Built in 1975, the three-story, 29-unit Promenade Apartments building on Cocoanut Avenue offers affordable rentals close to downtown. Last month, it sold for $3.9 million to an out-of-state private equity investment company that has plans to renovate it.
Vrzic, based in New York City, purchased the building on March 26. The company specializes in multi-family properties and has worked in 10 states. Promenade Apartments, located at 1045 Cocoanut Avenue, is the company's first in Florida, but it won’t be its last. The firm is in the process of setting up an office in Tampa, and building a Florida portfolio by “taking out slumlords one at a time,” says the company's founder Marko Vrzic.
According to Vrzic, the company's goal is to beautify buildings to satisfy existing tenants.
“We create a survey of what the tenants would want to see, down to the colors of the building," he says. "We try to customize things to their needs. That's how we’re unique.” He plans to invest $1.2 million in the building. Plans call for new flooring, newer appliances, updated finishes and perhaps even an on-site farm or garden. That idea ranked high in Vrzic's survey of existing renters. As for raising the rent, it depends on future survey outcomes, he says.
The apartments have gone through a series of owners over the decades. The previous owner, based in Alpharetta, Georgia, bought it in 2019 for $3 million. The building was listed for $4.1 million and was on the market for just 45 days before Vrzic's offer was accepted.
Depending on whether they live in one of the units between two others or in one on the outer edge of the building, residents can live in a one-bedroom abode a stone’s throw from downtown and Sarasota Bay for roughly $965 to $1,250 a month. Each unit has one bedroom and one bathroom, and they share the same floor plan at approximately 558 square feet each.
A couple of blocks up the street from Promenade Apartments, at 800 Cocoanut Avenue, CitySide offers one-bedroom, one-bathroom units that range from roughly $1,500 a month for 572 square feet to a little more than $3,000 for 895 square feet. Like Promenade Apartments, it has no water views, but CitySide is a more recent build and is updated with trendy finishes and amenities like a pool and yoga studio.
Proximity to those kinds of comparison properties potentially mark Promenade Apartments as a future candidate for a developer with a wrecking ball. But current zoning rules allow for construction to go no more than three stories high, and limit the property's use to residential only, although it is flanked by a restaurant and is near a Publix and several other retailers. Any changes to those rules would have to be approved by the City of Sarasota.
The property's close-to-downtown location is prime. It’s a five-minute walk from the Rosemary District, Sarasota Bay and downtown Sarasota, and it’s almost next door to Pioneer Park, with tennis courts and a newly refinished basketball court.
“The walkability factor will cater to younger professionals or singles who don't want the hassles that come with owning a house,” says Adam Podbelski, the first vice president of investments and the director of the national multi-housing group for Marcus & Millichap, which listed the property.
Podbelski also points to a recent local spike in apartment building investments.
“Demand has increased more than twice as much as it was last year for the same product,” he says.
Vrzic is experiencing a recent boom, too.
“Our business has at least tripled," says Vrzic. "A lot of investors with cash have been waiting to use it, and when Covid hit, they thought, ‘What is pandemic-proof?’ Multi-family properties. Since Roman times, people have been renting."