Summer's Sizzling Multifamily Stories
We've all heard enough about the hottest summer swimsuits, celebrity vacations, and box-office blockbusters. The real juicy stories are in multifamily, where the sun is shining on under-the-radar neighborhoods, throwback properties, and fancy financing. (Why doesn't US Weekly ever have pics of sexy apartments?) Here are the top stories:
SEATTLE: Secret’s Out on Tight Submarket
Investors don’t just like Everett because it’s in Snohomish County (which is fun to say). It also has no new construction underway, unlike downtown Seattle, Bellevue, and the surrounding communities, Lowe Enterprises Investors SVP Andy Sands tells us. Six months after its first acquisition in the area, LEI just picked up the 264-unit North Creek Apartments in a JV. Everett’s a great place to buy workforce housing, he says, given its solid employment base anchored by Boeing, Naval Station Everett, and Port of Everett. So the secret for LEI is finding properties that can be updated but will remain affordable to the local workforce.
SAN FRANCISCO: Changing Affordable Housing Delivery
With 70% of San Fran rental units rent controlled and growing anti-development sentiment (thanks to Ellis Act evictions), how do you continue to meet demand for below-market-rate units? A novel new solution that developers, tenant advocates, the city government are working on is a Stabilization Trust Fund, we learned at Bisnow’s Residential Real Estate Summit. The idea is to purchase rent-controlled units at market rate and hold them as permanently rent-controlled, thereby eliminating the risk of evictions and protecting tenants across a range of affordability. The cost to acquire and protect an existing rent-controlled unit is half of developing a new below-market-rate unit, AGI Capital prez Eric Tao tells us.
AUSTIN: Gotta Love the ‘90s
What does multifamily have in common with N'Sync and Destiny's Child? The ‘90s were good to both. ARA principal Pat Jones tells us there were not many properties built in the ‘90s in Austin because of the soft economy, so now any time a '90s vintage property comes to market, it's popular. Pat repped Northland Investment Corp in its sale of the 606-unit Northland at Stonehollow in Austin to an affiliate of Heitman. Bidders included institutions, private owner/operators, and private wealthy investors. The value-add opportunity bucket of capital is currently the largest pool of dollars pursuing Central Texas acquisitions, he says.
HOUSTON: From CBD to Home Sweet Home
It’s that well-told urban migration story. People aren’t just working in downtown Houston these days; they’re living and playing there, too. In fact, residents have already started moving into downtown’s swank SkyHouse Houston (developed by Novare), though we don’t see anyone on that rooftop tennis court just yet in this construction cam shot. Novare tells us it’s ahead of schedule on leasing and meeting rent projects (it’s asking about $2.50/SF). Alliance Residential’s 207-unit Block 224 is in the foreground, and on tap: Finger Cos’ 397-unit 500 Crawford; Marquette’s 361-unit tower with ground-level retail; and Trammell Crow Residential’s 267-unit community.
BALTIMORE: Fannie’s New-Look Financing
ColumbiaNational Real Estate Finance’s Brett Weil (above right) is finding interest from borrowers in Fannie Mae’s new green refi loan, which offers proceeds 5% above the typical LTV for energy- and water-saving property improvements. Who’s interested? It could be the city’s growing pool of small multifamily investors, who have graduated from 10- and 20-unit buildings to 100-units and up. They’re not buying Class-A, ColumbiaNational’s Josh Stone (above center) says, but they’re filling the investment gap right below REITS. Smaller buyers are also finding discounts with family-owned, 50-ish unit properties that haven’t been well managed (which can be a headache for national buyers), he adds.
DC: Taking a Chance on New Corridors
Every city has corners like DC’s 14th and U, which developers wouldn’t have taken a risk building along 20 years back. But this week, an ultra-high-end project got underway. Snapped: Madison Investments’ Barry and Sia Madani with Hoar Construction’s Mike Sloan, after the group broke ground on 56-unit Elysium Fourteen around the corner. Though the building will have some cool perks (like large units and real-time public transit monitors in the lobby), it’s the neighborhood that will be its greatest amenity (and the reason it’s time for luxury). There’s a Trader Joe’s across the street. Need we say more?
DENVER: Class-B Apartments Thrive in Class-A Neighborhoods
Class-B multifamily in an upscale neighborhood is just the thing to have, according to Advenir chief acquisition office Todd Linden (left, with Neil and Ari Linden during a little father-sons time on the links). Recently, the investor acquired the 326-unit, Class-B Lowry Heights at 8000 E 12th Ave for $35M. Renters in the area tend to be affluent and demanding, Todd tells us, but not so demanding that they won't live in 1980s and '90s vintage buildings, provided they've had major improvements to the common areas and unit interiors—which is what Advenir plans for its property. “Lowry's well positioned to continue to see significant rent growth as a well-located alternative with significantly lower rents,” he says.
PHILLY: College Towns Getting Attention
Multifamily investors around Philly are trying to relive their Animal House years. The latest: The 50-unit, fully occupied Husky Korners Plaza in Bloomsburg (adjacent to the Bloomsburg University campus, with 12k SF of retail) was purchased by Sunrise Properties. The seller was a family partnership out of New York that had owned the property for 20 years. The new owners are local, but RRA managing partners Corey Lonberger and Ken Wellar, who brokered the deal, say that the low rents combined with more potential buyers looking at student housing markets will make it a superb asset for repositioning.