From cap rates and a flight to yield to where investors
are coming from and a crisis of
affordability, here are five
things we learned this morning at our 2016 Atlanta Multifamily Forum.
1. RENT GROWTH IS SLOWING
Not just in Atlanta,
but across the country, top-line
apartment rent growth is slowing down. “We can't sustain this level of growth. 6%, 7%. Things are
tremendous,” says Axiometrics' Jay
Denton. “Just be aware at some point, we'll ease back to 3% to 4% rent growth.” CFLane's Brooks Castellaw echoed that, saying
even in hot submarkets like Midtown or Buckhead, there's little chance every new development
will hit the coveted $2.50/SF to $2.75/SF range. Most will be around $2.10/SF.
2. INVESTORS ARE HUNGRY FOR SECONDARY MARKETS
Forget gateway cities.
Investors are flocking to small
American markets in a chase for better returns, says Colliers
International's Will Mathews.
“There's a flight to value-add,” he says. The most desirable apartment buys
tend to be those between $20M and $50M
in a market with strong demographics. “If you have value-add product
that is well-located, that is really
where the capital wants to be,” he says.
3. AFFORDABILITY WILL BE HUGE TOPIC
Many of our panelists
say housing affordability—especially
apartment rents in urban centers—will be an even more pressing topic in the coming
months. “You look around any of these cities, including Atlanta, gentrification is simply pushing out many of
the people who were renting,” says AMLI Residential's Phil Tague (right). RADCO's Peter Fitzgerald (left) says housing
affordability is already a crisis
in some cities, but will rise to a national topic in the next five years.
Integral's Vicki Lundy Wilbon
(center) says cities need to consider solutions such as inclusionary zoning clauses or public/private partnerships.
4. FOREIGN INVESTORS FLOODING TERTIARY MARKETS
In the quest for
capital preservation, even smaller cities like Mobile are seeing investors from overseas buying
apartments. Our panelists say money is coming from the West Coast, Israel and Middle Eastern sources, especially Bahrain. “They're buying it for the
cash returns,” says Institutional Property Advisors' Brian Murdy. “They're looking at it as a way to eliminate currency risk. They win by just
not losing.” Brooks says his firm is even eyeing markets like Houston,
where investors have fled since the collapse of energy markets more than a year
ago. That's because caps in Atlanta between Class-A to C deals is 4.5% to 6.5%, as tight a spread as
he's ever seen here.
5. STILL LOTS OF MILLENNIALS LEFT TO RENT TO
Phil (here with AGG's Andrew
Siegel, our moderator) was quick to point out that there are still plenty of Millennials living in their
parents' basements. And that could continue feed the demand for
apartments for the foreseeable future. “We're
just praying that the parents kick them out and guarantee their leases,”
he quips. Peter says apartments in suburbia have been getting activity from
families who still see suburban schools
as better than urban public schools. “I think that public schools still
really matter a lot,” he says.
https://www.bisnow.com/atlanta/news/multifamily/5-big-multifamily-trends-shaping-2016-61120?be=rcallihan%40ameriglo.com&utm_source=Newsletter&utm_medium
=email&utm_campaign=wed-08-jun-2016-000000-0500_atlanta-re
Apartments Risky Business, Even in Dunwoody
Dunwoody Talk Blog Observations & Opinions of
Dunwoody events. Wednesday,
June 8, 2016
A developer recently withdrew a zoning change request for land
in the Perimeter area. The developer wanted to put in apartments.
We know that High Street (new project in Dunwoody) is bringing at least 1,500 apartments, and as many condos. The 3,000 units total will make a huge impact in the area. Of course you should expect to see the apartments built first, as that's the way 'mixed use' folks roll.
Developers tell us all the time how the apartments will be high end and rents will be at the top end. The latest developer said publicly a 1,000 sq foot unit would rent for $3,000 a month in Perimeter. That is simply not happening. Not even Avalon, the best mixed-use in Georgia, gets that rate.
Here are highlight of the Bisnow article: Rent growth is slowing "We can't sustain this level of growth" even in hot submarkets like Midtown or Buckhead, there's little chance every new development will hit the coveted $2.50/SF to $2.75/SF range. Most will be around $2.10/SF. forget gateway cities. Investors are flocking to small American markets in a chase for better returns
Source: Dunwoody Talk
Blog
Comments
Thanks to Rick
Callahan and Dunwoody Talk Blog for this article.
Atlanta is the least
dense city on the planet. Megacities won’t work, so Atlanta Metro is limited. Jobs
will return to the suburbs and exurbs if at all. Transit oriented high density development
won’t work. Public transit is too expensive to build and maintain. Atlanta was built for automobile mobility and
continues to spread into the exurbs.
Roads and highways need to be maintained and widened to address
gridlock.
The most affordable housing
for most is single family residential in the $100,000 to $200,000 range, with a
15 year mortgage. These are always smaller, older resales with yards in the
cities, but the new homes are now larger on smaller lots in the exurbs. Monthly
costs are around $1500 a month.
There are older
apartment complexes with rents from $800 a month to $1000 a month and owners
should concentrate on maintenance to keep these units from deteriorating.
Norb Leahy, Dunwoody
GA Tea Party Leader
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