January 12, 2015

Multifamily Monday: Axiometrics'
Five Fast Trends for 2015

Multifamily was the darling of commercial real estate in DFW in 2014 and it looks like we're on target for another banner year. Axiometrics research guru Jay Denton gives us five trends to watch in the coming year.

1) Big Numbers

Apartment performance remained strong in 2014, Jay tells us, with the annual growth rate at 5.4% in November (the most recent figures available). The continued demand combined with limited vacant residential supply means another year with strong apartment performance, Jay tells us. Though rent growth will likely moderate from the current pace, don't be surprised to see some of the better-performing submarkets posting 4% to 5% growth again next year. That's Jay in a snowmobile selfie with his daughter in Angel Fire a few weeks ago.

2) Demand

Demand isn't going away anytime soon either, Jay says. Axiometrics is projecting that the Metroplex will add an additional 100,000 jobs this year, whether it will be through major corporate relocations or growth of existing local businesses. DFW should remain one of the best job growth markets for 2015 in the US, he says. (Jobs may be the result of speed networking like that pictured here at a recent Bisnow DFW event.) Check out the slideshow for the trends here.

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KBS (Tollway2015) DFW
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Multifamily Challenge: Getting Deals on the Market

There's a dearth of multifamily product on the market and deals are trading before full-fledged marketing campaigns are done, says EDGE Realty Capital Markets principal Mart Martindale (far right, with recent additions to the EDGE team, senior associate Kevin Parrish and VP Wilson Stafford). Investors are eager for deals, making speed-to-market a key ingredient. Mart tells us he's got several irons in the fire, including the Magnolia at Bishop Arts at 801 N Bishop Ave and at 908 N Bishop Ave, which should be on the market soon.

Magnolia at Bishop Arts just opened a few months ago and is the only Class-A project (developed by Randy Primrose of Magnolia Properties) within walking distance of the funky Bishop Arts neighborhood, Mart tells us. The 39-unit boutique project (which has units on each side of Bishop Avenue) is a new product type in a very niche area, and the investment community is willing to listen to the story of the neighborhood, and understand a different format and  unique offering. He's already seeing a lot of players ready to make these bets.

While investors want quick deals, the market has become accustomed to uncertainty, Mart says. Obstacles like uncertainty about interest rates, oil prices and the global economy don't seem to torpedo deals. The 386-unit Class-C Willow Pond has a handful of players in the running, even with land-use restrictions, Mart says. The prospects are patient and ready to partner to do whatever it takes to make the deal happen because of the property's location (adjacent to the former Steakley Chevrolet off East Northwest Highway and Abrams) and potential upside. Willow Pond is in the path of growth between Lake Highlands Town Center and office and multifamily projects around the Chevrolet dealer. Mart says the owner is in the midst of dealing with State land-use restrictions to move a sale forward. Peering into his crystal ball, Mart says he thinks the market will see a lot of redevelopment in the urban areas, as land becomes more scarce. 

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Arent Fox (REI2) DFW
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Remembering Bob Edge

The local real estate community mourns the death of Cushman & Wakefield Texas vice chairman Bob Edge, who passed away Saturday. Bob handled some of the region's biggest transactions including the '79 HQ relo for American Airlines and the '88 office consolidation for Mobil Oil. Bob was also the '87 Stemmons Service Award winner and a member of the Dallas Real Estate Hall of Fame. He opened the Dallas office of C&W in '74. The Trocchio Advantage founder and CEO Liz Trocchio Smith, who worked with Bob for a number of years at Cushman, tells us the industry has lost an icon. She says she lost a friend, who was a quiet leader, strong and impactful. She tells us that he had a passion for what he did that was refreshing, and an incredible love for his family. Celebration of life is 2 pm Thursday at Sparkman Hillcrest Chapel.

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Velocis Sells 3131 McKinney to Invesco Entity

Velocis sold 3131 McKinney to an Invesco entity less than two years after acquiring the 146k SF trophy Uptown Dallas building. Velocis principal and co-founder Mike Lewis (here with his wife) tells us 3131 McKinney fit the Velocis model of buying properties in an office environment with a live/work/play atmosphere. Mike says the property checked every box on their list; they just needed to get in and unlock some of the building's value. Velocis co-founder Jim Yoder tells us since acquiring the building, it went from a gross+E to a triple-net rent structure. Velocis added a tenant lounge and locker rooms (the Katy Trail is just two blocks away), and food trucks come every other Friday.

Velocis took the building from a Class-A-minus to a solid A, Mike says, and to more than 95% occupancy. He says he usually anticipates holding a property for about five years, but they exceeded expectations within 17 months of acquisition, so it was time to exit the asset. “We have a buy, fix and sell strategy and I'm a firm believer that McKinney Avenue is one of the best addresses for business in the country,” Mike tells us. The first fund (which acquired 3131 McKinney) structure has no reinvestment provision, so the proceeds from this sale will go straight back to the investors, Mike says. Velocis' second fund was launched on Labor Day with a goal of raising $300M in equity. To date, the fund has raised $65M. 

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UT Southwestern Medical Center

Don't Miss Bisnow's Future of Healthcare Real Estate Event Jan. 21

The impact of medical-related real estate can be felt across the Metroplex from the opening a few weeks ago of UT Southwestern's new 460-room 1.3M SF William P. Clements Jr. University Hospital to the upcoming opening of Parkland's new 2.5M SF campus with 862 single-patient rooms. There's also a growing number of suburban MOBs and free-standing ERs. We'll give the lowdown on all of these projects, as well as what's ahead at Bisnow's 5th annual DFW Future of Healthcare Real Estate event on Jan. 21 (7:30am start) at the Westin Galleria. Come hear from the hospital execs: Parkland Health & Hospital System EVP Kris Gaw, Texas Health Resources EVP Brett McClung, Methodist Health System COO Pamela Stoyanoff and Forest Park Medical Center CEO Archie Drake. Save your place by buying tickets now.

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Tell Us

Sad to see the Cowboys season come to an end.  We mourned with a DQ Snickers Blizzard. How did you drown your pain? tonie@bisnow.com