Why the Triangle’s Multifamily Market Is Less Vulnerable to COVID-19
- Sep 03, 2020
Although Raleigh-Durham is not entirely immune to the pandemic’s impacts, the metro’s multifamily sector appears to be stable and well-positioned for a quick rebound. Thanks to the low cost of living, less dense urban environment and well-educated talent pool, the Triangle will continue to attract businesses and investors, according to a second quarter report from Avison Young.
Daniel Eller, president & CEO of Chapel Hill-based Eller Capital Partners, is convinced that the metro’s residential market is going to benefit from “changing personal preferences that may result from COVID-19.” As a specialist in the acquisition, development and management of multifamily assets throughout the Southeast, he discusses the effects of the coronavirus outbreak and provides insights on how the overall state of Raleigh-Durham’s economy might impact the metro’s multifamily sector.
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How has the global health crisis affected Raleigh-Durham so far?
Eller: Raleigh-Durham has been significantly impacted by long-term, government-mandated business closures that have led to a tremendous increase in unemployment. As a result, many restaurants and retail businesses will not survive, and the business owners and employees will suffer. This crisis has likely permanently accelerated the shift from brick-and-mortar stores to online retail, and the recovery time frame from an employment standpoint will be more protracted than many people initially hoped.
How has the pandemic impacted Raleigh-Durham’s multifamily sector in particular?
Eller: So far, multifamily assets in the Raleigh-Durham market have performed relatively well. The newer, higher-rent communities in the marketplace have virtually no delinquency concerns and even communities that are older, with lower rental rates, have performed much better than many in the industry anticipated. One question that remains unanswered is: “To what extent will this change as federal stimulus money comes to an end?”
What makes Raleigh-Durham’s multifamily market less vulnerable to economic disruptions?
Eller: The Raleigh-Durham market is extremely resilient with great diversity of employment, including major universities and health-care systems, Research Triangle Park, state government and many other strong industry sectors. The market continues to experience a rapid pace of growth. This trend is likely to accelerate due to the existing strong job creation in the Raleigh-Durham area as well as changing personal preferences that may result from COVID-19.
What immediate effects has the coronavirus outbreak had on your operations and portfolio?
Eller: Our portfolio consists of assets in good locations within strong markets and has performed very well so far. The initial challenges that we faced in March have resulted in improvements to many of our systems and the way in which we are able to operate.
How are you dealing with coronavirus-related business challenges?
Eller: Unique challenges related to operating during this time present themselves on an hourly basis. We have a great team with a tremendous amount of industry experience and everyone has done a fantastic job of adapting as necessary, and solving problems as they come up.
When do you expect Raleigh-Durham’s economy to bounce back and how will the recovery unfold?
Eller: Parts of the market will bounce back immediately—or already have—but the restaurant and retail sectors will experience a much slower recovery. I do not expect to see a full recovery of the restaurant industry until 2022. Many of the current restaurants in the market will be unable to reopen and it will take time for a new restaurant concept to open in the same space, but it will happen.
I believe that nonessential retail has been changed forever and will never recover to what it was pre-COVID-19. The best retail locations will likely survive and return to normal, but retail in many other locations could eventually be vacated and repurposed with a different use.
What steps do you intend to take for a smooth recovery?
Eller: We will continue to pivot and adapt as necessary, we will take advantage of the opportunity to use what we have learned during this time to become a better organization, and, most importantly, we will remain focused on our long-term goals, and we’ll continue to pursue deliberate growth through the acquisition of well-located, value-add multifamily assets.