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Fritz Waldvogel of Colliers Mortgage closed a Fannie Mae loan for a repeat client for the acquisition of a market-rate multifamily property in Buda, Texas, The Bradford. Community amenities at the 264-unit gated community property include concierge service, 24-hour fitness center, carport parking, business center, clubhouse with free wi-fi, resort style swimming pool and sundeck and gourmet coffee bar.
The loan carries a five-year term and was arranged for transaction sponsor, SPI Advisory.
Younger Partners announced today that the firm has executed a lease with Texas tapas pioneer Ildefonso Jimenez to open a Fort Worth location of Si Tapas. The lease includes 4,275 square feet of space at 2949 Crockett Street.
Si Tapas Restaurant and Bar offers a taste of Spain in the heart of Fort Worth’s Cultural District by offering both classical and contemporary Spanish cuisine. Their house drinks and select wine list offer a unique collection of Spanish wines hand selected by region, and their food reflects the rich regional diversity of classical and modern Spain. Ildefonso will be adding “exclusive” to Fort Worth menu items such as Cochinillo.
The restaurant is expected to open in early Fall 2023.
Partners Real Estate (Partners), arranged the sale of a 43,000-square-foot fabrication and distribution building located at 4725 Lawndale St. in La Marque, Texas.
Partners’ Cary Latham and Wyatt Huff represented the seller, Baucom Property Leasing, LLC, in the transaction of a sale leaseback to Bebco Environmental Controls Corporation, a leading manufacturer of industrial and hazardous location climate control products. Anthony Heins of Heins Properties represented the buyer, Wolf Capital Partners, in the sale.
Eagle Property Capital Investments, LLC (EPC), a vertically integrated real estate investment manager focused on the value-add multifamily space, announced the disposition of Colinas Ranch Apartments, a 160-unit apartment community, located in Irving northwest of Dallas-Fort Worth, Texas. The Property was acquired by EPC Multifamily Partners IV, LLC (Fund IV) and RealtyMogul 89, LLC in October 2018.
Colinas Ranch Apartments, located at 3203 W Walnut Hill Lane in Irving, was built in 1971. EPC successfully implemented a thorough repositioning strategy that substantially improved the profitability of the value-add property. The strategy included upgrading the apartment interiors, existing common areas and amenities, adding new amenities and services as well as implementing water and energy conservation programs. In addition, the property benefited from operating efficiencies that reduced controllable expenses by being operated together with Grand Riviera, a neighboring property.
JLL Capital Markets has closed the sale of 10200 Grogans Mill Road and 1610 Woodstead Court, two office properties totaling 153,294 square feet in The Woodlands, Texas.
JLL represented the seller, and procured the buyer, a privately held asset management firm.
The two-property portfolio is positioned within The Woodlands, one of the nation’s premier master planned communities located 27 miles from Houston. The area is home to seven Fortune 500 corporate headquarters, boasts top-quality schools and residential neighborhoods, is home to more than 11 million square feet of retail and offers recreation options, including 220 miles of connected hike and bike trails.
10200 Grogans Mill Road and 1610 Woodstead Court sit on a total of 9.85 acres and are 66.7% leased overall. The tenancy is comprised of a diverse mix of industries, including finance, technology, legal services, oil and gas, consulting and logistics.
The JLL Capital Markets Investment Sales and Advisory team representing the seller was led by Senior Director Rick Goings and Managing Directors Marty Hogan and Kevin McConn.
Investors looking for attractive returns in the U.S. housing market need look no further than workforce rental housing. A chronic shortage of housing in the country, exacerbated by onerous zoning, land use, and environmental regulations, labor shortages, and demographic shifts, has created a prime opportunity for investing in this segment.
The Supply Shortfall
Since 2017, the shortage of housing in the U.S. has been growing at an alarming rate, with estimates now ranging from 3.8 to 6.8 million units. The lack of supply, particularly in the workforce housing sector, has resulted in historically low vacancy rates and record-high rent and home prices.
Between 2010 and 2021, household formation exceeded net housing deliveries by nearly 4.8 million units leading to a decrease in vacancy rates, making housing less affordable and hindering household formation.
To close the housing gap, at least 3.4 million units are needed within five years, and the rate of new unit delivery needs to increase by approximately 71%. This shortage is evident in the downward trend of the ratio of total housing inventory to the total number of households, which has been below 1 (meaning there is at least one household unit for every household) since Q4 2017.
The shortage also disproportionately affects younger generations, as the median age of household heads has increased from 49.0 in 2008 to 52.1 in 2021.
The current combined vacancy rate for all for-sale and for-rent housing in the US is just 2.5%, with rent and home prices growing annually by an average of 11.1% and 18.9%, respectively.
The Growth and Impact of Zoning, Land Use, and Environmental Regulations on Housing Production
Strict local zoning and environmental laws limit affordable housing by increasing development costs by 32% for multifamily projects. This reduces supply, forcing developers to charge higher prices.
Increasing regulations worsen the housing shortfall, as evidenced by a negative correlation between regulatory cases and permits issued per state. From 2006 to 2018, 49% of U.S. metropolitan areas increased land use regulations. Each regulation in a California city raises the cost of owner-occupied and rental housing by an estimated 4.5% and 2.3%, respectively.
The Workforce Rental Cohort
The shortage of new workforce housing is hurting those earning between $45,000 and $75,000 annually the hardest, as developers typically focus on either luxury apartments or affordable housing. This underserved segment has higher rents and reduced vacancies, making it an attractive investment opportunity.
Private real estate funds focused on workforce rental housing have historically returned an average net IRR of 16.4% between 2009 to 2019, outperforming luxury housing-focused funds’ average net IRR of just 10.7%. While past performance is not indicative of future results, the favorable demographic and supply/demand fundamentals make the workforce multifamily sector a positive outlook for investors.
The chronic underproduction of housing in the U.S. has made workforce rental housing an attractive and sustainable target for investment. As demand goes unmet, prices rise, and this is a trend that is set to continue in the coming years. Investors looking for opportunities in the U.S. housing market should consider investing in the workforce rental segment for durable cash distributions and sustainable capital value appreciation.
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Kingbird Investment Management Senior Managing Director Kenneth Munkacy is responsible for creating and overseeing Kingbird’s investment strategy, acquisitions, joint ventures, and investment management platform in the U.S. Munkacy has over 33 years of global real estate experience and has been involved in all aspects of real estate including acquisitions, development, finance, portfolio and asset management. Munkacy has led full service real estate investment and operating companies in 12 countries and 23 states and has overseen over $3 billion in transactions.