Multifamily Archives - REBusinessOnline

Thriving in the Storm: Why Texas Multifamily Markets Will Triumph Despite Projected Challenges

Taylor Williams — Mon, 15 Jan 2024 12:55:00 +0000

By Sandy Schmid, director of acquisitions and development, StarPoint Properties In the fast-paced world of commercial real estate, foresight is as valuable as bricks and mortar. Despite whispers of distress on the horizon for the Lone Star State in 2024, the multifamily real estate market is ablaze with potential. Texas is one of the hottest destinations for developers and investors, and the strategic play is to not just weather the storm, but rather to ride it to success. Recent predictions of multifamily distress starting in the latter half of 2023 have certainly raised eyebrows and fueled speculation. However, predicting the Texas real estate market is akin to forecasting a Wild West shootout — a challenging task given the state’s history of resilience and its ongoing growth. Texas has consistently proven its ability to rebound from economic challenges, and current indicators suggest that the multifamily sector is poised for sustained growth. A Growth Powerhouse One factor supporting the optimistic outlook is the impressive trajectory of Texas’ GDP growth. The state saw a notable increase in its GDP over recent years: 5.7 percent growth in 2021, 2.7 percent in 2022 and 3 percent in the first quarter of 2023 alone. This data compares…

The post Thriving in the Storm: Why Texas Multifamily Markets Will Triumph Despite Projected Challenges appeared first on REBusinessOnline.

InterFace Panel: Multifamily Lenders Have Reason to Kill Deals

Taylor Williams — Tue, 25 Jul 2023 11:50:00 +0000

By Taylor Williams HOUSTON — Industry professionals say that while the fundamentals that underlie multifamily properties in major Sun Belt markets are quite healthy, the broader conditions of the U.S. capital markets are so choppy and disruptive that lending volumes are depleted across the board. The dearth of deals isn’t exclusively attributable to the Federal Reserve raising interest rates, which has now happened 11 times in 17 months. The nation’s central bank is now targeting a short-term benchmark range from roughly 5.25 to 5.5 percent, the highest level since 2001. Underwriting standards are tightening as owners reckon with serious increases in property taxes and insurance, among other items. Major banks are scaling back their originations in favor of keeping more reserves on hand in anticipation of exposure to defaults on office loans that are coming due within the next 12 to 18 months. The wounds of the collapses of regional lenders Silicon Valley Bank and Signature Bank in March are still fresh, and the country is scarcely a year removed from what will assuredly be a heated and divisive presidential election. For debt providers, the combined effect of those factors is major reluctance to transact. Lenders and investors have largely shifted…

The post InterFace Panel: Multifamily Lenders Have Reason to Kill Deals appeared first on REBusinessOnline.

Multifamily Sales Volume Slips Across Texas

Taylor Williams — Wed, 28 Jun 2023 12:16:00 +0000

By Taylor Williams Multifamily investment sales activity has been muted across major Texas markets during the first half of 2023, underscoring the unfortunate reality that even the most coveted asset classes are not immune to severe macroeconomic headwinds. Much like a year ago, the combined effects of stubborn inflation and corresponding interest rate hikes have wrought visibly negative changes to the world of multifamily investment sales. But in summer 2022, deals were still getting done at a decent clip; price disparities and depreciation were the most significant and obvious impediments to deal velocity. Today, buyers and sellers are more closely aligned on market realities as relates to price points, but many are simply not motivated to transact — at least in the short term. According to data from RealPage, in the first quarter of 2023, there were 337 multifamily transactions within the Dallas-Plano-Irving triangle, down from 510 in the first quarter of 2022. The greater Houston area saw 266 deals executed in the first quarter this year, a decline from 410 during that period in 2022, while the Austin market’s total number of transaction fell from 191 to 123 quarter-over-quarter. Multifamily sales prices responded differently to reduced deal volume from…

The post Multifamily Sales Volume Slips Across Texas appeared first on REBusinessOnline.

Indianapolis Is Emerging Star of Midwest Region

Kristin Harlow — Thu, 16 Feb 2023 12:45:58 +0000

By Steve LaMotte Jr., CBRE With 2021, a record year for asset appreciation and fundamentals, 2022 marked a turning point in the apartment space across the nation. Multifamily leasing velocity, rent growth and occupancy levels have seemingly reached their current peak levels and begun to cool. Instability in the capital markets throughout much of 2022 encouraged many on both the buy and sell sides to wait it out, looking for signs of stability. However, despite the turbulence and the pause, the multifamily sector has remained resilient and is expected to maintain its claim as the preferred asset classification in 2023. Further, metro Indianapolis has been a standout performer in every meaningful measurement. Now widely regarded as an emerging star of the Midwest, metro Indianapolis has earned its place as the nation’s rent growth leader in the back-to-back months of October and November of 2022, according to Yardi Matrix. The metro has outperformed many major markets while maintaining its characteristic affordability. According to research from CBRE Econometric Advisors, the average metro rent of $1,200 per unit ($1.30 per square foot) shows that metro Indianapolis will deliver outsized rent growth in times of distress while remaining one of the most affordable metro’s…

The post Indianapolis Is Emerging Star of Midwest Region appeared first on REBusinessOnline.

Texas’ Economic Growth Generates New Opportunities in Affordable Housing

Taylor Williams — Wed, 26 Oct 2022 11:45:01 +0000

By Cody Roskelley, senior developer at Pennrose Texas has experienced tremendous residential growth over the last few years. Families are leaving high-cost, high-tax areas like New York and California for more affordable alternatives. According to The Tax Foundation, Texas was one of the Top 10 U.S. states for inbound migration in 2021, posting population growth around 1.3 percent on a year-over-year basis. With population increase also comes opportunities for economic growth and regional investment. However, having high-quality, affordable and workforce housing stock is key to the state successfully capitalizing on this moment. Between historically high rates of inflation and single-family home prices, as well as aggressive interest rate hikes, having the affordable housing infrastructure in place to attract new residents is critical. While most people generally agree that there is a need for more affordable housing, there is often local pushback once such communities are proposed in their neighborhoods. Much of the opposition stems from a lack of understanding of what affordable housing is — and isn’t. For example, individuals making anywhere between 30 to 80 percent of the area median income (AMI) can qualify for affordable housing. There are also several different subcategories of affordable housing: Low-Income Public Housing:…

The post Texas’ Economic Growth Generates New Opportunities in Affordable Housing appeared first on REBusinessOnline.

Lack of Multifamily Supply in Chicago Market Is Catalyst for High Rents

Kristin Harlow — Thu, 13 Oct 2022 11:00:12 +0000

By Tyler Hague, Colliers A colleague of mine recently had to move out of her West Loop apartment quickly and she faced a conundrum: how much am I willing to pay for a one-bedroom apartment in Chicago? The unfortunate answer: not even close to the $2,700 per month rent she was continually being asked to pay. She ended up renting a studio. The average price for a one-bedroom apartment in the central business district is $2,478 per month, a figure that has grown 9.5 percent in the last year alone and equates to a $235.41 year-over-year rental increase, according to Yardi Matrix. It also translates to a national housing insecurity crisis, not just a local and presumed urbanized problem, and one that has been exacerbated by many of the detrimental housing laws and zoning regulations that exist in Chicago today. Whether it is aldermanic privilege, the Affordable Requirements Ordinance (ARO) or general NIMBYism, it is clear rent is too darn high — and it isn’t the entrepreneurial real estate professional’s doing but rather a major (and obvious) supply dilemma. This summer, for the first time in U.S. history, median rent costs in major cities surpassed $2,000 per month, according to…

The post Lack of Multifamily Supply in Chicago Market Is Catalyst for High Rents appeared first on REBusinessOnline.

Lenders Continue to Fuel Multifamily Development Boom in Northern Dallas Suburbs

Taylor Williams — Wed, 12 Oct 2022 11:41:08 +0000

By Kevin Leamy, senior vice president, debt & equity, Northmarq Dallas-Fort Worth (DFW) has been one of the hottest multifamily markets in the country over the past five years. And as the area’s growth pushes further north, developers and investors are finding plenty of liquidity to support transactions. The northern DFW suburbs experienced a huge inflow of people over the past several years. The growth to suburbs such as Addison, Richardson, Plano, Frisco and McKinney gained even more traction during the pandemic. An increasingly diverse employer base and corresponding job growth are attracting people and driving demand for both for-sale homes and multifamily units. Instead of making a long commute into downtown Dallas or Fort Worth, there are now several big employers in North Dallas that offer high-quality jobs. One key catalyst for expansion was the opening of Toyota’s North American headquarters in Plano five years ago. The 100-acre campus is home to more than 4,000 employees. Other major corporations have followed, including the newly opened regional headquarters for J.P. Morgan Chase. Another factor drawing new residents to the area is strong schools, including a reputation for some of the best elementary and high schools in the country. Multifamily developers…

The post Lenders Continue to Fuel Multifamily Development Boom in Northern Dallas Suburbs appeared first on REBusinessOnline.

Metro St. Louis Multifamily Market Caters to Aging Population

Kristin Harlow — Thu, 15 Sep 2022 11:45:23 +0000

By Dan Thies, Sansone Group We are more than halfway through the year and the multifamily market in the St. Louis metropolitan area continues to grow. As of the first quarter, there were 5,112 multifamily units under construction in the metropolitan area. So far, the rise in interest rates and the increase in construction costs has not dampened the enthusiasm of investors and developers for constructing new units in this market. Vacancy rates continue to stay low and lease rates continue to increase. As long as these market conditions continue, developers are going to bring new units to market. The new units being built will reflect new design features, which many developers are implementing in their communities. One of the many design trends taking place across the country and in the St. Louis area addresses the rise in the older population becoming renters. Many members of the baby boomer generation are looking to sell their suburban homes to downsize into smaller, more practical spaces. Their children have moved out of the home, and they no longer need all the space or maintenance of a home. They want to pull the equity out of their home and place it in a…

The post Metro St. Louis Multifamily Market Caters to Aging Population appeared first on REBusinessOnline.

No End Is in Sight for Kansas City’s Multifamily Development Needs

Kristin Harlow — Thu, 01 Sep 2022 11:45:16 +0000

By Chris Armer, Hoefer Welker People who call the Kansas City metropolitan area home know it’s a desirable place to live. From the robust job market and vibrant arts scene to its rich history and, of course, stellar sports teams, the Kansas City metro area attracts a diverse group of people. Kansas City is evolving and so are its housing needs. In recent years, the demand for multifamily development in Kansas City has grown, driven by a range of factors. Mass retirements and flexible work arrangements are shifting priorities, while the housing shortage and rising interest rates are sending prospective homeowners on the search for attractive alternatives. The multifamily housing trend stands to gain momentum, creating a space for discerning real estate and architecture firms with development expertise to pave the way in an evolving housing market. The great shuffle Much has been said about the Great Resignation, but the COVID-19 pandemic didn’t only affect young and midlife workers who left their jobs to pursue higher-paying and more meaningful employment. It also hastened the Great Retirement, a massive wave of baby boomers leaving the workforce, many of them earlier than planned. Now those homeowners are selling their suburban single-family…

The post No End Is in Sight for Kansas City’s Multifamily Development Needs appeared first on REBusinessOnline.

Multifamily Prices Adjust to Macroeconomics Throughout Texas Markets

Taylor Williams — Wed, 03 Aug 2022 11:35:04 +0000

By Taylor Williams First things first: By most objective metrics and standards, multifamily assets in major Texas markets still represent strong investment propositions relative to certain other commercial sectors, as well as to the stock market, the other long-term vehicle to which real estate investments are most commonly compared. But as we cross the midpoint of 2022, the U.S. economy finds itself awash in a unique combination of challenging and extreme circumstances. Mainstream news coverage increasingly includes the word “record” in reports on inflation, one-off interest rate hikes and movement in the 10-Year Treasury yield. The yield on two-year Treasury notes recently eclipsed that of the 10-year, creating the “inverted curve” that has historically been an indicator of an upcoming downturn. Rumblings of an imminent recession grow louder by the day. Fear is contagious, and some markets are already showing signs of hunkering down in anticipation of a downturn. The expectation of recession, let alone the materialization of it, impacts even the strongest of markets, including multifamily assets in Texas. Investors and brokers who specialize in the property type recognize that certain factors — net in-migration of hundreds of thousands of people per year, exceptional corporate relocation activity, and supply…

The post Multifamily Prices Adjust to Macroeconomics Throughout Texas Markets appeared first on REBusinessOnline.

Fundamentals Remain Strong in Northern New Jersey Multifamily Market

Taylor Williams — Mon, 25 Jul 2022 11:30:43 +0000

By Mike Oliver, managing director, JLL Capital Markets Fundamentals remain strong within the multifamily markets of Northern New Jersey and the greater metro New York City area, though the dynamics have continued to shift since the onset of the pandemic. During COVID-19, there was movement away from urban areas toward the suburbs, creating a “tale of two cities” market dynamic. The suburban multifamily market became red-hot while urban markets cooled. Vacancies dipped below 80 percent in some instances, with heavy concessions being offered and flat to negative gross rent growth. Today, while the suburban markets remain very strong, urban markets are also now red-hot. This is attributable to more and more people heading back to urban centers in anticipation of returning to the office or simply wanting to be back in the excitement of downtown living and its dining, shopping and entertainment options. Additionally, many renters are being priced out of and fleeing Manhattan, Brooklyn and other New York City neighborhoods. Jersey City and the Hudson Waterfront provide attractive rental options with incredible access into Manhattan. Jersey City, for example, is demonstrating healthy fundamentals, as occupancy rates are back over 95 percent with strong growth on lease trade-outs. There…

The post Fundamentals Remain Strong in Northern New Jersey Multifamily Market appeared first on REBusinessOnline.

Why the Austin Multifamily Market Is Still Worth the Investment

Taylor Williams — Wed, 20 Jul 2022 11:37:33 +0000

By John D. Hutchinson, vice chairman, global head of origination, Trez Capital The COVID-19 pandemic brought mass migration to the Sun Belt states, and by far, the most sought-after location of the pandemic migration boom was Texas. Multifamily investment demand remains strong due a higher quality of living, affordability and job growth. People are leaving high-tax, high-regulation states and moving to states like Texas with lower taxes and more favorable business climates. Austin, specifically, has outshone the top cities in the “Texas Triangle” with its large influx of both people and jobs. Austin’s exponential population growth, attractive cultural qualities and high-income jobs have created demand for and premium prices on real estate. Although the U.S. economy has seen changes in the last couple of months, such as inflation and interest rate hikes, the city still affords a great opportunity for multifamily investors. According to data from CoStar Group, Austin has doubled its construction starts over the past year and is expected to add 15,827 new units in 2022. In fact, there was a record 25 percent rent growth and strong occupancy at the end of 2021. A Growing Market In 2021, the Austin area’s net population growth was about 16…

The post Why the Austin Multifamily Market Is Still Worth the Investment appeared first on REBusinessOnline.

Affordable Housing Gap Widens Throughout Dallas-Fort Worth

Taylor Williams — Wed, 06 Jul 2022 11:27:38 +0000

After seeing its population grow by 97,000 between July 2020 and 2021, the Dallas-Fort Worth (DFW) metroplex is now home to nearly 8 million people, according to data from the U.S. Census Bureau. And it’s getting increasingly harder to adequately and affordably house the growing population. The problem isn’t new, just exacerbated, and it’s hardly unique to DFW. But when a market experiences the rate of population growth that the metroplex has over the last decade, the question of how much housing inventory exists that’s financially feasible for the average resident to rent or own gets thrust under the microscope. Of course, there’s a major difference between housing that’s affordable and affordable housing. The former is something of an arbitrary concept, whereas the latter carries a precise legal and regulatory definition. But the socioeconomic issue embodied within the two is largely the same. General Barriers A recent report from the National Low Income Housing Coalition ranked Texas — once heralded as the land of infinite land — as the sixth-worst state in terms of availability of rental housing for low-income households. This finding runs counter to Texas’ longstanding reputation as a state with an affordable cost of living, but…

The post Affordable Housing Gap Widens Throughout Dallas-Fort Worth appeared first on REBusinessOnline.

Fort Worth’s Multifamily Vacancy Falls via Robust Job Growth, Household Formation

Taylor Williams — Fri, 24 Jun 2022 11:28:28 +0000

By Al Silva, senior managing director, investments, Marcus & Millichap; and Ford Braly, first vice president, investments, Marcus & Millichap The multifamily segment in Fort Worth is in a great position. The metro’s vacancy rate slid down to a multi-decade low of 3.1 percent last year, which facilitated stellar rent growth as the number of available rental units plummeted. Fort Worth’s average effective rent grew more than 15 percent in 2021 to $1,276 per month, and the elevation in 2022 is expected to remain in the double digits. Behind this momentum is robust household formation as citizens relocate to the metro for greater job availability, cost-of-living considerations and quality of life. An average of 16,300 new households were created annually in the Fort Worth metro area over the past decade, and the 2022 addition is expected to eclipse that benchmark by about 20 percent. This rate of household creation is about twice as fast as the national pace and is happening at a time in which the barriers to homeownership have rapidly intensified, pushing much of the new demand toward the rental segment. Barriers to Homeownership The median price of a single-family house in the Fort Worth area climbed to…

The post Fort Worth’s Multifamily Vacancy Falls via Robust Job Growth, Household Formation appeared first on REBusinessOnline.

Organizations Align to Address Housing Affordability in Des Moines

Kristin Harlow — Thu, 23 Jun 2022 11:45:07 +0000

By Ryan Kelly, TWG Development Despite the affordable housing crisis, Des Moines has managed to endure the adverse factors that have caused a boom in housing prices nationwide — but we still have a ways to go. A sustained demand, an influx of business and new projects by national developers all played a role in Des Moines’ multifamily growth over the past two years. Developing Des Moines Home to some of the largest multinational finance and insurance corporations, Des Moines has pioneered Iowa’s growth. The city has also seen population growth — the most recent census revealed that Des Moines’ suburbs led to Iowa’s development while the city itself grew by 5.4 percent. Des Moines is the 10th-best place for business and careers, according to Forbes, and ranked as the fifth-best city to live in, according to U.S. News and World Report. The capital city has experienced a boom in employment, with a rise in the number of high-tech jobs, at a 6.7 percent rate. The Midwest’s low cost of living (7 percent lower than the national average) and Des Moines’ proximity to large cities have contributed to the growth of key industries, including logistics, ag-bioscience, manufacturing, data and insurance. …

The post Organizations Align to Address Housing Affordability in Des Moines appeared first on REBusinessOnline.

Downtown Chicago Multifamily Market Roars Back

Kristin Harlow — Thu, 09 Jun 2022 11:45:52 +0000

By Mike Drew, Structured Development As a longtime developer of multifamily, commercial and mixed-use properties in Chicago, I can tell you we’ve never seen anything like the last few years. From the highs of the pre-pandemic multifamily construction boom to the lows of the first year of COVID-19 lockdowns — when downtown emptied out — to today, it’s been a rollercoaster ride. But the multifamily sector has ultimately proved resilient and is roaring back stronger than ever. Here’s a look back at the past three years and a glimpse of three projects we broke ground on during the pandemic: Schiller Place, Big Deahl and Harrison Row. Early pandemic exodus For the years 2019-2021, developers were expected to build 9,000 apartment units in downtown Chicago, according to Integra Realty Resources. This figure was lower than the expected 10,700 units because of rising construction costs and uncertainty around property taxes, but still strong. Average rents for downtown Class A rental communities were $3.31 per square foot, per Integra, and occupancy was a robust 94.9 percent. When the pandemic hit nine months later, it greatly slowed that activity. Gov. J.B. Pritzker issued the first stay-at-home order on March 20, 2020, followed by other…

The post Downtown Chicago Multifamily Market Roars Back appeared first on REBusinessOnline.

Residential Development Nears Cyclical Peak Across RGV Markets

Taylor Williams — Wed, 25 May 2022 11:57:38 +0000

By Brad Frisby, director of land acquisitions, Rhodes Enterprises Demand for housing of all types continues to outpace supply in the Rio Grande Valley (RGV), and developers’ best efforts to add much-needed product throughout the region appear to be reaching a crescendo. Like the rest of the country, residential development in the RGV has been stymied and exacerbated by global supply chain disruption over the last year. Nor have developers in the region been spared from the pricing volatility of key construction materials, from basic building blocks like lumber and steel to more precise pieces such as air conditioning units and kitchen appliances. These factors, along with rising labor costs generated by the reheating of the regional economy, have negatively impacted conventional multifamily construction timelines and budgets over the past 12 to 18 months. While traditional single-family projects have not been hit nearly as hard as their multifamily counterparts, the net result of all this activity has been a widening of the gap between housing supply and demand. Though the regional vacancy rate for multifamily product is up on a year-over-year basis — about 4.5 percent today versus 3.5 percent at the end of the first quarter of 2021 —…

The post Residential Development Nears Cyclical Peak Across RGV Markets appeared first on REBusinessOnline.

Will the Hot Streak Continue for El Paso’s Multifamily Market?

Taylor Williams — Wed, 27 Apr 2022 11:22:47 +0000

By Jack Stone, senior director of investments, Greysteel It seems like every month there’s a new sales record being broken in the El Paso multifamily market. But with interest rates officially rising, how long will that streak last? El Paso has been on a tear. Greysteel has sold roughly 4,000 units there in the past 36 months. That’s an impressive number, but it’s not a surprising one. Between 2012 and 2014, roughly 20 properties over 25 units traded in El Paso. That number skyrocketed to 69 properties between 2019 and 2021. But why? We’ve followed the El Paso market closely and have brought numerous first-time, out-of-state buyers to the market. The No. 1 reason they’re interested in El Paso is the competitiveness of other markets like Dallas and Austin, where cap rates have just compressed too much. With lower cap rates and cash-on-cash returns, investors started flocking to secondary markets where they can achieve higher yields. But El Paso, while a secondary market, has several factors that help it stand out from the rest: (1) it’s one of the top 20 largest cities in the country, which comes as a surprise to many; (2) it’s well-diversified, having weathered the recession…

The post Will the Hot Streak Continue for El Paso’s Multifamily Market? appeared first on REBusinessOnline.

Multifamily Developers Face Unique Set of Challenges in Boston’s Seaport District

Taylor Williams — Wed, 30 Mar 2022 11:31:37 +0000

By Becky Bedwell, vice president of development, Cottonwood Group As one of Boston’s fastest-growing and most dynamic areas, the Seaport District has gotten a lot of attention as it has undergone a multitude of transformations over the past 150 years. The area has evolved from a bustling railyard and shipping area in the early 20th century to a no-man’s land of parking lots in the 1990s to its most recent iteration: The Innovation District. While the spotlight is only growing brighter as several high-profile residential and mixed-use projects come on line in this distinctive and in-demand neighborhood, the headlines tell only part of the story. The Seaport District’s seemingly sudden emergence is the result of more than a decade of development and over $22 billion in public funding — efforts that have helped draw hundreds of new businesses and support a growing list of noteworthy developments. The challenges faced and opportunities realized by developers in this part of town reveal some important truths about what it takes to create great civic spaces and successful multifamily developments — not just in this city and this area, but in urban communities around the country. What follows are some best practices, consideration and…

The post Multifamily Developers Face Unique Set of Challenges in Boston’s Seaport District appeared first on REBusinessOnline.

Texas Multifamily Developers Carefully Scrutinize Product Types

Taylor Williams — Tue, 29 Mar 2022 11:45:01 +0000

By Taylor Williams From sprawling garden-style complexes in the suburbs to wrap-style construction and high-rise buildings in the urban core, multifamily properties come in many shapes and sizes. And in Texas, all of these product types are in high demand. Consequently, developers have generally seen healthy paces of rent growth over the last decade. But with each year of cyclical maturation, land becomes more scarce, construction grows more costly and more communities come on line, making the competition to secure renters increasingly stiff. On a more granular level, bidding wars for large tracts of land that can support major residential density are becoming increasingly intense with the growth of build-to-rent (BTR) development throughout Texas. Global supply chain disruption is putting relentless pressure on costs of construction materials and timelines for new projects, and leasing initiatives are getting smarter via sophisticated proptech platforms that were developed exclusively with real estate operations in mind. But these economic and operational constraints exist entirely on the supply side of the market. Simultaneously, demand for housing is accelerating unencumbered throughout Texas, a perennial medalist in population growth among the 50 states. These market factors are creating an unusual dynamic in which the forces that drive…

The post Texas Multifamily Developers Carefully Scrutinize Product Types appeared first on REBusinessOnline.