2838 Fremont Ave S, Minneapolis, MN 55408

Flux Apartments

Asset description

Jones Lang LaSalle Americas, Inc. (“JLL”), a licensed real estate broker, is pleased to present the offering of Flux Apartments, a fully union-built, luxury 216-home apartment community located in Minneapolis' dynamic Uptown submarket, a legacy urban neighborhood. Flux represents an opportunity to acquire a proven, stabilized asset at a basis well below today's replacement cost. Constructed in 2012 and institutionally owned and operated, this well-maintained asset offers investors the rare opportunity to leverage proven property performance, today's submarket trendlines, and the extreme impending supply constraint to generate significant investment growth. Moreover, the asset is well-positioned for a value-add execution, allowing investors the ability to achieve an outsized return.

Flux's construction boasts clear attention to detail highlighted by its premier design and irreplaceable quality. With an amenity package that is second to none and top-notch unit finishes, Flux offers its residents a true luxury living product at an attainable monthly rate. Today's replication rents for a similar asset to Flux are ±$3.30, a substantial 78% growth compared to current rents, securely insulating the investment from future supply risk. The demand for Flux is robust and consistent, demonstrated by its strong average annual occupancy despite previous competing deliveries, and the muted supply pipeline on the go-forward represents a compelling pricing power thesis as the asset and submarket demand far outpaces market supply. This trend is already evident within Flux's leasing through its 7.6% blended growth between recent lease trade out and renewal activity.

The asset benefits from its main-on-main location in Uptown, a legacy Minneapolis neighborhood that is undergoing a transitional period. As yesterday's headwinds become a piece of the past, positive trendlines emerge for this time-tested community. With progress already beginning to materialize, the submarket presents a prime environment for investors to capitalize on today's tailwinds.

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Attributes

Units

216

Occupancy

93%

Year built

2012

Rentable area

163,678 sf

Media

Investment highlights

Irreplaceable Asset with Proven Performance

Rare, fully union-built project offering an amenity-rich community with luxury home finishes
93% occupied and has maintained an impressive 5-year average occupancy of over 92% since 2020 despite delivery of new competition and previous submarket adversity
Offered for +40% discount to today's replacement cost at a compelling basis opportunity relative to new podium-built construction
Replication rents require a 78% increase over current Flux rents, establishing secure insulation from future supply risk
Robust lease trade out and renewal activity, demonstrating 6.1% and 10.8% net effective growth respectively

Unbeatable Investment and Upside

Generational opportunity for 216 homes of investment-grade scale, institutionally owned and operated
Business plan optionality presents investors a multi-faceted approach to leverage submarket tailwinds and/ or execute a well-supported renovation program to generate further revenue growth and value appreciation
Embedded rent growth: current rents exhibit 29% discount to competitive set, equivalent to $404 on a chunk basis, with even further rental rate upside potential relative to today's core Minneapolis neighborhoods, achievable as recent Uptown trend-lines continue to materialize
Strategic and long-term competitive advantage due to high-barrier-to-entry market, premier location, and quality
Minneapolis is a spotlight multi-housing market nationally due to recent liquidity, forefront demand rankings, and one of the tightest supply constraints among U.S. metros

Legacy Submarket with Compelling Fundamentals

Uptown is a legacy, core Minneapolis neighborhood, boasting a vibrant atmosphere and wide array of demand drivers
Large number of stakeholders pushing to complete revitalization efforts, already resulting in green shoots and neighborhood progress
Clear supply and demand imbalance driving outsized growth and return potential, underpinned by third party forecasts; Uptown is scheduled to witness the steepest supply cliff across all Twin Cities submarkets
Strong demographics underscored by a high $126k average household income presenting a massive in-place rent cushion compared to current Flux Rents
Accessible luxury living at a substantial discount to the competitive nearby for sale market, representing a 2.5x discount to the monthly cost to own and massive financial benefit for renters