A local real estate veteran who had planned to retire has instead jumped back into the game with the purchase of two vacant
downtown properties he plans to convert to market-rate apartments.
John Watson, who was a partner with Carl Van
Rooy in Van Rooy Properties Group from 1986 to 2006, formed Core Redevelopment Inc. at the end of August and on Sept. 1 purchased
two buildings at Senate and North streets that will house 71 one-bedroom apartments and six studio apartments.
buildings on the southeast and southwest corners of Senate and North and about a block east of the canal were built in 1900
and 1903 as the Avondale and Deauville apartments. They were rehabbed in 1976 as low-income housing and have been vacant since
They had been owned since 2004 by a local partnership. Tenants in the buildings had been eligible
for housing assistance payments through a program of the federal government. When the property fell out of compliance with
that program a few years ago, occupancy took a nosedive and the entity that owned the building fell behind on its mortgage
with Wells Fargo Bank.
Watson bought the buildings for a little more than $1 million—about half the mortgage
balance—and plans to spend another $1 million rehabbing the units. Watson said moderating prices caused him to jump
back into real estate. “I was going to retire and go off in the sunset,” Watson said. “When I was stepping
away, people were paying crazy prices. But then the market changed.”
The Senate Avenue apartments, which
average about 650 square feet each, will rent for between $600 and $650 a month, Watson said. The first units should be ready
for tenants by Dec. 1.
Amy Burmeister, a multi-family housing specialist with the local office of CB Richard Ellis
who represented Watson in the transaction, said rent growth is driving interest in downtown apartment ownership.
Downtown rents have grown 6.7 percent in the last two years compared with 1 to 2 percent in other parts of the city, she
The out-of-town owners of the Richelieu townhomes and flats, a 62-unit, two-building property at the northwest
corner of North and East streets, are hoping the growth in rent will help attract a buyer for their property. Burmeister will
list the Richelieu, which is fully occupied, later this week for $4.95 million. At $80,000 a unit, it isn’t quite the
bargain Watson got on the Senate Avenue buildings, but the units are bigger— at between 950 and 1,000 square feet—and
the rents average more than $900 a month.
Burmeister attributed the growth in downtown rents to the limited supply
of downtown apartments and the fact young professionals these days are less likely to take the plunge and buy a condo. She
said downtown is especially attractive to college students and recent graduates. Watson agreed, noting that the Senate Avenue
buildings are only blocks away from the IU School of Informatics. Parking with the buildings is in short supply, but he thinks
their price and proximity to IUPUI will be attractive to student renters.
Executives at Flaherty & Collins,
the developer of the Cosmopolitan on the Canal project just south of Watson’s buildings, think Watson’s project
will help the neighborhood without competing directly for tenants. “We’re very happy to see John Watson buy the
buildings and redevelop them. It’s a significant improvement to the neighborhood to say the least,” said Jim Crossin,
vice president of development for Flaherty & Collins.
The Cosmopolitan will be ready for tenants by the end
of the year. Its 218 one- and two-bedroom units will start at about $1,000 a month. At that higher price point, Flaherty &
Collins expects the primary demographic for the complex to be young professionals, Crossin said.