2016 Commercial Market Forecast | Multi-Family Update

www.CharlestonCommercialMarketForecast.com

MULTI-FAMILY REPORTRobert Morgan

A Fully Integrated Multifamily Service Provider


Multifamily Report

1 U.S. FUNDAMENTALS

2 CHARLESTON MARKET

3 OPPORTUNITIES

4 TRENDS

Daniel Island Village, 2008


Drivers of Multifamily Housing:

• Job growth / employment rate• Wage growth• Residential still undersupplied by historical

standards• Renters by choice

U.S. FUNDAMENTALS


• Job growth approximately 2% annually since the Global Financial Crisis• Wage growth decelerating, but with full employment creates potential to rise

U.S. FUNDAMENTALS

Source: Bureau of Labor Statistics, Moody's Analytics


• Demand-fueled recovery continues

U.S. FUNDAMENTALS

Permits in these calculations refer to LTM permits offset 4 quarters prior to the current quarter. This offset accounts for time of construction and is most historically reliable in predicting rent growth. Source: Bureau of Labor Statistics, US Census Bureau, Moody’s Analytics, Greystar


• Total residential supply is benign • If current MF building remains constant, 4.5 years to backfill debt of supply

U.S. FUNDAMENTALS

Source: US Census Bureau


• Rent growth continues but decelerates, still solid by historical standards

U.S. FUNDAMENTALS

Source: Axiometrics


U.S. FUNDAMENTALS

34.1%

62.9%

69.1%

74.7%

77.9%

58.3%

HO Rate change since 4Q15

1.4%

0.5%

1.0%

1.0%

0.9%

Source: Moody’s Analytics, US Census Bureau


CHARLESTON MARKET


CHARLESTON MARKETSummerville: $1,230 $1.30 psf

• Top of Submarket Asking Rents: price per month & per square foot

N Charleston: $1,256 $1.21 psf

Daniel Island: $1,704 $1.90 psf

Downtown: $1,874 $2.15 psf

Mt Pleasant: $1,645 $2.17 psf

W Ash/James I: $1,738 $2.09 psf

W Ash (out): $1,557 $1.49 psf


• Peak conditions have already been achieved• Solid, but more normalized growth

CHARLESTON MARKET

Source: CoStar Market Analytics



CHARLESTON MARKET




CHARLESTON MARKET



OPPORTUNITIES


OPPORTUNITIES

Charleston Neck 2016 (image courtesy of JLL)

Atlanta West Midtown 2003


OPPORTUNITIES

Charleston Neck 2013

Atlanta West Midtown 2016


TRENDSLast Cycle:• Charleston: greenfield and suburban • Atlanta & Charlotte: urban infill mid-rise product, some mixed-use

Current Cycle:• Charleston: several class-A projects are now urban/suburban infill, assemblage

sites, high-density, and some mixed-use• Atlanta, Charlotte, Nashville, and Raleigh: extremely dense complex mixed-used

projects, as well as towers

Next Cycle:• The evolution to provide urban housing in desirable areas will continue• Dense multifamily housing will improve the viability of our cities and suburbs• Niche projects catering to evolving renter demands


TRENDS

Elan Midtown – Charleston, SC

Courier Square – Charleston, SC

Elan Westside – Atlanta, GA


TRENDS

Overture Crabtree – Raleigh, NC

Overture Lindbergh – Atlanta, GA

2016 Commercial Market Forecast | Multi-Family Update

Real Estate