Q1 2013 Columbus Market Trends Multifamily

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  • 1. MULTIFAMILY INVESTMENT TrendSGreater Columbus Regionwww.colliers.com/ohioSlow Start to 2013, But Buyer DemandAcceleratingApARTMENT Sales MARKET OVERVIEWAfter nearly $300 million in multifamily sales volume transacted in Columbus in the fourth quarter of2012, the investment sales market started off slowly in 2013. The fourth quarter of 2012 had hugesales volume due year end closings, the expiration of Bush tax cuts, and a concentration of large ClassA deals. In the first quarter of 2013, two properties over 100 units sold; both of which propertiestransferred from the same seller and buyer. This does not mean there is a lack of momentum in themarket, rather that there is currently a substantial imbalance in the supply and demand. A growingnumber of buyers are chasing a smaller pool of on-market deals. A higher number of transactionswill occur in the second quarter of 2013 because a majority of the properties currently on the market,consisting mostly of stabilized A and B class product, are under contract. We do not predict anaccelerated amount of new listings to come on the market, because owners are benefiting from thestrength of the rental market. The flipside of this projects a positive scenario for owners looking tosell due to the constrictive supply and buyers having the benefit of an accretive rental market.Q1 2013 | MULTIFAMILYTotal MultiFamily Sales VolumeSURVEYED BY Quarter$38,789,000 $59,027,500 $66,681,750$298,149,714$30,079,00005001000150020002500300035004000$0$50,000,000$100,000,000$150,000,000$200,000,000$250,000,000$300,000,000$350,000,000Q1 12 Q2 12 Q3 12 Q4 12 Q1 13Sales Volume UnitsTHE COLLIERS OHIO MULTIFAMILYINVESTMENT TEAMMatt Gockstetter+1 614 437 4496matt.gockstetter@colliers.comJ Rosenbusch+1 614 437 4697j.rosenbusch@colliers.comMatt Newcomer+1 614 437 4698matt.newcomer@colliers.comMarket indicatorsQ12013*Q22013**OCCUPANCYRENTAL RATESCONSTRUCTIONUNEMPLOYMENT — —*Actual change from previous quarter** Projected change from previous quarterWe are seeing more owners and investors coming off the sidelines as potential buyers in themarketplace. This is a result of the strong rental market evidenced by high occupancy and rentincreases. In addition, regional private investment firms and a few institutional investment firms haveentered the Columbus market in search of yield through acquisition of stabilized Class A multifamilyassets. Still, a majority of the total multifamily transactions (51%) over the last twelve months havebeen purchased by private investors based in the Columbus market.
  • 2. ApARTMENT SAles MARKET OVERVIEW(CONTINUED)Buyers’ demand in the Columbus marketplace has beenstrongest for stabilized Class A and B properties. The handfulof properties on the market during the first quarter in thisproperty class garnered a large amount of interest and strongmarketing activity from prospective buyers both locally andregionally. Buyers are expecting to find value in theseproperties by pushing revenue, which is achievable in thecurrent rental environment, or through improved managementefficiencies. This rush to Class A and B properties is alsofueled by attainable non-recourse debt with historically lowinterest rates. This causes cap rate compression, and in turnCapital MarketsSIgnificant Loan Issuances522 offices in62 countries on6 continentsUnited States: 147Canada: 37Latin America: 19Asia Pacific: 201EMEA: 118• $1.8 billion in annual revenue• 1.25 billion square feet undermanagement• Over 12,300 professionalsAccelerating success.This document/email has been prepared by ColliersInternational for advertising purposes. ColliersInternational statistics and data are audited annually andmay result in revisions to previously reported quarterlyand final year-end figures. Sources include ColumbusDispatch, Business First, Xceligent, CoStar, Bureau ofLabor Statistics, Bureau of Economic Analysis, Gallupand the Cleveland Federal Reserve.IN CONTRACTName Date Units Year Built Occupancy Type AMountTall Oaks 1/17/13 160 1972 91% Fannie Refinance $3,500,000Lakeview Square 1/22/13 470 1986 91% Fannie Refinance $19,500,000The Elms 1/31/13 304 1976 97% Fannie Refinance $11,000,000Waterstone Landing 3/8/13 56 2012 95% Fannie Refinance $4,800,000Buyer ProfilesTrailing 12 MonthsTypes Q1 2013Local Private Investor 51%Regional Investment Firm 24%National Private Investor 7%National Investment Firm 9%Institutional/REIT 9%improves pricing for owners looking to sell. For this reason, owners of well located, Class A and Bmultifamily product should reexamine the disposition value of their properties to capitalize on buyers’increasingly aggressive pricing and the overall supply and demand imbalance in the Columbus market.The amount of distressed property acquisition opportunities in the marketplace has greatly diminishedbecause banks have shaken out a majority of their bad assets by this point. We are seeing a fair amountof properties that were bought distressed between 2009 and 2012 returning to stabilized levels. A major-ity of those distressed properties had significant deferred maintenance that needed addressed for bothexterior and interior items, and their respective new owner’s capital infusion for renovations has helped toattract new tenants and improve occupancy. As these value add projects stabilize, owners will be placingpermanent financing to amplify cash flow or look to sell.Source: US Census Bureau Data1962413893543088 1042565691318282840100200300400500600700800900Trailing 12 Month Building Permits: 5+ Unit MultifamilyFranklin CountySource: Fannie Mae DataCOLLIERS OHIOMULTIFAMILY 2012PERFORMANCE RESULTS:• 1,171 Total Units Sold• 10 Multifamily ProductsSold In Columbus, OhioTRAILING 8 YEARTEAM SALES HISTORY:• 12,284 Units Sold• A Total Sales Volume of $300,000,000+• 97 TransactionsCompletedp. 2 | Colliers Internationalresearch & forecast report | Q1 2013 | MULTIFAMILY | Greater Columbus Region