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Real Estate Bisnow
   
January 10, 2012 
 
 

Multifamily Sizzles in '13


 
You thought last year was good? There will be more multifamily sales opportunities this year, says the region's top grossing multifamily sales team, CBRE partners Simon Butler and Biria St. John.
 
CBRE-NE  Partner Simon Butler
In 2012, investors snapped up land to fill development pipelines and ponied up for buildings that previously couldn't fetch a high enough price. Simon, Biria and their team closed—and put under agreement—$1.6B in assets. For example, Chestnut Hill Realty paid $84M for Grandview Village & Terrace, a 581-unit Framingham community that JPI put on the market in ’08 but couldn’t sell. Pricing is still strong; Class-A urban properties draw 4% cap rates and some suburban buildings achieve as low as 4.5%, says Simon. Come hear more about these trends from Simon and other experts at Bisnow’s third-annual Boston Multifamily Summit on Jan. 16 in the Westin Waterfront Boston. (Register here!)
 
Bisnow (PropManage)
Station 250 in Dedham
Since the spread in cap rates over T-bills is at all-time lows, investors can bid aggressively and still support an interest rate uptick. If assets are close to mass transit, the allure is even greater. Recently, Archstone paid $94.2M for Station 250 in Dedham (above), near the commuter rail. The land market was also very active: The team closed nine deals (compared with three in ’11) and put another 12 under agreement. Wood Partners, for one, paid Catamount Management $23.2M for 2.4 acres permitted for 392 residences at 22 Water St, Cambridge. When the Lechmere Green Line is relocated, the stop will be across the street from Water Street's future front door.
CBRE partner Biria St. John
Bisnow has always been inspired by Highlights magazine: Can you spot six differences between this photo and the first one? But seriously... On the affordable side, the Low Income Housing Tax program is coming back, Biria tells us. In ’09 and ’10 it struggled, with pricing down to $0.60/$1.00. Now it sometimes exceeds $1.00, usually when a bank needs to make its CRA target. More opportunities will also arise when the Equity Residential/AvalonBay purchase of Archstone is completed, since Archstone won't be competing for deals anymore. To pay for it, EQR is selling $4B in US assets, mostly in secondary markets. Here, that means Winchester Winds (478 apartments) in East Providence and Four Winds (168 units) in Fall River.

AvalonBay's Big Pipeline
 
AvalonBay Boston vp/development Michael Roberts
AvalonBay development VP Michael Roberts tells us his firm has 1,000 apartment units under construction, totaling $300M, and 1,500 more in the pipeline. (Above he's with Lars Unhjem and Amy Rawlings at their new development in Natick.) Urban core projects can fetch rents in the $4 to $5/SF range; infill and suburban properties near jobs and transportation offer lower rents. In Q1, Michael's team will deliver new units in Somerville and Back Bay and start construction at 45 Stuart St downtown. Meanwhile, permitting is under way for a 500-apartment project in North Station. (It just so happens Michael is also speaking at our Multifamily Summit this Wednesday.)

Bart Before TCB
 
The Community Builders CEO Bart Mitchell
The Community Builders CEO Bart Mitchell got into CRE in ’84 when development was booming in Boston after decades of scant growth. As deputy development advisor to Mayor Ray Flynn, Bart aided developers with permitting and financing to make sure projects were built downtown. To help neighborhoods reap some of the benefits, he also helped write rules for the Linkage program that raised money from developers to fund projects outside the CBD. He worked on developing the Post Office Square Park & Garage (his name's on the plaque) and with the redevelopment of what’s now the TD Garden. In ’89, he jumped to the private side, shepherding through at least 80 developments, mostly multifamily, in the Northeast, Midwest and Mid-Atlantic. And to keep our pattern going, he too will be speaking at our Multifamily Summit this Wednesday. It's almost last call!
 
Please send news and ideas to Susan Diesenhouse, susan@bisnow.com
 
 
 
 
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