Southeast Feature Archive

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’ …

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The editors of REBusinessOnline.com are conducting a brief online survey to gauge market conditions in 2024, and we welcome your participation. The survey should only take a few minutes to complete. Questions range from property sectors that you are most bullish on heading into 2024 to trends in deal volume to your outlook for interest rates. The results of our 13th annual survey will be compiled and published in the January issues of our regional magazines. Conducting these surveys is part of our mission at France Media to provide readers with indispensable information, and we couldn’t do it without your help. To participate in our broker/agent survey, click here. To participate in our developer/owner/manager survey, click here. To participate in our lender/financial intermediary survey, click here. (Note: Please remember to click on “done” to properly submit the survey.)

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North Carolina taxes both real estate and personal property, but differing valuation schedules and processes for the two types can lead to confusion and inflated tax bills for industrial property owners. Understanding how assessors value industrial properties can help those taxpayers detect issues and contest unfair assessments. Dual processes North Carolina requires assessors to revalue real property at least every eight years. The value as of Jan. 1 of the valuation year then remains constant until the next valuation, unless specified changes in the property occur to trigger a change in the assessment. Many counties revalue every four years, and a few, even more frequently. Assessors use a market analysis to determine real property’s taxable or fair market value. This involves applying one or more of the three valuation approaches: cost, comparable sales, or income. The state requires annual valuation of personal property based on installed cost, which is subject to the applicable trending and depreciation schedules. For the most part, taxing authorities rely on the taxpayer’s annual business personal property listing to determine what items of personal property are present, the installed cost, and the trending and depreciation schedule applied. The counties follow schedules for auditing the property tax …

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COVID-19 laid bare many problems inherent in offshore supply chains and spurred widespread interest in reshoring manufacturing to the United States. As companies and communities explore site selection and expansion opportunities, they should remember that manufacturing profitability often hinges on tax strategy. Staging a comeback For the first time in decades, industry and the public sector are working to make American manufacturing competitive in a rapidly changing global marketplace. The recent enactments of the Inflation Reduction Act, the Bipartisan Infrastructure Law and the CHIPS and Science Act have directed billions of dollars into enhancing domestic manufacturing capacity. The semiconductor industry presents a high-profile case study. The United States holds 12 percent of the world’s semiconductor manufacturing capacity, eroded from 37 percent in 1990. The CHIPS Act’s $52 billion in federal funding is intended to strengthen domestic semiconductor manufacturing, design and research and reinforce the nation’s chip supply chains, fortifying the economy and national security along the way. Simultaneously, the United States is becoming a leading producer of electric vehicles and vehicle battery plants. Since 2021, announced U.S. investments in semiconductors and electronics exceed $166 billion, and announced U.S. investments in electric vehicles and battery manufacturing exceed $150 billion. Deciding where …

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ATLANTA — One of the central questions of the investment panel at InterFace Seniors Housing Southeast was: Will transaction activity return in the fourth quarter? When Brooks Blackmon, panel moderator and executive managing director of Blueprint Healthcare Real Estate Advisors, asked the question, there was a quick response from the panel — “no.” “Return to what?” asked Kelly Sheehy senior managing director of Artemis Real Estate Partners. “Higher than today? Yes. Compared to 2019? No, it’s going to take time.” InterFace Seniors Housing Southeast is an annual conference hosted by France Media’s InterFace Conference Group, Seniors Housing Business and Southeast Real Estate Business. The event was held on Wednesday, Aug. 16 at the Westin Buckhead Atlanta hotel. Blackmon moderated the discussion. The panelists agreed that the fly in the ointment that has stifled investment sales the past few quarters has been the rapid runup in interest rates. The 10-year Treasury yield was at 4.3 percent at the time of this writing, which is the highest level since 2007. The secured overnight financing rate (SOFR) and federal funds rate, two short-term benchmark interest rates, have risen by more than 500 basis points in roughly 16 months. “Until debt markets improve, you’re …

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The U.S. economic picture is an opaque one for lenders and borrowers alike as inflationary pressures persist and the massive swings in interest rates are still working their way through the economy. At its May meeting, the Federal Open Markets Committee (FOMC) raised the federal funds rate for a 10th consecutive time to a target range of 5 to 5.25 percent. The fed funds rate is the interest rate that U.S. banks charge each other to lend funds overnight. This time a year ago, the short-term benchmark rate was at a range of 0.75 percent to 1 percent. Raising the feds fund rate is the primary way that the Federal Reserve combats inflation, which was at a 3 percent annual rate in June, according to the Bureau of Labor Statistics’ Consumer Price Index (CPI). The CPI is at its lowest level in more than two years, which is generally viewed as a positive sign for economic stability, though the June figure is 100 basis points more than the Fed’s target inflation goal of 2 percent. Jason Scott, managing director and head of conventional loan production at Regions Bank, estimates that it can take six to eight months for each interest …

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The multifamily divisions of Fannie Mae and Freddie Mac are off to a slow start this year as the government-sponsored enterprises (GSEs), their network of lending partners and multifamily borrowers contend with rising interest rates. Fannie Mae’s volume of new multifamily business totaled $10.2 billion in the first quarter of 2023, which is a 36 percent decrease from the same period a year earlier when the agency closed $16 billion. Freddie Mac closed $6 billion in new multifamily business in the first quarter, a year-over-year decrease of 60 percent. Seasoned agency lending professionals all point to elevated borrowing costs as the primary reason for the two agencies closing less business thus far in 2023. “The rapid increase in rates across the board has really been a shock to the industry,” says Vic Clark, senior managing director and head of conventional multifamily production at Lument. At its May meeting, the Federal Open Markets Committee raised the federal funds rate to a target range of 5 to 5.25 percent. The fed funds rate is the interest rate that U.S. banks charge each other to lend funds overnight. This time a year ago, the short-term benchmark rate was at a range of 0.75 …

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Suburban markets in the Carolinas are the big winners in the current multifamily landscape, both from a new development and rent growth perspective, according to the various panelists at the InterFace Carolinas Multifamily conference. Hosted by InterFace Conference Group and Southeast Real Estate Business, the annual event took place on May 25 at the Hilton Charlotte Uptown hotel. At the end of the leasing and operations panel, moderator Mike Susen, senior director of real estate at Greystar, asked the property managers on stage if they could manage any product type in any Carolinas market, which they would choose. The consensus was their dream assignments lie in the suburbs. “Let’s do mid-rise suburbs, something out toward Matthews or the Mint Hill area,” said Amanda Kitts, senior vice president of property management at Northwood Ravin, referring to the suburbs of Charlotte. “I’d want to do product that those markets haven’t seen yet.” “Suburban product is still really strong right now,” added Bob Moore, co-founder and CEO of FCA Management LLC. “Tertiary markets are going to surprise you. You’ll see opportunities to do some deals where there has been a lot lower supply.” Property managers are keen to handle suburban communities because those …

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Interstate 85 traverses through the heart of the Southeast, the fastest-growing region in the United States by way of population. The southern terminus of the 666-mile interstate is in Montgomery, Ala., home of the mega Hyundai Motor Manufacturing Alabama plant, and it travels north to just shy of Richmond, Va., the site of North America’s first LEGO factory. Along the way, I-85 connects through Atlanta and the Carolinas markets of Greenville-Spartanburg, Charlotte, Greensboro and Raleigh-Durham. These I-85 Corridor markets have seen their fair share of industrial development in recent years, so much so that for the first time this cycle, some experts are worried about overbuilding. Steven McGee, vice president of Southeast development at Rockefeller Group, said that half of the nation’s population growth has been coming to the Southeast region, and that faucet isn’t expected to be shut off anytime soon. “America is getting bigger, and half of that growth is occurring in three or four states,” said McGee. “I don’t see any real structural elements that are stopping that growth. It’s a challenge on the timing [for industrial deliveries], but in almost every market we have record vacancy. We have very few options for occupiers coming into the …

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The self-storage sector has historically been considered resilient and recession-resistant. This year, key trends are already emerging that will contribute to the health and performance of this $80 billion industry. Despite risks of oversaturation in some urban markets, 2023 promises to be a strong year for self-storage investments. Shined-up facilities What started in early 2000s continues to today. Where decrepit, one-story metal buildings with chain-link fences were the standard, now high-caliber, well-designed and polished facilities dot the landscape. Today, new development is almost exclusively Class A product. Intown and suburban communities demand it. And customers now expect professional lobbies with music and complimentary snacks and beverages, staffed by knowledgeable and skilled managers selling space that is clean, bright and secure. The once red-headed stepchild of commercial real estate is now the belle of the ball. The proof can be seen in the fervent attention from public REITs and private equity firms. Blackstone Real Estate Income Trust grabbed headlines in 2020 with its acquisition of Simply Self Storage for $1.2 billion. Smaller, yet just as notable, transactions also support increased valuation. In 2022, Space Shop Self Storage, one of the top 20 self-storage operators in the United State, sold two portfolios …

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