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real estate

Southeast Multifamily Outlook Holding Strong

Several Southeast markets continue to top national lists for job and population growth, causing investors to pour capital into the region’s multifamily sector as they chase a new wave of demand that’s driving the current market expansion.

ARA and Berkeley Point Capital’s 2Q 2018 United States Multihousing Market Report includes several Southeast hubs among its top 25 for sales volume in the past 12 months: Atlanta ($7.3 billion); Orlando, Fla., ($5.6 billion); South Florida ($4.5 billion); and Charlotte/Raleigh–Durham, N.C., ($4.2 billion).

The Southeast also notched the largest per-unit pricing gains of any other region, at 8.6% year over year. Additionally, its key metros benefit from migration fueled by high income-tax–rate states, including New York, New Jersey, Connecticut, and California.

Full article HERE

Source: Multifamily Executive

Blue Heron Closes Construction Loan for NC Property

Raleigh, N.C.-based private equity real estate investment and development firm Blue Heron Asset Management has closed a construction loan for Foster on the Park, a boutique mixed-use project to be developed in Durham, N.C. The loan was closed with First National Bank, the largest subsidiary of FNB Corporation.

Adjacent to Durham’s Central Park, Foster on the Park will be a 164-unit apartment community featuring ground-floor retail and restaurant space overlooking the park. The site is adjacent to the 1.7-million-square-foot Durham Innovation District. It is also situated steps from the Historic Durham Athletic Park, for decades the home of Minor League Baseball’s Durham Bulls and the filming location for the movie Bull Durham.

The existing building on site is functionally obsolete and underutilized and we didn’t see a whole lot of minuses pertaining to the redevelopment,” Blue Heron Asset Management partner Benjamin Grinnell told MHN.

The original plan was for an urban condominium project . . . While we believed in the urban living, for-sale thesis in Durham, there were some challenges in terms of certain pre-sale requirements, especially for a larger-scale condo project in the Durham market. Once we decided to switch o a mixed use—apartments and ground floor retail—project, the financing markets were much more receptive.”

Grinnell added that the entire Blue Heron Asset Management team worked diligently over several years to collaborate with the City of Durham, Durham Central Park, Downtown Durham Inc. and other local stakeholders.

Our focus has been on thoughtful place-making and trying to create a vibrant community with great walkability and access to downtown Durham’s growing job base, renowned dining, and its many lifestyle, recreation and entertainment amenities,” Grinnell reported. “Foster on the Park represents the types of infill re-development opportunities that we hope to continue to pursue and invest in.”

THRIVING DESTINATION

Added Chris Moore, president of FNB’s Raleigh-Durham Region: “We are pleased to provide the financing for Foster on the Park under the experienced leadership of Lewis Bass, our regional manager of investment real estate banking.

Contributing to our communities is part of our mission at FNB, and it is a privilege to partner in a project that builds on downtown Durham’s momentum as a thriving destination for residents, businesses and visitors alike.”

Financing was arranged by the HFF team of Roger Edwards, Justin Good and Henry Sisson. “Blue Heron secured one of the best sites in downtown Durham and [has] created an amazing project that we expect will be hugely successful,” Edwards said

We are excited to be a part of the team and contribute to making this great project a reality.”

Full article HERE

Source: Multi-housing News

Employment and Affordability Driving Growth in the U.S. Southeast

The Carolinas

Job growth is solid in the major metropolitan areas of North and South Carolina, with large metro areas accounting for most of the growth in the two states. Charlotte and Raleigh, North Carolina, and Charleston, South Carolina, rank among the fastest-growing metro areas in the country, says Mark Vitner, managing director and senior economist at Wells Fargo Securities in Charlotte.

“This past decade has seen a move back into the urban centers that has benefited the Carolinas’ larger MSAs [metropolitan statistical areas] the most,” he adds. “Young people are flocking back into the cities, and businesses are moving back toward the city center in order to attract those workers.”

Employment in North Carolina is expected to increase 2.3 percent this year and personal income by 4.4 percent, Vitner says. New single-family home starts will expand by 9.5 percent, but following several years of strong gains, multifamily housing starts in North Carolina remain essentially flat. Employment in South Carolina will rise 2.7 percent and personal incomes by 4.7 percent, with new home starts up 7.7 percent and multifamily starts rising 2.5 percent.

“The Carolinas are being driven by a combination of expansions by new industry into the state and some revival in traditional sectors, including textiles and furniture,” adds Vitner. “Retirees moving to the region are helping drive new home construction and growth in health care and professional services. South Carolina continues to benefit from aggressive economic development efforts. Manufacturing activity has held up solidly, with the automotive sector and aerospace industries leading the way.”

Out-of-state capital is flowing into the Carolinas, says Chang.

“Investors are drawn by more affordable entry costs and the potential for higher returns than are available in their home markets,” he says. “The increasing supply of new multifamily properties near downtown cores is keeping institutional investors active. First-year returns in this tier of the market typically begin in the 5 percent range in Charlotte, Raleigh, Greensboro/Winston-Salem [in North Carolina], Greenville/Spartanburg, Columbia, and Charleston [in South Carolina].”

In the Charlotte city center, an estimated 5.3 million square feet (492,000 sq m) of office space, more than 775,000 square feet (72,000 sq m) of retail space, 9,725 housing units, and 2,600 hotel rooms are either under construction or planned, says Jon Wilson, principal at Raleigh-based consulting firm Kimley-Horn.

Kimley-Horn is involved with a number of developments, including Atlanta-based Portman Holdings’ 19-story, 370,000-square-foot (34,000 sq m) 615 South College, which is scheduled to be completed early this summer.

“The city continues to be a hot spot for a highly educated and skilled workforce—some 17,500 new degreed residents move to Charlotte each year—and improved mobility will play a role in catalyzing future growth,” Wilson says. Later this year, the Lynx Blue Line extension will be completed, allowing people to travel on light rail from Interstate 485 in southwest Charlotte through Uptown to the University of North Carolina–Charlotte in the northeast, he says. The city also broke ground in mid-January on the second phase of the CityLynx Gold Line streetcar.

Walkable urban and mixed-use communities are definitely on the rise in many of the state’s cities, says Gary Cline, president and managing principal at Cline Design Associates of Raleigh.

“As our area rapidly grows, more people are seeking residency in urban cores and mixed-use communities where they can walk or bike to work, dining, and retail,” Cline says. “The Research Triangle office market has also made a large comeback, with less than 10 percent overall vacancy. Some submarkets like downtown Durham report less than 1 percent vacancy in Class A space.”

Demand is strong for mixed-use developments such as Kane Realty’s Smokey Hollow–Peace Street mixed-use project in Raleigh, which will have 434 multifamily units and 61,000 square feet (6,000 sq m) of retail space, with estimated completion in 2019. The project was designed by Cline Design. Another project in downtown Durham scheduled to begin construction later this year is Northwood Ravin’s Van Alen, which will have 418 units in 12 stories.

Read Full Article HERE

Source: Urban Land Institute

 

Why Innovation Districts Matter

Metropolitan areas in the United States and other mature economies face out-sized challenges in the aftermath of the Great Recession. At the most basic level, U.S. cities and metropolitan areas need more and better jobs. According to the March 2014 Brookings Metro Monitor, the number of jobs in 61 of the 100 largest U.S. metro areas are still lower than their pre-recession peak; incredibly, job levels in 23 metros are more than 5 percent below their pre-recession peak. At the same time, the number of people living in poverty and near poverty has grown precipitously in the largest 100 U.S. metros—from 48 million in 2000 to 66 million in 2012— due not only to the recession but broader trends around wage stagnation and economic restructuring.10 Beyond these economic and social demands, cities are on the front lines of addressing enormous scale and environmental challenges given federal gridlock and the absence of leadership in many states.

In the face of these challenges, cities and metropolitan areas are experimenting with new approaches to economic development and sustainable development that focus on growing jobs in productive, innovative, and traded sectors of the economy while concurrently equipping residents with the skills—particularly STEM (science, technology, engineering and math) skills —they need to compete for and succeed in these jobs.11 These new approaches try to build on the distinctive assets and advantages of disparate places rather than merely pursuing heavily subsidized consumption-oriented strategies (e.g., building the next sports stadium, convention center, or performing arts facility) that yield low quality jobs or aspiring to unrealistic economic goals (“becoming the next Silicon Valley”).

Innovation districts are a key part of the new wave of local economic development and advance several critical objectives...

Full Research Report HERE

Source: Brookings Institute