memphis - east region · 2016. 10. 24. · collirs itratioal multifamily advisory group p. 2 supply...

Accelerating success.

Research & Forecast Report

MEMPHISQ3 2016 | Multifamily

RECENT SALES

Source: AXIOMetrics. RCA, CoStar

Market Survey Results and ForecastsSequential Month Annual

4Q15 1Q16 2Q16 3Q16 Sep-16 2014 2015 2016F 2017F 2018F 2019F 2020F

Effective Rent Per Unit $793 $805 $825 $835 $827 $781 $792 $823 $856 $878 $903 $932

Per Sq. Ft $0.82 $0.83 $0.85 $0.86 $0.86 $0.81 $0.82 $0.85 $0.88 $0.91 $0.93 $0.96

Effective Rent Growth - Annually 1.9% 3.6% 3.2% 4.4% 4.9% 1.4% 1.4% 3.9% 4.0% 2.6% 2.8% 3.2%

Effective Rent Growth - Quarterly -0.9% 1.5% 2.5% 1.2%

Occupancy Rate 93.0% 92.9% 94.2% 93.5% 93.6% 92.7% 93.0% 93.5% 94.3% 94.0% 94.6% 95.0%

Occupancy Change - Annually 0.7% 0.6% 0.8% 0.5% 0.5% 0.1% 0.3% 0.6% 0.8% -0.3% 0.6% 0.4%

Occupancy Change - Quarterly -0.2% -0.1% 1.4% -0.7%

Economic Concessions Concession Value $-12.75 $-11.61 $-8.07 $-9.89 $-9.07 $-16.69 $-14.39

As a % of Asking Rent -1.6% -1.4% -1.0% -1.2% -1.1% -2.1% -1.8%

Date Property Name Address City Units Year Built Price in $ $/Units

Sep-16 Austin pointe Apartments 4141 James Rd Memphis 112 1973 1,800,000 16,071

Sep-16 Hickory Meadows 2940 Hickory Hill Rd Memphis 209 1985 9,700,000 46,411

Sep-16 Civic Center II Apartments 4744 W E Ross Pkwy Southaven 384 2005 38,200,000 99,479

Aug-16 Sunrise Terrace 2080 Winchester Rd Memphis 112 1964 950,000 8,482

Aug-16 Greens at Irene I and II 8285 Irene Blvd Memphis 600 2002 39,250,000 65,417

Aug-16 Jennifer Meadows 4800 Raleigh Lagrange Memphis 224 1988 4,100,000 18,304

Jul-16 Highland Chateau 5246 Raleigh-La Grange Rd Memphis 300 1970 / 2007 8,839,285 29,464

Jul-16 Highland Hills Apts 2831 Fosterwood Dr Memphis 260 1974 / 2007 7,660,714 29,464

Jun-16 Broadmeadown Place 150 Peeler Rd Covington 148 1982 4,095,000 27,669

Jun-16 Madison At Schilling Farms 160 Madison Farms Ln Collierville 324 1999 34,300,000 105,864

May-16 Winbranch 3551 Dalebranch Dr Memphis 448 1968 2,600,000 5,804

May-16 Poplar Place 1669 Randolph Pl Memphis 220 1975 / 2012 15,270,000 69,409

Apr-16 Dorchester Place Apartments

1725 Dorchester Dr Southaven 128 1974 3,800,000 29,688

COLLIERS INTERNATIONAL MULTIFAMILY ADVISORY GROUP P. 2www.ColliersMultifamilyEast.com

SUPPLY AND DEMANDAccording to the Bureau of Labor Statistics, job growth in Memphis, TN-MS-AR Metro Area was 0.8% in August 2016, reflecting 5,100 jobs added during a 12-month period.

Axiometrics forecasts Memphis, TN-MS-AR Metro Area’s job growth to be 1.1% in 2017, with 7,103 jobs added. Job growth is expected to average 1.0% from 2018 to 2020, with an average of 6,356 jobs added each year.

On the supply side, permits for 1,171 multifamily units were issued in the 12 months ending in August 2016, down -199 units from the prior year’s sum. In terms of total residential housing, 4,064 units were permitted in the 12 months ending August 2016, an increase of 105 units from the prior year’s total.

Multifamily Absorption and Supply

Annual 3Q16 Annual Forecast

2013 2014 2015 Market National 2016F 2017F 2018F 2019F 2020F

Total Units Absorbed 1,113 717 1,214 1,623 274,353 1,424 1,685 515 1,556 1,165

New Supply 830 919 690 984 367,859 927 894 1,153 938 719

Inventory Growth 0.9% 0.8% 0.9% 0.9% 1.4% 0.9% 1.1% 1.1% 1.0% 0.9%

Market Employment and Permitting

Annual August-16 Annual Forecast

2013 2014 2015 Market National 2016F 2017F 2018F 2019F 2020F

Employment (000s) 608.7 616.5 625.8 634.3 144,424.0 634.1 641.3 646.4 652.1 660.3

Job Gain (000s) 5.1 7.7 9.3 5.1 2,451.0 8.3 7.1 5.1 5.7 8.2

Job Growth (%) 0.9% 1.3% 1.5% 0.8% 1.7% 1.3% 1.1% 0.8% 0.9% 1.3%

Total Residential Permitting 3,669 3,171 3,959 3,416 1,056,185 4,036 6,131 8,127 7,450 6,058

Relative Change 4.7% -13.6% 24.9% -5.1% 2.3% 1.9% 51.9% 32.6% -8.3% -18.7%

Single Family Units Permitted 2,487 2,554 2,581 2,563 658,713

Relative Change 12.1% 2.7% 1.1% 13.8% 9.1%

Multifamily Units Permitted 1,023 607 1,370 815 368,231

Relative Change 10.7% -40.7% 125.7% -39.0% -8.2%

Multifamily as a % of Total 27.9% 19.1% 34.6% 23.9% 34.9%

Demand/Supply Ratio Job Gain / Total Residential Units Permitted 1.5 2.1 2.9 1.4 2.4 2.1 1.8 0.8 0.7 1.1

Job Gain / Single Family Units Permitted 2.3 3.1 3.7 2.3 4.1

Job Gain / Multifamily Units Permitted 5.6 7.6 15.4 3.8 6.1


IDENTIFIED SUPPLYAs of October 9, 2016, Axiometrics has identified 1,051 apartment units scheduled for delivery in 2016, of which, 707 have been delivered. As a comparison, there were 617 apartment units delivered in 2015. Properties delivered to the market in the last 12 months have achieved an average asking rent of $1,218 per unit, or $1.41 per square foot. Effective rent has averaged $1,200, or $1.39 per square foot, resulting in an average concession value of $-17.44. As a comparison, existing properties in the market had an average asking rent of $845 per unit ($0.87 per square foot) and an average effective rent of $835 per unit, or $0.86 per square foot, in 3Q16. Concessions for existing properties averaged $-9.89.

Submarket Delivery Schedule

Pipeline Delivery Schedule Pipeline Lease Up Trend

Units Absorbed Asking Rent Effective Rent

Top Submarkets 2014 2015 2016 Total Totals PPM Per Unit PSF Per Unit PSF Downtown/Midtown 366 267 156 789 158 12 $1,151 $1.64 $1,151 $1.64

East Memphis/University 226 226 142 23 $1,382 $1.47 $1,382 $1.47

Poplar Pike/Germantown/Cordova 291 245 529 1,065 29 4 $1,233 $1.07 $1,191 $1.03

Shelby County/Other 105 59 164 99 9 $1,226 $1.22 $1,191 $1.18

Southeast Shelby County/Ridgeway 81 81 428 10 $1,223 $1.41 $1,205 $1.39

Memphis, TN-MS-AR 657 617 1,051 2,325

*Based on 2016 deliveries *Trend based on a trailing 12 month period


PIPELINE# Name Status Owner Address Market Units1 The Charleston Apartments Lease Up Peak Capital Partners 2870 Gosling Cir W Gray's Creek 2202 Highland Row Lease Up Highland Row, LLC 395 S Highland St University Area 1173 Parcels @ Concourse Under Construction Crosstown Building Owner Llc 1350 Concourse Ave Jackson Heights

Rhodes 265

4 South Line at Central Station Under Construction Henry M Turley 610 S Front St Downtown Riverside 1555 Fieldstone Apartments Phase VI and VII Under Construction Michael Lightman Realty 3229 Harcourt Way Southwind 1186 Highland Row - Phase II Under Construction Highland Row, LLC 395 S Highland St University Area 2377 Centennial Gardens Phase IV Under Construction Michael Lightman Realty 3779 W Mount Lemon

LoopSouthwind 160

8 The Nine at Memphis Under Construction 908 Development Group 3557 Mynders Ave University Area 1429 Tennessee Brewery Apartments Under Construction Tower Ventures, LLC 495 Tennessee St Downtown Riverside 14810 Carrington West Under Construction Boyle Investment Company 900 Winchester Rd Collierville 12511 Thornwood Proposed McNeill Commercial Real Estate 1660 S Germantown Rd Germantown 25812 8310 E Shelby Dr Proposed Astor Fine Builders 8310 E Shelby Dr Southwind 24013 One Beale Apartments Proposed Carlisle Corporation 245 Wagner Pl Downtown Riverside 28014 266 Memphis Lofts Proposed Vince D Smith 266 S Front St Downtown Riverside 178

Total Units 2,643

Source: CoStar

6

5

7

82

1314

11

4

3

10

1

9

12

Key

Lease-Up

Under Construction

Proposed


WHO WE AREOne of the largest and most

experienced teams of multifamily

specialists in the industry

Units sold since 2011

30,000MORE THAN

Group gross transaction value in since 2011

$2.0B

Dedicated Multifamily Professionals & Advisors

50MORE THAN

Expansive geographic footprint

20COVERING OVER

STATES

Overlook at Allensville SquarePhase IIKnoxville, TNUnits: 288

Overlook at Allensville SquarePhase IKnoxville, TNUnits: 288

Renaissance at Peacher’s MillClarksville, TNUnits: 216

RENAISSANCE AT PEACHER’S MILL | Clarksville, TN

CHALLENGE: This was a difficult and cumbersome transaction as the debt execution consisted of an assumable HUD loan which dramatically narrows the pool of buyers and extends the process. Additionally, the East Region team reviewed the seller’s proforma and found they were charging too high an administrative fee to each renter. STRATEGY & RESULTS: After reducing the fee, ownership was able to achieve an $80,000 annual NOI increase, which resulted in an increased sale price. To sell the property the team, broadly marketed to work with an active HUD buyer comfortable with the process.

Selling this property resulted in the highest price per unit in the history of Clarksville.

CLIENT: JA Murphy Group UNITS: 216

OUR PROVEN TRACK RECORD

“We were extremely pleased with the East Region team and its ability to attract an incredible amount of interest in our 3 assets. The number of offers received and the end results exceeded our expectations. They have a talented group who was a pleasure to work with. Their performance stands out against any of the groups we work with nationally.”

Nels Billsten, Vice President | CORE Realty Holding Management


WE CAN HELPAs an investor in multifamily properties, you need a firm that provides experience, broad reach and the ability to market an asset no matter how challenging the economic environment. You need a team that specializes in your market, you need The East Region Multifamily Advisory Group.

Colliers International has one of the largest and most experienced teams in the industry, strategically located in key markets throughout North America. Our combination of market dominance, expertise, and singular focus, make us uniquely successful in helping our clients achieve their disposition objectives.

How are we able to bring together the skills and tools necessary to complete challenging assignments? Our East Region Multifamily Advisory Group is connected by purpose and focus. Our team is dedicated to sharing information on market opportunities, capital sources and buyers/sellers to achieve the best results for our clients.


John AshleyASSOCIATE | EAST REGION

[email protected] +1 615 850 2715

www.ColliersMultifamilyEast.com

To learn more, scan this with a QR code reader or visit:

Will MathewsPRINCIPAL | EAST REGION

INSTITUTIONAL CLIENT GROUP


Brooks ColquittASSOCIATE | EAST REGION


Craig BrownASSOCIATE | EAST REGION


AT YOUR SERVICE

memphis - east region · 2016. 10. 24. · collirs itratioal multifamily advisory group p. 2 supply...

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