McCann Bets Big on Chesapeake with Value-Add Apartment Acquisition

CHESAPEAKE, VA – November 24, 2025 – In a move that underscores the intense investor appetite for well-located suburban multifamily assets, Richmond-based McCann Realty Partners has acquired Red Knot at Edinburgh Apartment Homes, a 336-unit garden-style community in Chesapeake. The acquisition signals a clear bet on the strength of the Hampton Roads rental market and highlights a dominant investment strategy in today's real estate climate: acquiring modern, yet upgradeable, properties and injecting capital to elevate their position in the market.

Built in 2015, Red Knot is not an aging, distressed asset. Instead, it represents a new class of target for institutional investors—a solid, well-occupied property in a prime location that can be pushed into a higher tier of luxury through targeted enhancements. McCann's plan for the community, which will be managed by its subsidiary Pegasus Residential, involves a significant capital improvement program aimed at modernizing both amenities and individual units. This strategy, known as “value-add,” is designed to increase the property's appeal, command higher rents, and ultimately, generate greater returns for investors.

A Market Defined by Scarcity and Demand

McCann's investment is anchored in the compelling fundamentals of the Chesapeake and greater Hampton Roads rental market. While other regions grapple with an oversupply of new apartments, the Tidewater area is experiencing what analysts have termed a “supply pipeline collapse.” As of late 2025, only about 650 multifamily units are under construction across the entire Hampton Roads region, a stark drop from the historical average of 2,600. In Chesapeake specifically, the pipeline is even tighter, with just 200 units underway.

This dramatic slowdown in new construction, representing only 1.6% of the total market inventory compared to a 4.9% national benchmark, creates a powerful tailwind for existing properties. With fewer new options coming online, demand is funneled toward communities like Red Knot. This dynamic has kept vacancy rates exceptionally low. In the fourth quarter of 2025, the Hampton Roads vacancy rate stood at a healthy 6.1%, significantly below the national average of 8.3%.

This supply-demand imbalance has predictably fueled strong rent growth. Across Chesapeake, average rents have climbed between 3% and 8% over the past year, with the city’s average monthly rent now sitting between $1,700 and $2,200 depending on the data source. The Edinburgh submarket, where Red Knot is located, has seen even more explosive growth, with year-over-year rent increases reaching as high as 16% for one-bedroom units. High mortgage rates and elevated home prices continue to keep would-be homebuyers in the rental market, further bolstering demand and giving landlords significant pricing power.

The Modern Value-Add Playbook

McCann's strategy for Red Knot at Edinburgh is a textbook example of the modern value-add approach. The firm intends to go beyond simple cosmetic fixes, implementing upgrades that cater directly to the evolving lifestyle of today's discerning renter. According to the company, select units will receive new stainless-steel appliances, flooring upgrades, and modern lighting packages to bring them in line with new-construction standards.

More strategically, the amenity enhancements target key trends in luxury living. The planned renovation of the clubhouse and fitness center is standard practice, but the addition of a micro market, a new dog run, and, most notably, EV charging stations, reflects a forward-thinking approach. EV chargers are rapidly transitioning from a niche perk to a must-have amenity for attracting and retaining affluent tenants. Similarly, micro markets offer a level of convenience that residents increasingly expect.

“We are excited to bring our team's expertise to this high-quality asset,” said Mike Dowd, Managing Director at McCann, in the initial announcement. Matt Akin, President of McCann, added that the acquisition “provides the opportunity to modernize and upgrade the property's finishes, which will enhance the overall experience of the community.” By making these specific, high-impact improvements, McCann aims to elevate Red Knot's market position, justifying higher rental rates while improving the resident experience.

The Owner-Operator Advantage and Its Challenges

Crucial to executing this vision is McCann's vertically integrated structure. The property will be managed by Pegasus Residential, a wholly-owned McCann subsidiary and an NMHC Top 50 property management firm overseeing more than 50,000 units across the country. This owner-operator model provides a significant strategic advantage, allowing for seamless alignment between the investment goals of the owner and the day-to-day operational execution of the manager.

Instead of negotiating with a third-party firm, McCann can directly implement its value-add program, control branding, and enforce its operational standards through Pegasus. This model is a key component of McCann's expansion strategy across the Sun Belt, as it enables the firm to acquire assets and quickly deploy its proven playbook for improving performance.

However, the success of this model hinges on consistent execution at the property level. While the stated goal is to enhance the living experience, scaling high-quality service across a vast portfolio presents challenges. Publicly available resident feedback for Pegasus-managed properties is mixed. While some tenants praise the company for responsive maintenance and well-kept communities, others have filed complaints regarding unresolved issues and communication breakdowns. For McCann, ensuring that the on-the-ground reality at Red Knot lives up to the promise of its investment will be critical to the project's long-term success.

As McCann seeks further acquisitions in the Mid-Atlantic, Southeast, and Texas, the Red Knot project will serve as a key case study. The acquisition is more than just a real estate transaction; it's a calculated move based on deep market analysis and a belief that strategic, modern upgrades can unlock significant value, even in a property just a decade old. For current and future residents of Chesapeake, it signals the arrival of a major institutional player poised to raise the bar for rental living, likely at a commensurate price point.