Southeast Real Estate Business

DEC 2016

Southeast Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Southeast United States.

Issue link: https://southeastrealestatebusiness.epubxp.com/i/756717

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F ollowing years of frenzied devel- opment across the country, the multifamily industry is entering a slowdown period where develop- ers have fewer starts and even fewer completions. As of the end of Octo- ber, multifamily starts are down 1.8 percent year-to-date compared to this time last year, according to the U.S. Census Bureau and the Department of Housing and Urban Development. Year-to-date completions are down 3.1 percent in that same time frame. "We're entering a more normalized market going forward, as opposed to an aggressive development market of the past few years," says Steven Shores, president and co-founder of Pollack Shores, an Atlanta-based mul- tifamily developer. "I don't view it as a negative. In a lot of respects, we were trying to catch up with demand in the years immediately following the recession where there was no new de- velopment." Core submarkets within major met- ros saw the bulk of new multifamily construction in the years following the downturn as developers were answer- ing renter demand to live within close proximity of employment centers, dining, shopping and entertainment. Construction in those submarkets is now slowing as those sites have be- come more difficult to come by, in ad- dition to the existing governors of con- struction such as the industry's labor shortage and rising costs for materials and land. Mill Creek Residential Trust LLC, a national multifamily developer and manager with more than 16,800 apart- ment units in its portfolio as of June 30, 2016, is an active developer in the Southeast, especially in the metro Atlanta area. Even though the firm is bullish on Atlanta, the company's planned developments in the metro area in 2017 will be about half of 2016's total, according to Chad Dubeau, se- nior managing director of Atlanta and North Florida for Mill Creek Residen- tial. Developers like Mill Creek are also www.REBusinessOnline.com December 2016 • Volume 17, Issue 9 Opportunities for new multifamily projects lie in niche product and amenity-rich neighborhoods. By John Nelson UPS Unveils Plans for $400 Million Distribution Facility in Atlanta page 11 page 10 page 6 Financial Scoreboard Market Highlight on Jacksonville pages 16-17 INSIDE THIS ISSUE see MULTIFAMILY, page 22 Swire Opens Brickell City Centre in Miami URBAN DESIGN IS THE NAME OF THE GAME A fter two years of strong office investment sales in the metro Washington, D.C., area with roughly $8 billion in volume in 2014 and 2015, the District experienced another strong year and is on track to trade roughly $7.5 billion in 2016. Al- though the volume is off only slight- ly from years past, the buyer pool is shifting, according to James Cassidy, executive managing director of New- mark Grubb Knight Frank's (NGKF) Washington, D.C., office. "Some of the core buyers are do- mestic institutions, but for the trophy product they're being outbid by in- ternational investors. In 2013, 33 per- cent of buyers or the capital backing purchases in the District were for- eign, but year-to-date in 2016, more than 60 percent of these transactions Office buildings, especially in Washington, D.C., dominate the Southeast's top 20 sales in 2016. By John Nelson TROPHY OFFICE GOT TOP BILLING IN 2016 see TOP DEALS, page 19 The No. 4 transaction in 2016 was Blackstone's $282.4 million purchase of Metropolitan Square, a 587,050-square-foot office building in Washington, D.C. Phase II of Modera by Mill Creek-Morningside will feature something unique to Atlanta, 12-foot ceilings and private outdoor and rooftop space for every residence.

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