News
Where Is Multifamily Heading?
October 18, 2012
| It's been a few good years for Charlotte multifamily, with rising rents and occupancies, plus some development (but not too much). But the question on the industry's mind: Will the market turn somehow? More than 200 attendees got the answer at last week'sBisnow Charlotte Multifamily Summit. | ||
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| Two panels talked about what's next for the industry. According to the capital market panel, fundamentals are still in Charlotte's favor. There have been a few good years behind it, and there'll be a few good years ahead of it. | ||
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| The capital markets panel included moderator Marshall Phillip of CohnReznick and Grandbridge Real Estate Capital's Mike Ortlip. Household formation is still relatively strong, the panel says—and, unlike previous decades, buying a house as soon as financially possible isn't always the goal of the rising generation. Still, the pace of rent growth isn't sustainable. | ||
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| The other members of the panel were SYNCO Properties' Tim Hose and Red Capital Group's Peter TenEyck. Interest rates have never been this low, the panelists note—and they will probably stay this way for the near future. Who will be interested in Charlotte? Investors who want to buy and hold and ones who are priced out of some larger, especially coastal, markets. There will be repercussions when rates do go up, such as drastic slowing of refinancing for multifamily properties. | ||
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| The owner-developer panel, which included moderator Eric Coulson of Entasis Design and Grubb Properties' Clay Grubb, discussed the direction of rents, the risk of overbuilding, the changing mindset of renters (people are now more open to it, even if they can buy), and the drivers of demand for rental properties in various Charlotte markets. | ||
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| The panel also included Ginkgo Residential?s Scott Wilkerson and Faison?s Christopher Branch. The danger now is to assume that rent increases will go on like this, year after year. The rate of growth is going to slow down, especially if Charlotte job growth doesn?t step up (it's been up 1.43% year-over-year, according to the BLS). Push rents too high and young renters, especially, will move home (again) or double up more, which happened during the worst years of the recession. (Worst for everyone except the bunk bed industry.) | ||
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| Here are Crescent Resources? Ben Collins and Carter Properties'John Porter. Gyrations in construction costs are also a concern for Charlotte developers. Sophisticated operators who have the resources are negotiating for construction services now. Be prepared, in other words. | ||
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| We snapped University City executive director Mary Hopper in the crowd. One of the next big things for University City: the construction of the Lynx Blue Line extension to the area. Recently, the CATS voted to spend $87M to buy 22 new light-rail cars in anticipation of the expansion. This week, the FTA approved funding. |
