Jim's Real Estate - Finance Blog: CIRE Magazine

Thursday, August 21, 2014

CIRE Magazine - My Multifamily Interview

I was recently interviewed for a CIRE Magazine-magazine of the CCIM Institute. Here are the questions and my answers:

Tell us about a recent multifamily transaction.

101 Bowmans Walk is a 100 unit property located in Round Rock, Texas, just north of Austin. JimYoungCCIM/NickNelson CCIM work with a group of investors from Japan, and purchased this site in an off market transaction. The off market nature made negotiations simple and has been our preference for many of our multifamily buyers.

Describe multifamily investment and transaction activity in your market.

Multifamily investment is hot in the Austin/Central Texas Area. There is no other way to describe the fact that many properties in Class C or Value-Add in the Austin MSA are receiving more than 3-5 offers. Many of those offers contain non-refundable Earnest Money on Day1. Feasibility periods are shorter, and closing times are even shorter. The Multi-Family Agents and Investors I know say that they are pursuing more transactions now than in the previous 2 years.

Who's buying and selling?

Everyone. My office receives 2-3 inquiries or referrals each week from Buyer-Investors from: California, NewYork, China, Japan and Canada. Sellers are much tougher. Many sellers see both the rental rate increase as a reason NOT to sell, and that cap rates have continued to compress.

What is the cap rate movement?

Cap rates continue to compress in the hot areas such as the CBD, East Riverside, South Congress/Lamar/1^st (trendy areas).

If multifamily supply has increased in your market, how has it affected renter demand and rent growth?

The best example I can give of increased supply affecting rental rate growth is the Austin Central Business District. Austin’s CBD has a considerable share of the overall new multifamily supply. Rental rates have hit near $3/foot in many CBD properties. However, one of my clients recently moved from California and was given free parking, and other rent concessions in a downtown Class A Multifamily complex that amounted to 3 months free rent.