Tenant protections in D.C. have reduced the multifamily investment market to a crawl, so one local developer that traditionally holds its assets long-term is bringing an almost-finished project to market before it has any renters. MidCity this week began marketing for sale a 108-unit apartment project at 1400 Montana Ave. NE that is expected to deliver in May, with Feldman Ruel Urban Property Advisors managing the listing, Bisnow has learned. The project, branded as Big Sky Flats, sits across the street from the Brookland Manor community where MidCity has for years planned the 1,700-unit RIA redevelopment. MidCity in 2018 purchased the site for Big Sky Flats for $5.85M. It received zoning approval and financing for the $33M project in May 2019 and broke ground shortly after that. The developer is now looking to sell it before signing any leases explicitly to avoid having to navigate D.C.'s Tenant Opportunity to Purchase Act. The law, which allows a property's tenants to organize and match any offer to buy their property, has become more fraught with city-imposed delays during the pandemic, and it led apartment sales volume to fall in the District last year despite rising in neighboring jurisdictions and across the country. "Just the fact it doesn't have to go through TOPA is going to get a ton of eyes," said Feldman Ruel Managing Principal Josh Feldman, who is marketing the property along with Ian Ruel and Ryan Smith. The strategy of selling before leasing up a building is a first for Bethesda-based MidCity, a 57-year-old real estate firm that has typically held onto its developments for the long term. MidCity Executive Vice President Jamie Weinbaum said that the sky-high investor demand for multifamily assets combined with the appeal of buying a D.C. apartment building that doesn't have to go through TOPA makes selling now the smartest investment decision for the firm. "MidCity hasn't done that in the past, but it's a very different climate, and we haven't delivered any new buildings in the recent past," Weinbaum said. "It really is challenging to even consider selling a building down the road at any point, given the time constraints, and so there’s a lot of investment demand we're seeing," Weinbaum added. "We've got a lot of unsolicited inquiries about the building, folks who have capital and are interested." Feldman said investors have soured on buying large D.C. properties that must go through TOPA, so the opportunity to buy a vacant building of more than 100 units is appealing to many. "TOPA has resulted in sales taking longer and longer. A lot of them were effectively frozen during Covid," Feldman said. "When you're talking about a 108-unit project, that’s a lot of tenants to have to negotiate with, and candidly, I think buyers don't have as much appetite for that. ... A lot of buyers are bowing out of those deals and aren't as patient as they were before." Feldman said he expects more developers to begin employing the strategy of bringing properties to market before they begin leasing up. He said he is marketing a smaller project on Georgia Avenue where the developer is looking to sell before renting the units. "Why lease it up and go through TOPA if you plan to sell?" Feldman said. Weinbaum said the property could be especially appealing to 1031 exchange investors, who have a limited window of time to buy assets with the proceeds of a prior sale, because the TOPA process typically makes that tight closing window impossible to hit. The sellers are also marketing the property to opportunity zone funds because it is located within one of the eligible zones for the federal tax incentive program. While opportunity zone investments typically finance new development, Weinbaum and Feldman said they consulted with an attorney who told them the property still qualifies as an opportunity zone investment because it hasn't received its certificate of occupancy or signed any leases. An outside opportunity zone expert, who declined to be identified because he isn't familiar with this specific property, said that the Treasury Department's rules explicitly identified this type of yet-to-be-occupied multifamily project as an allowable investment under the program. Opportunity zone funds raised $6.9B in the last six months of 2021, up 39% from the first half of the year, according to a Novogradac report released last week. That money now must be deployed into qualified projects, creating a large potential buyer pool for assets like MidCity's new apartment building. "We expect a lot of activity from opportunity zone funds because this is something you don’t usually see," Feldman said. "Normally you have to be in the business of development. In this case, you don’t. An opportunity zone fund can purchase the building and do the lease-up, and it can be a quick close because you don’t have to deal with TOPA ." The construction of the project was also financed in part by opportunity zone investors, and Weinbaum said those investors would be able to take the gains from a sale and deploy them into another opportunity zone project. The five-story property, sitting about three-quarters of a mile from the Rhode Island Avenue Metro station, consists of 75 one-bedroom units and 33 two-bedrooms. Feldman Ruel's deadline for offers on the sale is April 8. While MidCity is looking to cash out of this 108-unit building, it is still planning to retain its large ownership stake across the street, where it expects to finally begin construction this year on RIA. The project had been held up by appeals for three years before receiving a favorable court ruling last March. Weinbaum told Bisnow this week that MidCity plans to begin construction on the project's first phase by the end of this year. The first phase is planned to include a 200-unit affordable senior building and a 131-unit affordable building set aside for existing Brookland Manor residents. Future phases would have hundreds of market-rate units and 181K SF of retail, and the developer is targeting a grocery store anchor. "We’re long-term invested in the neighborhood, and we’ll be bringing a lot of mixed-income market[-rate] and affordable housing online in the coming years, as well as grocery and other retailers," Weinbaum said. "Our opportunity to be the epicenter for something inclusive and well-designed and thoughtful is paramount." MidCity, which also has two projects planned in Shaw, in June named a new CEO in Stacy Spann, the former head of the Montgomery County Housing Opportunities Commission. Spann received a waiver from the county ethics commission in July, allowing him to take the job despite having done significant business with MidCity's sister company, Edgewood Management. Also last year, MidCity Chairman Eugene Ford Jr. was sued by members of his family, who alleged counts of fraud and breach of fiduciary duty in his role overseeing the business.