multi family market summary & a tivity...
TRANSCRIPT
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THE TRIANGLE | WINTER 2013
MULTI-FAMILY
MARKET SUMMARY
& ACTIVITY UPDATE
THE NC TRIANGLE
RALEIGH - DURHAM
CHAPEL HILL
WINTER 2013
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THE TRIANGLE | WINTER 2013
Table of Contents
Area Economic Overview 3
2012 Transactional Activity 4
Current Development Pipeline 5
Why Choose Capstone? 7
Introduction
Capstone Apartment Partners prides itself on the continual value
contributions we are able to offer our industry, and thus we produce
periodic Multifamily Market Summaries to further inform the clients
and industry we serve. Capstone believes that this market snapshot
will be beneficial to current owners, operators, investors, and other
industry professionals who are active in the Raleigh-Durham MSA, as
well as others that are looking to break into this market.
Market Commentary Commonly referred to as the ‘Triangle’, North Carolina’s Raleigh-Durham-Chapel Hill MSA
added 21,000+ jobs over the last year. While Raleigh was ranked 10th in the nation in
terms of post-recession job growth, these 21,000 new jobs make the MSA currently one of
only 14 markets nationwide that can claim a positive employment rebound from pre-
recession levels — The Triangle has effectively “left the recession behind”. Along with these
stronger than average employment trends, Forbes magazine ranked Raleigh 4th on its list of
America’s Fastest Growing Cities in 2012, as the city’s population is expanding at a rate of
more than 3% annually. The city also experienced job growth of 2.3% in 2012, leaving it
behind only Austin, Houston, and Dallas.
The Triangle area has a total of 108,140 apartment units with a vacancy rate of 5.5% as of
January of 2013 — the lowest rate reported since 1998. This represents a strong 110 bps
improvement from the January 2012 rate of 6.6%. Demand continues to exceed new
supply with 1,565 units absorbed over the past six months and only 1,062 new units
completed over the same period. As a consequence to this tightening, the Triangle region
experienced rent-growth in excess of 2.9% in 2012; however, as the wave of new supply
begins to come on-line in late 2013 and throughout 2014, we expect to see a modest pull-
back in overall occupancy and rent growth.
Overall, the Raleigh/Durham/Chapel Hill MSA continues to stake it’s claim as one of the
preeminent markets nationwide for multi-family investment. By all accounts, the recent
explosion of population and employment growth experienced in the area is projected to
continue, as the Triangle builds upon its post-recession expansion.
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THE TRIANGLE | WINTER 2013
Recent Employment Announcements
NetApp, a data storage company, will
create 460 jobs at its new facility in RTP.
Bandwith.com, a communications
technology firm plans to add 200
employees at its headquarters in Raleigh.
AW North Carolina, an automotive
manufacturing company, has added 500
workers to its plant in Durham.
GE Aviation, an aircraft engine supplier, has
added 140 jobs at its factory in Durham.
Employment Wages
There are 500,550 employees in Raleigh/Cary, with a
mean hourly wage of $21.74 and annual income of
$45,220. Durham/Chapel Hill has 267,390 employees,
with a mean hourly wage of $25.93 and an annual in-
come of $53,930.
Unemployment Rate and Trend
The unemployment rate for Raleigh is currently at 6.7%,
down 0.4% from December 2011. Chapel Hill currently
has the lowest unemployment rate at 5.2%, the same as
the previous year. Durham has the highest
unemployment rate at 7%, down 0.3% from December
2011.
THE TRIANGLE | WINTER 2013
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THE TRIANGLE | WINTER 2013
The new construction boom in the Triangle is
well underway with over 6,100 new units started
over the past six months bringing the total
number of units under construction to over
9,200. To that end, supply growth will begin to
take off in the second half of 2013 and continue
at an accelerated pace into 2015, with occupancy
and rent growth experiencing some downward
pressure as new supply comes on line in 2014.
Strong lease-ups and absorption are anticipated
into 2014, as the MSA’s is currently experiencing
record-setting occupancy rates and continued
positive revenue growth.
Developer Community Units Road/Intersection Developer Community Units Road/Intersection
McCormack, Baron & Salazar Rolling Hills 132 Lakewood Ave. Northwood Ravin St. Mary's Square 134 St. Mary's Rd.
Crescent Resources Circle at Ninth Street 303 Ninth St. Bainbridge Communities Bainbridge Six Forks 266 Featherstone Dr.
Worthing Companies Heights at South LaSalle 290 South LaSalle St/Durham Freeway South Atlantic Group Flats on 401 300 Louisburg Rd./Spring Forest Rd.
Edward Rose Companies Avellan Springs 196 Page Road/I-40 Grubb Properties Sterling Town Center 243 Fox Rd./ Heritage Center Dr.
Kotarides Clairmont at Brier Creek 444 Brier Creek/T.W. Alexander Caroll Companies Village at Town Center 288 Fox Rd./ Heritage Center Dr.
The Residential Group Crest at Brier Creek 291 Brier Creek Rd. Certus Partners Heritage Gardens 260 Rogers Rd./Heritage Center Dr.
Phillips Development Phillips Research Park 344 Ellis Rd. Woodfield Investments Woodfield Creek 288 Caveness Farms Ave.
Davis Development Waterstone at Brier Creek 236 Brier Creek Rd. Woodfield Investments Marshall Park 384 Blue Ridge Rd.
Worthing Companies Heights at Meridian 339 Meridian Pkwy./Exchange Pl. Dominion Realty Partners Tryon Place 205 Tryon Rd./Cary Pkwy.
Grubb Ventures 401 Oberlin 243 Clark Ave. JWH Properties Villages at Marquee Station 265 Cinema Dr.
Southern Lan Company 425 North Boylan 261 Tucker St. Carroll Companies Amberton at Stonewater 348 Green Level Church Rd.
Faison 925 West Morgan 249 West Morgan St. Northwood Ravin Bradford 370 Davis Dr./High House Rd.
Crescent Resources Gallery at Cameron Village 282 Clark Ave. Wood Partners The Bristol 248 Chapel Hill Rd./ Cary Pkwy.
Capital Associates Greens at Centennial 292 Achievement Dr. Northwood Ravin Lofts at Weston 215 Weston Rd.
Post Properties Post Parkside at Wade 393 Wade/Edwards Mill Rd. ECI Group Columns at Broad Stone 300 Apex Pkwy.
Federal Capital Partners Ramblewood 435 Ramblewood Dr. Northview Partners Meridian at Harrison Pointe 248 Maynard Rd.
COMMUNITIES UNDER CONSTRUCTION
COMMUNITIES UNDER CONSTRUCTION
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Developer Community Units Road/Intersection Developer Community Units Road/IntersectionHawthorne Partners University Market Place 330 Chapel Hill Blvd. Empire Properties L Building 100 West David St.
Faison 300 Swift Ave 202 Swift Ave Grubb Properties The Links 203 North Harrington St.
Aacre Properties Metropolitan at Lakeview 320 Erwin Rd./ Downing St. Post Properties Post Parkside 400 Wade Ave.
Federal Capital Partners Liggget Apartments 196 West Village Novare Group Skyhouse 320 S. Wilmington St./ E. Martin St.
Dean Painter 5602 Comstock 312 Comstock Blvd./Page Rd. Two Capital Partners Capital Creek 214 Rogers Rd.
Trinitas Central Park 198 Martin Luther King, Jr. Blvd. Kotarides Clairmont at Capital 328 Wadford Rd.
Landmark Development Bellevue 103 Nash St./ Hillsborough St. Carroll Companies The Cliffs 312 New Falls of Neuse/Common Oaks Dr.
Davis Development Tzhe Avenues 297 Ratchford Dr./Six Forks Rd. HEGM Corp. Granite Falls 72 Rogers Rd./Grand Rock Way
Carroll Companies Bacarra 312 Western Blvd./I-40 Martin Fein Interests Crabtree Commons 336 Creedmoor Rd.
Melton Valentine Courtland 156 Hillsborough St./ Concord St. Pappas Properties Kidds Hill 525 Crabtree Valley Ave.
Davis Property Group Jones Grant 243 Forest Rd./Wake Town Dr. Carroll Companies Adeline White Oak 312 Salt Hill Rd.
COMMUNITIES PROPOSED 100 UNITS AND ABOVE
While the current pipeline of units Under
Construction and Proposed in the Triangle looms
large at just over 15,000 units, the outlook
remains bright for the Triangle market.
The requisite fundamentals are in place for
positive absorption of this sizable pipeline, as the
above average employment and population
growth experienced in recent years in the
Triangle shows no signs of slowing down.
Furthermore, as investors continue to shift their
focus from the nation’s primary and gateway
markets to the more attractive returns offered in
high-growth markets, like the Triangle,
transactional activity is anticipated to continue to
increase. Strong market fundamentals will serve
as a mitigating factor to potential ‘over-supply’
risk.
PROPOSED DEVELOPMENT
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Brian Ford
Managing Partner
704.962.9462
Andrew Klenk
Partner
919.647.9510
Alex McDermott
Investment Advisor
704.533.4865
Beau McIntosh
Managing Partner
704.877.5681
The People Sell the Deal Capstone’s Southeast & Mid-Atlantic Investment Sales Team is among the market leaders within our industry sector and respective region. We place client service above all else, and can guarantee that no one else will work smarter and harder in achieving the highest level of results for our clients. We don’t rely on a logo to sell the deal, but rather utilize the industry expertise and investment acumen, tremendous drive and work ethic, and unbeatable salesmanship of the team members assigned to each project. At the end of the day, it’s the individuals that drive value and sell the deal, and we know the capabilities of our individual team members are second to none.
Market Expertise & Product Niche Capstone sits atop the private capital sector of multi-family investment sales for multiple reasons. Our deliberate and concentrated focus and expertise in not just the primary markets of the Southeast, but namely the secondary and tertiary markets within our region identifies us as the ideal candidate for these assignments. Capstone’s investment sales team has completed a multitude of transactions across the secondary & tertiary markets of the Southeast, and our track record of success can be attributed to our comprehensive coverage and expertise among these markets, as well as our relationships with the owners and investors who remain active in this environment.
National Exposure via Cutting Edge Technology Capstone has developed and maintains industry leading national databases, expansive information delivery methodologies, and various proprietary activity tracking systems. These tools are utilized daily by the investment sales team, analysts, and back-office support staff allowing for optimal operational efficiency. This enables Capstone’s investment brokerage team to spend nearly all of its time servicing clients, interacting with industry players and active asset traders, and promoting transactions.
Reputation and Results Capstone prides itself on its impeccable industry reputation and the core values and behaviors of the firm that drive daily operations. The firm possesses an unblemished reputation and track record industry-wide, and, as such, the firm’s trusted relationships among the apartment investment community continue to facilitate seamless, fluid sales transactions.
MARKET COVERING
INVESTMENT SALES TEAM
North Carolina • South Carolina • Georgia • Virginia • Tennessee
Raleigh Office: 2 Bolin Heights
Suite 1 Raleigh, NC 27514
Charlotte Office: 1600 Camden Road
Suite 100 Charlotte, NC 28203
**Information presented in this report had been provided by the following resources: Raleigh Chamber of Commerce, The Triangle Real Data Report December 2012, REIS Report, Costar, The Business Journal, Loopnet, Bureau of Labor Statistics, county tax records, and various multi-family industry contacts.