Charlotte, N.C.—The multifamily markets in the southern and mid-Atlantic regions of the country are booming. MHN talks to Marc Robinson, co-founder and co-managing partner of Atlanta-based Multi Housing Advisors, who is overseeing their Charlotte, N.C., branch, about investment and development trends in the region.
MHN: What are your main priorities at Multi Housing Advisors?
Robinson: Our first priority continues to be providing our clients with the highest-quality strategic investment advice and guidance, while focusing on exceeding the expectations of all parties involved in the transaction. In addition, over the past three years, we have made a significant capital investment to enhance and grow Multi Housing Advisors to better serve our clients. That process has included the re-branding to the Multi Housing Advisors name [from Southeast Apartment Partners], as well as making significant investments in technology, research, our client-service platform, the recruitment of talented brokers and expanded geographic coverage.
MHN: What are some investment and development trends you’re seeing in Charlotte?
Robinson: The apartment investment market throughout the Southeast, Mid-South and Mid-Atlantic regions is as active as we have experienced in several years. The underlying fundamentals remain very compelling, and the lending environment is extraordinary. Lenders continue to return to or enter the market, with Fannie Mae, Freddie Mac, life companies, conduits and balance-sheet lenders all eager to make loans on viable assets.
Equity capital continues to seek yield and is becoming more creative and flexible in the several markets. As pricing remains very high for core assets in Tier 1 cities, investors are moving to value-add opportunities or secondary and tertiary markets—where MHA has successfully sold over 70,000 units—in search of investment opportunities.
From a development standpoint, the Charlotte market has a healthy development pipeline that includes numerous pockets of activity in both infill and suburban areas. Proximity to mass transit is a clear theme in the Charlotte market for new development, and those locations tend to be infill, but there is steady activity in the suburbs as well.
At the moment, demand is pacing with supply, and I do not expect a significant drop-off in operating performance as more of the units reach completion and enter the market.
From a design standpoint, developers continue to improve both the community and unit features. Cutting-edge products along with innovative design have closed the gap in quality between a luxury apartment and a custom home. Granite counters, tile flooring, high ceilings and resort amenities have become standard features of the newest generation of apartment communities. We are seeing a trend of smaller units and more communities being built with efficiencies and with one- and two-bedroom units, with fewer three-bedroom units.
MHN: Do you think these trends are particular to the area, or do they reflect a nationwide trend?
Robinson: Generally, the trends I am seeing in Charlotte are mirroring the trends we are seeing broadly across the Sunbelt and to some extent the nation. The gateway markets (New York City, San Francisco and others) have some variables that are different from the Sunbelt, but generally speaking, significant investment capital is seeking multifamily rental assets, and fundamentals remain healthy and look to stay that way in most markets for several years. America is gradually shifting to a more renter-based society and apartment living by choice is rapidly increasing.
MHN: What are some challenges you’ve seen?
Robinson: Many of our developer clients would say that a notable challenge is the increasing resistance to new multifamily development in many areas. Municipalities have become very sensitive to new apartment development, particularly in historically strong school districts, so developers are finding it increasingly difficult to get new deals through the process.
MHN: Is there anything else you’d like to add?
Robinson: The confluence of a number of key factors—including both the Gen Y (Millennials) and Baby Boomer generations becoming active renters during the same decade, a shift in consumer preference toward renting following the collapse of the single-family real estate market, and an abundance of debt and equity capital—has resulted in a very active time for people in the multifamily business. We are very thankful to be a part of it.