A local apartment management company that last year took over the former Cotton Mills apartments in downtown Janesville announced it has bought a 96-unit apartment complex on the east side.
The Spaulding Group announced this week it purchased the Park View Apartments at 1601 Randall Ave. that for a decade has been market-rate but historically served a senior citizen tenant base.
Justin Spaulding, president of Spaulding Group and Spaulding Equity, a private investment sister company, said he plans to rename the apartments “96 East” and pump about $50,000 into initial improvements, starting with a parking lot replacement.
Spaulding said the acquisition will broaden his company’s local holdings of market-rate apartments and offer prospective tenants slightly lower rates with different perks than he offers at the former Cotton Mills.
Spaulding said the move comes as his rebranding and renovation at the former Cotton Mills, 222 N. Franklin St., which Spaulding renamed Signature 23, has had “much faster and better success” than initially expected.
And the purchase comes as the city’s stock of market-rate rental properties remains the slimmest in years—to the point city government has been entertaining tax incentives to spur new construction of both affordable and market-rate apartments.
Spaulding plans to dress up a few common areas in the apartments to make more inviting space for tenants to meet or socialize. He said he is structuring the apartments’ $720- to $780-per-month rent to include water, sewer, electric, heat, parking and trash. That’s in addition to a cable and internet service package he said the apartments will offer at about half the going market rate.
Park View Apartments had been owned by Glen Ellyn, Illinois-based Golden Acres. The Spaulding Group reports in just a few weeks it raised investments of $1.5 million needed to buy the apartments. Spaulding said he had spill-over interest by investors. He plans soon to acquire a few hundred more apartment units in Madison and the suburban Milwaukee area.
The apartment group over the last 18 months and under the steam of local, regional and national investment, has amassed about $30 million in properties throughout southern Wisconsin, most of them apartments, Spaulding said.
Spaulding believes he has found another market sweet spot at the Park View in Janesville. He said as market forces have brought about nascent plans by other developers to develop and build new apartments, the existing complex located off Milton Avenue near shopping and dining will compete well.
He believes developers who built new apartment complexes in Janesville likely wouldn’t be able to compete on rents. He said he believes the expense of new construction likely would force market-rate apartment developers, even ones with projects subsidized by the city or state, to charge rents of $1,000 or more a month.
Spaulding expects initially six or seven tenants will move out from 96 East, but those were previously scheduled. He said otherwise, the Park View Apartments are “pretty much fully occupied.”
“It (96 East) is occupied. It’s a lot different beast. We’re going to remain competitive when people start to build (new apartments). The investors will get what they want out of it,” Spaulding said. “It (96 East) won’t be as new, but to have an option that’s $200 less, it’s a pretty safe investment option,” Spaulding said.
When Spaulding bought the former Cotton Mills he echoed similar sentiments on prices, although his company was factoring in at least $300,000 in renovations at those apartments. And, he said at the time, about a dozen of the Cotton Mills’ 47 units were vacant.
Spaulding said rents at Signature 23, now average about $840 a month without utilities included. That’s a notch higher than the $600- to $800-per-month Spaulding estimated he might charge when he took over the Cotton Mills last year.
He said new tenants tend to be professional-class workers— some who work in town and some who commute to Beloit or Rockford, Illinois.
Each set of apartments he owns—about 400 units—serves a demographic that varies based on location.
“Each property is a different beast, each location,” Spaulding said. “We put different prices out there and test it.”
Spaulding said all but about 15 tenants who lived at the Cotton Mills when he bought the apartments have moved out, but the vacancy rate there is down to 5%.
“For open apartments, we’ve been doing two, maybe three showings, and they get leased,” Spaulding said.