Author: Sarah

Most New Units Since 1972: Developers Building Apt Units at Record-Setting Pace

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A building boom. That’s what the U.S. apartment market is seeing this year, according to the latest research from Yardi Matrix.

In a report released in late August, Yardi Matrix said that construction crews will bring 420,000 new apartment units to the United States this year. That’s a 50-year high. According to Yardi, the last time apartment completions surpassed the 400,000-unit mark was in 1972.

And three Midwest markets are expected to rank among the busiest 20 major metropolitan areas this year when it comes to new apartment units: Nashville, Chicago and Minneapolis-St. Paul.

The New York metropolitan area is projected to deliver the most apartment units in 2022, beating out Dallas-Fort Worth for the top position for the first time since 2018. Overall, developers in half of the country’s top-20 metropolitan areas are now on an apartment building spree, with these metros expeced to hit their five-year highs in new multifamily construction this year.

“The construction industry is finally returning to pre-pandemic levels of activity but is still being hampered by three familiar challenges: labor shortages; material costs and availability; and supply chain issues,” said Doug Ressler, manager of business intelligence at Yardi Matrix, in a written statement.

What’s behind this construction boom? Yardi Matrix points to pent-up demand for multifamily units across the country. This demand has only risen as many renters hold off on buying homes as inflation and interest rates rise.

In the Midwest, Nashville ranks as the hottest market for new apartment construction. Yardi Matrix says that this Tennessee city will deliver 9,620 new aparment units in 2022, ranking it as the 13th busiest new-construction market.

Chicago will see 8,573 new apartment units by the end of this year. That places the city as the 16th busiest in terms of new multifamily construction. Expect 6,266 new apartment units in the Minneapolis-St. Paul market, making it the 19th busiest new-construction market in the country.

Texas, as usual, was well-represented. Yardi Matrix reported that the Dallas market will see 23,571 new apartment units in 2022, placing it second only to the New York metro market. Austin ranked fourth on Yardi Matrix’s list, with 18,288 new apartment units projected to be delivered here during the year, while Houston ranked fifth with an expected 17,759 new apartment units.

Yardi Matrix said that the Houston market will see the highest number of apartment completions that it has seen in the last five years. Austin climbed three positions on the Yardi Matrix list this year to inch past Houston.

Institutional Property Advisors Completes San Antonio Multifamily Asset Sale

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Institutional Property Advisors (IPA), a division of Marcus & Millichap, announced the sale of Pecan Springs, a 344-unit, stabilized asset in the Far Northwest submarket of San Antonio.

“Situated in a submarket that ranks the highest in the city in terms of rent growth, averaging 18.8% in 2021 while achieving 96.7% occupancy, Pecan Springs is prominently located just off Interstate 10 near the Loop 1604 intersection,” said IPA Executive Managing Director Will Balthrope. “This asset boasts strong historical performance, averaging 96% occupancy in the trailing 12 months while growing effective rents 13%.”

Balthrope and IPA’s Drew Garza represented the seller, American Landmark, and procured the buyer, StoneRiver Company.

“Pecan Springs’s proximity to leading entertainment and retail resources such as The Rim and The Shops at La Cantera, and major employment centers, made this an attractive asset to prospective buyers,” added Garza. “We held a highly competitive sales process for Pecan Springs as buyers gravitated to the continuous population and economic growth of the San Antonio submarket where 100,000 additional jobs are expected by 2025.”

Pecan Springs is a three-story, garden-style property built on 16 acres in 2013. The property has Hill Country views and a low-density site plan with mature oak trees and ample greenspace. Apartments have nine-foot ceilings, stainless-steel appliances and pendant lighting.

DWG Capital Partners Acquires Austin Industrial Property Net Leased to Austin Iron

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DWG Capital Partners (DWG), a private commercial real estate investment firm led by President Judd Dunning, has completed the acquisition of 9606 Old Manor Road, a single-tenant, 10,500-square-foot facility in Austin. It has been fully net leased to custom architectural and structural steel fabricator, Austin Iron, since 2014.

Founded in 2011, Austin Iron works with leading commercial and residential contractors, architects and designers in a state that has undergone a massive surge in development. A swell of big tech relocations has created an influx of job opportunities and rising demand for homes.

“The addition of this industrial asset to our portfolio is in line with our strategy of intelligent investment,” said Dunning. “Austin continues to perform as one of the nation’s strongest industrial markets with consistently elevated metrics and a strong pipeline for growth. We are thrilled to have been able to secure local financing to acquire this well-positioned asset with value-add opportunity.”

Dunning secured fixed-rate acquisition financing from First Bank Texas. Drew Boroughs and Andrew Gross of Matthews Real Estate Investment Services represented the private seller.

Austin was recently ranked as the nation’s strongest jobs market in a report by The Wall Street Journal and Moody’s Analytics. 9606 Old Manor Road is located between two of East Austin’s biggest employers, electric car giant Tesla, and global engineering powerhouse, Applied Materials. According to Dunning, the property adds a lower risk industrial asset with limited downside to DWG’s diverse portfolio of NNN properties located in primary and tertiary markets across the U.S.

“We look forward to continuing to serve investors with our value-add and sale-leaseback approach to effective investment and plan to triple our portfolio targeting industrial acquisitions of $3 million to $15 million in the coming 12-24 months,” said Dunning. “Backed by strong local lenders, we see opportunity for growth through partnerships with American businesses that form the backbone of the nation’s economy.”

Since opening an outpost in Texas last year, DWG has doubled down on growing its portfolio, adding Texas purchases like the following sale-leasebacks: a 124,417-square-foot flex industrial site in Longview and a 35,835-square-foot light industrial property in Columbus occupied by private equity firm-backed The Theut Company, a division of Denver Glass Interiors (DGI).

Olive Tree Affordable Housing Advances $25M Capital Improvement Program in Houston

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Olive Tree Affordable Housing, an affiliate of Olive Tree Holdings, a mission driven private investment company focusing on value-add multifamily projects in dynamically growing markets across the United States, today announced its plans for a $25 million, full-scale capital improvement program at The Life At Grand Oaks in Houston,. With improvements currently underway, the 556-unit affordable multifamily complex’s modernization is on schedule to be completed mid-year 2023.

Interior upgrades across the 556-unit community include the implementation of new flooring, countertops and vanity tops, elevated lighting fixtures, new sinks with accompanying service lines to kitchen and bathroom areas, and HVAC replacements. To date, 177 residence upgrades have been completed, with an additional 64 units in progress. Exterior upgrades completed thus far include the resurfacing of the pool and deck amenity areas, parking lot and concrete walkway replacements, irrigation system and masonry repairs. In addition, Olive Tree Affordable Housing has invested $100,000 in upgraded security features throughout the complex, including the installation of high-resolution cameras and enhanced LED lighting, a panelized privacy wall along the complex’s exterior, and more.

Remaining rehabilitation efforts at The Life at Grand Oaks include the additions of new exterior siding and wood, fresh exterior painting, the installation of new windows and gutters throughout the complex, landing area and patio resurfacing, and the creation of an on-site dog park. The Life at Grand Oaks leasing office will additionally undergo interior upgrades as current and prospective residents look to visit and tour the community.

Built in 1982, The Life at Grand Oaks was acquired by Olive Tree Holdings in 2021. JPMorgan Chase provided $56 million in construction financing as well as a more than $45 million Fannie Mae Multifamily Tax-Exempt Bond (MTEB) permanent loan for the substantial capital improvement project, ensuring the project qualified for LIHTC equity through the utilization of tax-exempt bonds. The community consists of one and two-bedroom apartment homes reserved for those earning up to 60% of the area median income (AMI). Community amenities include a swimming pool, resident clubhouse, cyber room, on-site laundry center, playground, and picnic pavilion.

To date, Olive Tree Affordable Housing has preserved the affordability of over 4,000 units nationwide, including more than 865 within the Houston-metro area, totaling $125 million in development costs.

Electra Capital Funds Over $115 Million in Q2 2022

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Electra Capital, a boutique lender specializing in flexible, short-term multifamily financing solutions, has originated more than $115 million in the last 90 days on several value-add and ground-up multifamily properties located in major U.S. Sunbelt metros, including Dallas-Fort Worth.

“While the capital markets are trying to make sense of the Fed and the potential of value corrections in the multifamily marketplace, Electra Capital is prudently evaluating and closing high-quality transactions requiring senior debt and/or subordinate debt (mezzanine and preferred equity) for savvy sponsors that are active in the Sunbelt territories,” said Electra Capital CEO Sam Greenblatt. “Despite the volatility in the capital markets, multifamily fundamentals remain strong in several Sunbelt cities. We’re particularly optimistic about the in-migration and job growth trends in Orlando, Austin, San Antonio, Las Vegas, and Phoenix, which will support sustainable demand and rent growth for the foreseeable future.”

Electra Capital’s recent transactions in Texas include:

A $21.45 million preferred equity investment on a four-property, 952-unit apartment portfolio located in Dallas. The sponsor – a three-time repeat client – plans to make significant improvements to the common areas, as well as upgrading the individual units, and adding in-unit washers and driers.

An $18.6 million mezzanine loan for the Ashland Green Portfolio, a three-property, 936-unit portfolio in the Dallas-Fort Worth metro area. The sponsor’s business plan includes making significant improvements to the common areas, as well as upgrading the individual units, including adding in-unit washers and driers.

Thompson Realty & Trez Capital Developing New 50Ac Mixed-use Development in Flower Mound

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Thompson Realty Capital, LLC, in partnership with Trez Capital, announced plans for a new 50-acre mixed-use development located at the southeast corner of FM 2499 and Lakeside Village Parkway in the town of Flower Mound. The first phase of the project includes a four-story, 200-unit, garden-urban mix, multifamily community and 15,000 square feet of retail with space for three restaurants, as well as a 60,000-square-foot office building with one level of underground parking. The development will include approximately 20 acres of public parks, open space and more than 2.5 miles of trails on site.

The multifamily community will feature stainless steel appliances, elevators, faux hardwood floors and top-of-the line finishes. It will also include a private fitness center, concierge services, resort style pool and a community dog park.

This project is a part of Trez Capital’s joint-venture partnership program which provides experienced developers like Thompson Realty Capital with equity financing for value-add and ground-up developments in key markets with strong population, employment and GDP growth.

McAdams will handle civil engineering and landscape architecture for the project. Other architects for the mixed-use project include: Cross Architects – multifamily; GSO Architects – retail; and Alliance Architects – office. Bill Dahlstrom of Jackson Walker served as the zoning attorney.

Thompson Realty Capital and Trez Capital have seven other multi-family projects currently under construction in Texas totaling 2,100 units.

The new development is within proximity to Grapevine Lake, has direct access to FM 2499 and is only 5.3 miles from DFW Airport. The property is scheduled to break ground in Fall 2022 with phase one completion slated for 2022.