At SVN Rock Advisors Inc., we’ve sold 40 newly constructed apartment buildings, mastering Canada’s multi-residential market with street-level insight. Our **Top Lessons Learned** series dives into the metrics—IRRs, cap rates—and buyer trends driving today’s deals. We know who’s flush with capital, from REITs to private syndicates, and what assets they’re chasing, from urban core rentals to suburban value-adds. Tailored for apartment developers, these posts reveal how to position your project for maximum returns in a competitive landscape. Join us to unlock strategies grounded in real transactions.
Lesson 1: Address Financing Early—It Can Make or Break the Deal
Financing is often the biggest hurdle in a new-build apartment sale. Sellers must pre-qualify buyers to ensure they can secure debt in today’s tighter lending environment. In some cases, offering interim vendor take-back financing can keep deals alive.\
Lesson 2: Price Per Square Foot—Not Per Door—Drives Value
Relying on price per unit is a silly metric, but it is easy to calculate and it misleads. Staffing levels, in-place rents, concessions, and vacancy assumptions vary widely between seller and buyer. It’s the broker’s job to reconcile those differences through underwriting. In today’s market, pricing must be justified through a blend of cap rate, price per square foot, and IRR.
Lesson 3: Your Lease-Up Team Is Your Sales Strategy
The quality of your front-line leasing and property management team during the lease-up phase directly impacts your exit price. Plugging in a generic third-party manager too early often leads to lower rents—and therefore lower asset value. An intentional, strategic lease-up that resembles a checkerboard—not a race to 100% occupancy—preserves long-term revenue and valuation.
Lesson 4: New Buildings Require Credible Operating Cost Estimates
Vintage buildings come with years of stabilized data. Newly built, stabilized assets rarely have even 12 months of trailing operations. That gap leads to mismatched assumptions—buyers will often apply higher vacancy or inflated expense assumptions. Credible pro forma operating costs help manage expectations and bridge underwriting differences.
Lesson 5: Manage Parking Strategically—It Impacts Leasing and Revenue
Parking allocation during lease-up must be intentional. Too often, developers give away too many spaces to smaller, early-leasing one-bedroom units—leaving insufficient parking for higher-rent two- and three-bedroom units. In constrained markets, implement a tiered pricing strategy: for example, $150/month for the first spot, $250/month for the second.
Lesson 6: Lease-Up Velocity vs. Value—Know the Trade-Off
If you’re planning to sell, leasing up quickly at discounted rents can cost you millions. Just $100/month less in rent equals $24,000 in lost value per unit at a 5% cap. Conversely, if you’re a long-term holder, cash flow today might take precedence. But from a brokerage perspective, we strongly advocate for maximizing rents upfront—it protects your valuation.
Lesson 7: Incentives Today Are Reductions Tomorrow
In tough markets, developers often offer rent concessions like free months during lease-up, hoping to burn them off in Year 2. Buyers, however, typically adjust rents downward in their underwriting to account for these concessions. That discount shows up in the sale price. Be strategic about incentives—they linger longer than you think.
Lesson 8: Focus on Price Expectation, Not Just Cap Rate
Sellers often anchor on cap rate as a pricing metric, but cap rates don’t tell the whole story—especially when income and expense assumptions vary. Agreeing to a cap rate too early can create false pricing expectations. Instead, focus on aligning total price expectations through clear, realistic underwriting on both sides of the table.
Lesson 9: Phased Sales Are About Relationships, Not Just Real Estate
When selling a phased apartment development, the dynamic shifts from a simple transaction to a strategic relationship. Unlike a vintage building sale—where the deal can close without the principals ever meeting—a phased sale typically involves multiple touchpoints between buyer and seller. Building 1 often serves as the proof of concept, laying the groundwork for subsequent phases to be delivered and acquired. Trust, transparency, and alignment of expectations are critical. In these situations, you’re not just selling buildings—you’re building a partnership.
Lesson 10: The Site Tour Is a Due Diligence Event
When buyers tour a construction site, they’re evaluating far more than bricks and mortar. They’re assessing construction quality, safety culture, management professionalism, site cleanliness, and whether shortcuts are being taken. Expect multiple site visits. Buyers are evaluating everything they see, what happens if you’re touring the site and you see multiple safety code violations? We’ve seen this happen and buyers won’t put in an offer when they see untoward things on a construction site.
Lesson 11: Selling a Partially Leased Building? Today’s Buyers Want Certainty
In the past, you could sell a building with 30–40% occupancy and convince buyers to underwrite a stabilized NOI. Not anymore. Today’s market is risk-averse. Buyers will likely discount future rents or assume slower lease-up velocity—even if early leasing has been strong. Certainty sells—and that means full or near-full occupancy.
Selling new apartment buildings is both an art and a science. At SVN Rock Advisors, we’ve refined our process over 40 successful transactions—and these 10 lessons continue to shape how we advise our clients. Whether you’re preparing your first sale or your fiftieth, we hope these insights help you move faster, sell smarter, and unlock more value from your next project.
Have questions about your upcoming apartment sale? Let’s talk.