.

Developed by Copaken Brooks and managed by Asset Living, REVERB opened mid-August 2020; The Mercury Room soon followed, opening in mid-November 2020.

Swanson explained that REVERB is unique from other recent multifamily projects in that it only offers studio and one-bedroom units and provides its residents with no amenities, like a pool or a gym. Instead, residents have access to a mixed-use space on the 14th floor with conference and meeting rooms and the Mercury Room — all of which Swanson called “an extension to our residents’ homes.”

Hoiland said that in selecting the site, the developers wanted the project to be part of the Crossroads neighborhood.

“So many downtown apartment buildings have everything you need inside them so why move downtown and then just stay in your building?  We really wanted people to not have a gym and not have a pool and not have some of these amenities you typically see because we want people out on the streets, to be part of the neighborhood and connecting with other tenants up the street.  That was very, very intentional,”  Hoiland said.

Swanson said that to supplement the community’s lack of amenities, Asset Living focused on providing residents with ways to get residents into the neighborhood, including providing residents with metal cards to present at nearby businesses for insider perks and discounts.

Swanson said the challenges of developing and delivering a high-end multifamily community with only studio and one bedroom units, no on-site amenities and a cocktail lounge open to the public during a pandemic were met through an innovative marketing plan, custom-built website and COVID-friendly seamless leasing and a virtual marketing outreach.

“When COVID interrupted previously established marketing plans, the Asset team quickly pivoted to creative practices such as partnerships with social media influencers to promote REVERB through what we call the ‘unboxing experience..’ We partnered with several local Kansas City influencers and invited these influencers to unbox promotional items and branded apparel on Instagram as well as attend private tours and share the REVERB experience with followers,” said Swanson.

Swanson said that the project was nearly 10 percent pre-leased without offering concessions prior to delivery.  To date, REVERB is 20.77 percent occupied and 26.15 percent leased.  Rents range from $1,149/mos for a studio unit to $3,325/mos for the largest one bedroom unit, which offers 1393 SF.

Construction of the project was well underway when the pandemic hit and there were not many delays.  Holland said that when smaller job sites in the city were shut down, the REVERB project was able to pull from them to keep construction going. 

Hoiland said that the project got its name from the energy on the streetcar, which also impacted the design of the building. 

“As the building gets taller, those apartment units stretch out further towards the streetcar, towards Main Street - then it pulls back at the very top.  So we really wanted to almost create a diagram of the soundwave that maybe you get from the energy on Main Street,”  Hoiland said. 

The Mercury Room currently accommodates approximately 20 guests to comply with COVID restrictions, but Bennett said it can sit approximately 32 guests when operating at full capacity.  

Entry to The Mercury Room is by reservation only for two-hour periods. Guests are checked in by a host downstairs and notified by text when their table is ready. Reservations are being taken on a month-to-month basis and Bennett said The Mercury Room is booked through the end of the month. Bennett expects to retain the reservation system post-pandemic.

“We are a high-end cocktail bar, really focusing on the craft of making delicious cocktails and really offering a high-touch, elevated-style service not seen in the cocktail world,”  said Bennett.

The Mercury Room has partnered with Michael Corvino from Corvino Supper Club & Tasting Room and is seeking other chefs to offer small bites to pair with the cocktails.

Berkadia sweeps $214 million in Midwest property run

In just the past eight weeks, Berkadia’s Midwest brokerage team has closed on $214.75 million in combined sales of fourteen properties.

“While overall activity in the multifamily investment sales space was down over 50 percent year-over-year, our Mid-Markets Group has remained busy with gross sales through the end of September of more than $725 million. We have taken an aggressive approach to assist those clients who needed to transact despite the difficult market conditions,” said Michael Sullivan, managing director of Berkadia’s Mid-Markets Group.

The properties include Oak Tree Square Apartments, Lakeside Village, Cold Storage Lofts, Citadel Suites and Apartments and Ames 6 Portfolio.

“The fourteen deals we’ve closed over the last eight weeks represent the last of those deals that we listed prior to the onset of the COVID-19 pandemic,” said Alex Blagojevich, senior managing director at Berkadia.

“When the full magnitude of the pandemic hit the U.S. in March, it reshuffled the market fundamentals of the entire multifamily sector, resulting in a disconnect between buyer and seller expectations. Overcoming this disconnect was our greatest hurdle to getting these deals closed, but we kept both sides communicating, and in the end, the average difference across all of those transactions between the final sales price and the price we quoted the seller was in the two-percent range,” Blagojevich said.

Transactions recently closed by the Berkadia Mid-Markets Group include:

·       Oak Tree Square Apartments, located at 12800 14th St. in Grandview, Mo. The 189-unit garden-style multifamily property was a Section 42 LIHTC affordable deal sold by Missouri-based Worcester Investments. Managing director John Schorgl of Berkadia’s Kansas City office secured financing for the acquisition on behalf of the buyer, a private syndicator out of Texas. The 10-year Freddie Mac loan includes three years of interest-only payments, and the deal closed on August 18, 2020.

·       Lakeside Village, a 75‐unit, garden‐style apartment community located in North Kansas City, Mo., was sold by Kansas-based Eighteen Capital Group to a private syndicator new to the Kansas City market. This off-market, direct sale was completed in just 45 days, as the buyer was rushed to complete this final piece of a larger 1031 exchange. Senior managing director Chris Blechschmidt and director Emily Stang of Berkadia’s Chicago office secured the acquisition financing. The deal closed on August 19, 2020.

·       Cold Storage Lofts is located at 500 E 3rd St. in the River Market area of Downtown Kansas City, Mo. Sold by a locally-based Kansas City firm, Maxus Properties, this 224-unit, adaptive reuse, midrise apartment property was ultimately purchased by a New York-based investor. After launching in late March, just weeks after the start of the shutdown, the Mid-Markets Group utilized the power of their extensive network and virtual touring to show the deal to more than 150 buyer groups. After receiving 10+ formal offers, they were able to get the deal across the finish line on September 23, 2020 at the agreed upon contract price, equating to a trailing 12-month cap rate in the low four percent range.

·       Citadel Suites and Apartments, located at 5113 N Brookline Ave. in Oklahoma City, Okla., was sold by a private family trust. The 114-unit garden-style multifamily property was purchased by a local, Kansas City-area firm after beating out more than 18 formal offers on the property, many of which had non-refundable money at execution of PSA. The deal closed on August 10, 2020.

·       Ames 6 Portfolio features six multifamily properties totaling 296-units, all located in Ames, Iowa. After launching the deal in early January, the Berkadia sales team pushed more than 150 interested buyer groups into the data room despite the oncoming pandemic and huge amount of uncertainty surrounding the student housing market. The portfolio was sold by Iowa-based Professional Property Management to a private, Chicago-based firm who closed the deal on September 7, 2020 at an in-place cap rate in the mid five percent range. Properties in the portfolio include: Colleen Crest, Delores Apartments, Gateway Hills, Maple Glen, Phoenix Apartments and River Burch.

The Berkadia Mid-Markets Group is led by Sullivan, Blagojevich and managing director, Ralph DePasquale. The team also includes senior directors Patrick Jordan and Chris Bruzas, directors Parker Stewart, Chris Gentry and Brett Meinzer and associate directors Dominic Martinez and Alex Malzone, who completed the sales on behalf of their respective sellers.

Separately, Berkadia’s Mid-Markets Group also recently completed the sale of Steeplechase on Maple, a 314-unit garden-style multifamily property located in Omaha, Neb., financed by Berkadia’s Blechschmidt and Stang; and the Wichita 5 Portfolio, a portfolio comprised of five multifamily properties throughout the Wichita, Kan. metro area.