January 16, 2015

The Suburbs' Unexpected Appeal

Whether it's the school systems, attainable rents or even a new ballpark, there's a whole host of reasons suburban multifamily can suddenly develop an X factor. Let's explore two market examples:

In Atlanta, prolific apartment investor and RADCO CEO Norm Radow is eyeing suburban apartment complexes along northwest metro Atlanta's I-75 corridor, an area having a new lease on life, he says. The main catalyst for change is the Braves stadium development. But don't discount multimillions in infrastructure projects (like widening major thoroughfares) in recent years, he says. “It lagged the recovery for jobs. But there's no reason 75 shouldn't be be an economic engine,” Norman says.  And despite aggressive pricing on apartments, Norman says the market has another two years of strong growth, especially with interest rates, which he predicts won't be going anywhere soon.

Apartment complexes in the Austin suburbs are being sold at a premium, BMC Capital VP Hank Crane tells us, as more people take advantage of the affordable rents, attractive locations and excellent school systems. He arranged $5.95M in financing for The Meadows (a 100-unit fully occupied multifamily property in Cedar Park), which is across the street from Westwood High School--ranked No. 23 in the nation. ("23 is a prime number!" shouted all of the whip smart, suburb-raised students in unison.) Under-market rents and value-add potential appealed to the out-of-state buyer of The Meadows, Hank tells us.

Yardi (MelissaWhite) MF
Bisnow Hypnotic HALF
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NMHC Survey: Apartment Boom Slows, Slightly

Apartment supply has not outpaced ravenous demand and improving economic indicators indicate a positive year ahead for multifamily, according to the National Multifamily Housing Council's Quarterly Survey of Apartment Market Conditions. (Pictured: NMHC president Doug Bibby.) Employment and income improvement spur household formation, a large portion of which will likely be searching for rentals, says NMHC SVP of research and chief economist Mark Obrinsky. Some key survey takeaways: the market's still fairly tight; sales volume's less robust; equity is free flowing; and debt conditions remain favorable.

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TORONTO: Condo Rentals En Vogue

2014 was a record year for Toronto condo rentals, with the number of condo apartments leased up 15% over 2013 to an eye-popping 22,765 units (this comes on top of 2013's 28% growth versus 2012). With heaps of renters clamoring to live in the core, the city's next crop of towers should have no trouble with lease-up, Urbanation SVP Shaun Hildebrand tells us. “Rent growth has been held back by the huge increases in supply we're seeing, creating more competition among landlords,” Shaun says. (It appreciated just 0.8% in '14.)

Half the units in condo buildings under construction are destined to be rentals, Sean points out. “The condo market has become the de facto rental market for new supply.” It can be a tight squeeze for renters, however, as builders shrink unit sizes to maintain affordability amid rising land and construction costs. Last year the average condo was 761 SF, down 12 SF from the year before. (Forget that: Smart House, a condo project on Queen Street West by Malibu Investments and Urban Capital Property Group, features the city's first micro-condos, some under 300 SF.)

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SILICON VALLEY: What to do When You're New in Town

18 months in the making, LA-based Decron Properties (5,000 mostly SoCal units owned and under management) just entered the challenging Silicon Valley market with the $86M buy of a 187-unit apartment community in Mountain View, and it plans to invest $260M more in the Bay Area this year, VP of acquisitions Daniel Nagel tells us. "Aside from learning the dynamics of each pocket of the Valley, we needed to earn the trust of the brokerage community," he says. To nab its first buy, Daniel tells us he spent a lot of time on planes traveling to properties and ending up somewhere between second and last place on more than a dozen deals before establishing Decron Properties as a serious buyer.

CohnReznick (Field) MF
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NYC: The New Tallest Residential Building in the West

SHoP Architects

Someone grab an oxygen mask. After much speculation, city records are showing the final height for the JDS-developed 111 W 57th St in NYC to be 1,421 feet—25 feet taller than 432 Park Ave—making it the new tallest residential building in the Western Hemisphere, reports Crain's NY. And with a slenderness ratio of 1:23, the lanky tower also boasts the title of the slimmest building in the world, says 6sqft. (Unnamed sources have confirmed the Statue of Liberty will continue to turn her back in disgust.) Development began last year for the SHoP Architects-designed high-rise, which will sport a wall of glass on the north façade, giving residents Central Park views. The skyscraper, developed in partnership with Property Markets Group, will also have a courtyard wrapped by the landmarked Steinway Building.

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BOSTON: Bisnow Multifamily Summit, in Tweets

IPA Boston

Bisnow took Boston by storm yesterday with our Boston Multifamily summit. 

Check out our website for an easy-to-read Twitter recap, We have to admit, sometimes you guys sum it up much better than we do. #BestReadersEver

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Bisnow's Capital Stack Report: And 5 Reasons Why You Should Be Allowed to Expense It...

  1. You'll learn which metros are attracting the most capital...
  2. As well as what fees developers are charging...
  3. You'll be a pro on real estate vs. the stock market...
  4. And an expert on how leverage is being used by asset class...
  5. Last but not least, who the most active foreign investors are...

This incredible report includes easy-to-understand charts, graphs and bullet points that sum up complex information neatly and accurately. Fortify yourself with useful knowledge as you move forward in 2015. To get your discounted copy, please use the code: jan50.

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A cold weather recipe from Bear Construction's Bill Ziemek Jr in Chicago. In a large coffee mug: Mix three parts Jameson Irish Whiskey or equal like Bushmills, three parts piping hot caffeinated coffee, a generous dollop of real whipped cream or two tablespoons of heavy cream, then stir with a cinnamon stick. Enjoy! marissa.oberlander@bisnow.com

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