PHILADELPHIA — AMC Delancey Group Inc., seeking ways to seize on opportunities in a shifting commercial real estate market, has decided to focus on the walk-up apartment.
A staple of city living, the walk-up has no elevator and renters must typically walk up stairs to reach their apartments. AMC Delancey settled this month on a portfolio of 10 walk-ups in Center City along Spruce, Walnut, Pine and other nearby streets for $9.5 million. The seller, Clinton Properties of New York, had owned the buildings since the 1990s. In all, there are 91 apartments. The transaction was arranged by Ken Mallin of Mallin Panchelli Nadel.
The market for walk-ups has warmed up, said Mallin, whose firm has sold 21 multifamily properties in recent months and continues to have interest from investors seeking to buy the properties. The deals range from $632,000 to the $9.5 million transaction with AMC Delancey. Investors have realized the property type is stable and lenders will still finance their acquisition though they are asking for investors to put more money down as part of the deal, he said.
“It’s a tried and true asset class that has worked as long as I have been in the business,” Mallin said. “It’s stable, rents do go up over time, and if you buy at the good locations you will do well in the long run. The key to it is it is a very stable asset.”
That’s the appeal for AMC Delancey. The Philadelphia real estate firm has been actively adding to its portfolio of walk-ups, now owning a total of 150 apartment units in Philadelphia.
“We look to buy more as appropriate and build a business,” said Ken Balin, chief executive officer at AMC Delancey. Ryan Sell and Balin’s son Steven are heading up the effort. “Right now I’m looking at a strategy that is a little more conservative and closer to home and I believe there is a lot of opportunity in this. These are properties that don’t have a huge amount of upside but they have a lot of stability.”
The properties are within 10 blocks of where Balin lives and works. Balin believes the rental properties are operated by owners inconsistently in terms of maintenance and services. The plan is for the buildings to receive upgrades and be maintained in a manner in which the renter can expect to have a problem or issue addressed in a timely manner and a high level of service. Though rents may be down in the multifamily sector in general, they are down only slightly for walk-ups and Balin expects that will improve as the market gains traction.
Natalie Kostelni, Reporter
Philadelphia Business Journal