JLL Exec: Multifamily Financing Is Rough, But The Sector's Still Strong
Financing multifamily projects has gotten trickier recently, but overall the sector is still strong and at a healthy point in the cycle, JLL managing director of multifamily Scott LaMontagne reassures us. Join Scott and other industry experts on July 21 in Addison, TX, for Bisnow's Multifamily Annual Conference South. The all-day conference will give you an opportunity to network, learn and have a lot of fun, too. Read on for a sneak peek.
It is increasingly tough to get construction debt, Scott (pictured here with his family) tells us. It’s a national problem: There are a slew of new regulations that will go into effect soon and it's making lenders a little gun-shy.
Scott says there are a lot of regional and national banks in Texas that have exposure to oil and gas. The money reserved for those losses is just not available for loans.
Scott tells us he’s been working on a lot of Class-A and B value-add properties, but interestingly, luxury is coming back. Scott and his partner, Jeff Price, recently closed on The Catherine (pictured below) in Downtown Austin, an iconic trophy property. Travis Central Appraisal District most recently valued the 300-unit luxury property at $134M.
Scott delved into Austin's stats for us: The construction pipeline is set to deliver a high number of multifamily units—about 10,000 by the end of the year—but Austin should just about be able to absorb them. Scott reckons it takes 4.2 jobs to absorb every new unit in the Texas capital, which is considerably better than the national 5.1 jobs for every unit.
If absorption is negative this year, it’ll be slight and short-lived. Scott predicts that by the middle of 2017, delivery will start pulling back and the market will tighten up.