Apartment REIT Equity Residential (NYSE: EQR) plans to break ground in the first half of the year on a joint venture project in New York with luxury-home builder Toll Brothers Inc.
The 40-story tower on Park Avenue is expected to be completed in 2015. The lower half of the building will include a mixture of retail spaces and approximately 265 luxury rental apartments run by Equity Residential. Toll Brothers will be selling the top half of the building as condominiums.
A combination of rental apartments and condominiums for sale in the same building can have added benefits, according to Mark Tennison, executive vice president of development for Equity Residential. The companies will share acquisition, construction and operating costs on the project.
"In a market like New York City, where land prices remain expensive, it is a good way to spread risk," Tennison said.
Equity Residential remains bullish on the New York apartment market, after recently completing a 111-unit development there.
"New York continues to be a very good market with high occupancies and little new supply," Tennison said.
The new 400,000-square-foot development site is located on the corner of Park Avenue South and 28th Street in Manhattan. While the two will share the same building and several amenities, the apartments and condominiums will have separate lobbies and addresses. Tennison said that, once completed, the company's new Park Avenue building will feature a mixture of floor plans, including studios as well as one-, two- and three-bedroom rental units.
"The apartment units will have high-end finishes, and the property will have a fantastic amenity package including a pool, large fitness center and space for entertaining," Tennison said.
The new project with Toll Brothers mirrors Equity Residential's joint venture with K. Hovanian Homes, 70 Greene in Jersey City, N.J., which opened in 2009. In both cases, Equity Residential has not taken a financial interest in the asset's condominiums, and its partners have not taken stakes in the apartments.