Features

Demand for Student Housing Development Persists Despite Economic Headwinds

by Katie Sloan December 21, 2023

It would be impossible to write a development or design article without mentioning the elephant in the room — the state of the capital markets and the current hurdles in securing financing of any sort, but especially for new development projects. While demand for new communities exists in many markets, getting projects to pencil out is the tricky part. For those developments that can move forward, innovative architecture and design are being employed to make the projects as functional and efficient as possible. Out are some of the flashier amenities from the days of yore, and in is design that helps student residents be the happiest and healthiest versions of themselves, both mentally and physically. From the developer perspective, there is no question about the desire to build — especially in Power Five university markets. “Almost all of the Power Five universities have seen 7 percent to 10 percent rental rate increases over the past three years and are showing approximately 98 percent occupancy at most properties,” says Greg Faulkner, president of Humphreys & Partners Architects. “But math has to work with the rates, like equity requirements of 45 percent or higher. Hard costs have moderated, but some are still …

December 21, 2023

Features Multifamily

How Modern Residences Can Combat Climate Change

by Taylor Williams December 19, 2023

By Richard Ross, CEO of Quinn Residences Climate change is an enormous topic with implications so expansive that it can be difficult to understand how — or even if — we can make a positive impact. While companies and individuals can make essential changes on the margins, like advocating for public policies that promote better climate outcomes, there is one place where everyone can make a distinct difference: at home. The built environment is one of the most significant contributors to climate change, and our residences account for much of our carbon footprint. Changing how we build and what we buy or rent can alter this dynamic, and for new builds, this process starts on day one. Here are five ways in which developers, builders, buyers and renters can make that possible. Implement a Solar Program Rooftop solar panel adoption is soaring, setting installation records for six consecutive years. More than 700,000 homeowners installed solar panels in 2022, and over half of U.S. adults say they “want to power their home with solar panels in the future.” Meanwhile, the costs of installing and maintaining solar panels have never been lower, thanks to cheaper material costs, streamlined permitting processes and workforce …

December 19, 2023

Conference Coverage Features Multifamily

Multifamily Operators Had to Work Smarter, Harder This Year, Say InterFace Panelists

by Kristin Harlow December 15, 2023

ATLANTA — Shortened attention spans and the desire for instant gratification are a couple of the changing consumer behaviors that impact the multifamily operations industry. Karen Key, a president with Houston-based Asset Living, said that 75 percent of consumers expect a response time in less than 24 hours from a business. Twenty percent expect a response time within minutes. “If you’re missing that mark and someone else is responding to them, whether it’s a client, prospect or resident, you’ve lost them. They’re gone.” Key’s remarks came during the operations panel at the 2023 InterFace Multifamily Southeast conference, which took place Thursday, Nov. 30 in Atlanta. France Media and Southeast Real Estate Business hosted the event at the Westin Buckhead hotel. Ed Wolff, president of California-based LeaseLock, moderated the panel, which was entitled “What’s Changed and What’s Not Changed in Terms of Occupancy, Rental Rates and Operations?” Key emphasized that many of these changes resulted from the COVID-19 pandemic. “When the pandemic happened, everyone got spoiled in terms of having everything at their fingertips. They were tied to a computer all day every day,” she said. As such, Asset Living’s use of social media as an advertising tool increased significantly ever …

December 15, 2023

Rafi Golberstein PACE Loan Group CPACE quote

Content Partner Development Features Hospitality Loans Midwest Northeast Southeast Texas Western

Capital Markets Warm to C-PACE Financing Amid Growing Stress

by Sarah Daniels December 14, 2023

The spike in interest rates and the consequent disruption throughout real estate capital markets over the last 18 months is generating newfound interest in commercial property assessed clean energy (C-PACE) financing. The program, which emerged more than a decade ago, pays for building upgrades to improve energy and water efficiency as well as seismic resilience in new construction and rehabs. In cases where cost overruns, stabilization delays and declining values threaten the ability to refinance construction loans, developers are tapping C-PACE retroactively for a much-needed slug of so-called “rescue capital,” says Rafi Golberstein, CEO of the PACE Loan Group, a direct lender of C-PACE based in Minneapolis, Minn. Typically, developers are using the proceeds to pay down debt and fund reserves to secure loan extensions or modifications. “We are seeing a ton of opportunities right now in deals that were built over the past three years, and C-PACE can provide a liquidity infusion to get many folks through a maturity logjam,” he declares. “When confronted with other options, they’re going to prefer C-PACE all day long.” Cost-Effective Debt Indeed, the cost of those other options, such as mezzanine financing or preferred equity, can be upwards of 500 basis points higher …

December 14, 2023

Features Office

How Office Owners Can Navigate Challenging Credit Scenarios for Their Properties

by Taylor Williams December 13, 2023

By Nicole Schmidt, managing partner, Oberon Securities Whether it’s traditional bank loans, private equity or securitized financings, it’s clear that a large number of commercial property owners are facing serious credit issues. Many office tenants continued making rent payments even through COVID-19, and the work from home trend has now left them with excess space. But as leases expire, they are downsizing their physical footprints, leaving landlords with significant vacancies amid very soft demand. According to a November 2023 article in The Wall Street Journal, “Only one out of every three securitized office mortgages that expired during the first nine months of 2023 was paid off by the end of September, according to Moody’s Analytics. That is the smallest share for the first nine months of any year since at least 2008 and well below the nadir reached in 2009, when 47 percent of these loans got paid off.” Add to that the impact of WeWork’s recent bankruptcy filing and projected high office vacancy rates in New York City and other major markets — plus higher interest rates — and the inevitable result is lower valuations that don’t support existing levels of debt on many properties. Higher vacancy rates, higher …

December 13, 2023

Conference Coverage Features Multifamily

Contrarian View: InterFace Lending Panel Explains Why Multifamily Borrowers Should Refinance Today

by Taylor Williams December 11, 2023

By Taylor Williams ATLANTA — Depending on the era in which you came of age and the general experiences you’ve had in life, the notion that “things can always get worse” can be easy to endorse. As it pertains to commercial lending and borrowing, the consensus narratives that have prevailed ever since the Federal Reserve began jacking up interest rates in early 2022 have largely followed the same script: “Hunker down.” “Survive till ’25.” “Delay and defer.” In other words, do whatever you have to do to avoid the sting of the 11 interest rate hikes totaling 500-plus basis points that have been enacted over the past 20 months, raising the federal funds rate from near zero percent to its current target range of 5.25 to 5.5 percent. According to data compiled by Walker & Dunlop, the average all-in interest rate on a 10-year, fixed-rate Fannie Mae mortgage — assuming a conservative structure of 55 percent loan-to-value — is roughly 6.25 percent. Since rate hikes began, multifamily lenders across various markets have stated that leverage ratios in the neighborhood of 55 to 60 percent have become the norm, all other factors being held equal. Cloud of Uncertainty Despite some seemingly …

December 11, 2023

Acquisitions Features Multifamily Seniors Housing

Seniors Housing Acquisitions Make More Sense Than Development in Today’s Market, Says Benchmark CEO Tom Grape

by Jeff Shaw December 7, 2023

The dearth of new supply in the seniors housing space is a double-edged sword, says Tom Grape, founder, chairman and CEO of regional operator Benchmark Senior Living. While the lack of new product has provided a much-needed lift to operators of existing communities seeking to boost occupancy, it’s also a missed opportunity for developers chomping at the bit to start new projects. The year-over-year (YOY) inventory growth in seniors housing was 1.3 percent in the third quarter, nearly the smallest YOY growth since 2012, according to NIC MAP. Grape foresees the possibility of even slower inventory growth in the near term. “We’ve got a development pipeline, but we’re sort of parking it. Construction costs remain high. We’re starting to see early signs that maybe those are softening a bit, but nothing has really softened materially,” said Grape during the keynote interview at the seventh annual InterFace Seniors Housing Northeast conference in Philadelphia on Wednesday, Nov. 29. Laura Cambria of KARE, senior vice president of operations at KARE, a senior living staffing app that connects caregivers with operators, conducted the interview. France Media’s InterFace Conferece Group and Seniors Housing Business hosted the conference at the Hilton Philadelphia at Penn’s Landing. The daylong event …

December 7, 2023

Conference Coverage Development Features Georgia Multifamily Southeast Southeast Feature Archive

New Multifamily Starts to Slow to a Crawl in 2024, Say InterFace Panelists

by John Nelson December 5, 2023

ATLANTA — Multifamily developers are bracing for the uncertainty of 2024 as their projects are delivering into a landscape where new supply is outpacing demand by a significant margin. In the third quarter, a total of 114,000 new multifamily units were delivered in the United States compared to 82,100 absorbed, according to research from CBRE. The absorption figure is technically rebounding as it represents the highest quarterly figure since early 2022, but there is still a sizeable delta compared to supply growth. The trailing four-quarter total for U.S. multifamily deliveries stands at 376,500 units, which CBRE reports is the highest since it began tracking the metric 27 years ago. “This is historic supply,” said Todd Oglesby, managing director of Alliance Residential Co.’s Southeast division. “It’s at the highest levels since the 1980s.” Oglesby made his comments as part of a panel of developers at France Media’s InterFace Multifamily Southeast, an annual conference held on Thursday, Nov. 30 at the Westin Buckhead hotel in Atlanta. Chad Riddle, senior project manager at Bohler, moderated the panel entitled “Given the Interest Rate & Debt Market Environment, How Are Developers Making New Projects Pencil?” Throughout the full-day conference, several panelists mentioned that their firms’ …

December 5, 2023

Build-to-Rent Features Single-Family Rental

Why Build-to-Rent Continues to Take Commercial Real Estate by Storm

by Taylor Williams December 4, 2023

By Mark Taylor, managing director, residential, American Real Estate Partners For young families across the country, the dream of homeownership has been delayed due to high mortgage rates, low supply and rising build costs. Many millennials, particularly those with growing families, are ready to move into their first homes but cannot afford either the down payment or the increased mortgage payment. According to Pew Research Center, 65 percent of Americans under the age of 35 still rent, as opposed to a market average of around 33 percent. That’s why build-to-rent (BTR) homes are booming; they offer residents the space and privacy of a house with a lower price tag, alongside the extensive amenities and institutional property management services of rental apartment living. For most people, rent is by far their largest monthly expense. Ideally, they want to live somewhere that is safe, stylish and comfortable — all things that BTR homes offer. Here are some of the reasons BTR is taking the real estate industry by storm. The Economics BTR appeals to investors as well as residents. Whether townhouses or single-family, BTR homes are typically larger than traditional apartment units and generally include an attached garage. The trunk rent, or …

December 4, 2023

Acquisitions Conference Coverage Features Multifamily

Bid-Ask Spread Continues to Throttle Down Multifamily Investment Sales, Say InterFace Panelists

by Jeff Shaw December 1, 2023

ATLANTA — Investors in the multifamily sector are having trouble getting deals done in 2023, and 2024 isn’t looking to start out much better. The culprit is the bid-ask spread — the gap between what sellers believe their property is worth and what buyers are willing to pay. That’s according to a panel of multifamily investors, several of whom described transacting in the present environment to be a “slog.” The panel, titled “Investment Outlook: When will the Bid-Ask Gap Narrow, the Market Stabilize and Transactions Resume in Earnest?,” was held yesterday at France Media’s InterFace Multifamily Southeast conference at the Westin Buckhead in Atlanta. The panel included Brian Grant, senior vice president of acquisitions of Equity Residential; John Leonard, first vice president/regional manager of Marcus & Millichap; Eddy O’Brien, managing partner and co-founder of Blaze Capital Partners; Matt Trammell, chief financial officer of Wood Partners; Kristina Lynn, senior director, of housing and alternative investments in the Americas at Nuveen Real Estate; and moderator Paul Berry, president and chief operating officer of Mesa Capital Partners, who recently joined the firm from CBRE. Berry kicked off the discussion by noting that “the bid-ask spread affects all of us.” While he noted that …

December 1, 2023

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