Something Is Happening That We Haven't Seen Since WW II
While we wish that headline meant we're finally getting a Casablanca sequel (Casablanc-er?), it's still very good news: We're in the middle of a demographic shift of epic proportions. Last week's Bisnow Multifamily & The Mixed-Use Revolution at the St. Regis had all the details.
The RADCO Cos' Norman Radow feels this market has depth and legs. “This is the biggest demographic shift since WWII,” Norman says. And that shift is adding depth to a rental market, since many Baby Boomers and Millennials (an even bigger group) are preferring to rent over own.
Cortland Partners' Steven DeFrancis tells our audience of 500 that there's reason to be cautious because “nobody wants to be the guy buying tech stocks in late 2000.” (If someone wants to be the guy buying in late 2014, we've still got some Pets.com shares to unload.) Yet, Steven says there's still room to grow rent and more units in this market.
AMLI Residential's captain Greg Mutz has a different view: “If you're not worried about oversupply, you're a moron. It's a topic of every conversation. You've got to be asking that question.” But Greg says so far, signs haven't pointed to that. “So far, unbelievably, demand is equally running with new supply in all our markets,” he says. “If I had to guess, I think it's another three-, four-, five years of gradual growth in rents.” This year alone, Greg says AMLI is expecting 4.6% rent growth.
Any oversupply potential isn't curbing AMLI at the moment. As Cooper Carry's Alysha Buck notes, her firm is designing two new AMLI apartment towers in Midtown, as well as Post Properties' Post Alexander, Phase 2. “I don't get the sense that our clients and developers are slowing down.”
During our breakfast schmooze, we caught up with our new sponsor Caesarstone's Mellissa Munda, Karen Hutto, and Rebecca Gonzalez. They tell us that the quartz surfacing maker —based out of Israel—will open its first Georgia plant in Savannah by April 1 (no, we're not fooling), and will hire 215 people.
We also chatted with Arnall Golden Gregory's Abe Schear, and AGH's Randy Gold and Adrian Grant. Abe—our resident baseball historian—tells us there's a lot of money coming from Europe and Israel into American real estate, especially multifamily, which has a lot to do with instability overseas. Do they care they're paying sub-6% cap rates on average for multifamily? “International investors are very realistic on what cap rates are right now,” Abe says.