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CUSHMAN & WAKEFIELD | COMMERCIAL KENTUCKY LOUISVILLE · PDF file 2020-05-01 · CUSHMAN & WAKEFIELD | COMMERCIAL KENTUCKY LOUISVILLE MULTIFAMILY RESEARCH The Cushman...

Jul 19, 2020

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  • MARKET INSIGHT LOUISVILLE, KENTUCKY MULTIFAMILY REPORT | FIRST QUARTER 2020

    CUSHMAN & WAKEFIELD | COMMERCIAL KENTUCKY LOUISVILLE MULTIFAMILY RESEARCH

    The Cushman & Wakefield | Commercial Kentucky Multifamily Research Team, along with Integra Realty Research, provides in-depth coverage of the Louisville Metropolitan Statistical Area. In addition to analyzing multifamily rent and sale trends, these reports examine employment data, key economic announcements, and development pipeline news.

    Note that the majority of this data was collected prior to March 15, 2020 and the outset of the COVID-19 pandemic hitting the metro area.

    RESEARCH & SALES TEAM

    IN THIS EDITION

    CRAIG COLLINS SENIOR DIRECTOR [email protected]

    MIKE KEMETHER VICE CHAIR, MULTIFAMILY ADVISORY GROUP [email protected]

  • 1LOUI SVI L L E , KEN T UCKY MARKET INSIGHT First Quarter 2020

    The following are select announcements from first quarter 2020:

    Average Q1 employment decreased by 10,416 jobs.

    Average Q1 unemployment increased to 4.5%.

    1.6 -4,000 % Y O Y B P S Y O Y

    ECONOMIC EXPANSION

    JOB GROWTH & UNEMPLOYMENT RATE

    Sunglass designer and manufacturer, Shady Rays, Inc. plans to create 38 new jobs in the next five years at its 11,800 sf office and warehouse operation in Simpsonville.

    The University of Louisville plans to hire almost 400 nurses and doctors to increase access to local healthcare in its expanded system. Those facilities include Jewish Hospital locations in Louisville and Shelbyville, and Mary & Elizabeth Hospital.

    A Fall River, Massachussetts-based biopharmaceutical sector thermal shipping and packaging manufacturer, Packaging Technology Group, has chosen a Louisville location for a new manufacturing plan. These plans are expected to create up to 40 new jobs and mark a $2M investment.

    QSR Automations, Inc., a Louisville company that designs hardware and software tools for restaurants and the hospitality industry, will construct a new headquarters near River Road and Zorn Avenue. The new HQ building will be approximately 3 times the size of its current office and represents a $10M investment, with a plan to add about 50 new employees.

    a

    As of the end of March 2020, unemployment rates in the Louisville area climbed from 3.3% (as of Q3 2019) to 4.5%. Louisville’s unemployment rate was slightly above the national average, which was 4.4% for the same period. Louisville ranked in the Top 15 of Glassdoor’s “25 Best Cities for Jobs 2020”.

    EMPLOYMENT & UNEMPLOYMENT TRENDS

    LOUISVILLE JOB GROWTH TRENDS

    LOUISVILLE METRO AREA

    Q1 2019 Q3 2019 Q1 2020

    EMPLOYMENT (% Change) 1.0% 0.0% 2.3%

    UNEMPLOYMENT RATE (%) 3.8% 3.3% 4.5%

    Source: Bureau of Labor Statistics

    EMPLOYMENT IN THOUSANDS

    Source: Cushman & Wakefield | Commercial Kentucky

    a

    a

    a

    -20000

    -15000

    -10000

    -5000

    0

    5000

    10000

    15000

    Q1 Q2 Q3 Q4

    Series2 Series3 Series42018 2019 2020

  • 2LOUI SVI L L E , KEN T UCKY MARKET INSIGHT First Quarter 2020

    1,791 units were completed in the last 12 months, and over 3,700 units are currently under construction in the Louisville Metro area.

    Additionally, over 6,900 units are planned throughout the Metro area, with two submarkets planning over 1,400 units each. Those submarkets are Area 2 (with 1,456 units planned) and Area 7 (with nearly 2,500 units planned).

    From 2019 to 2024, the metro is project to add 17,200 households, of which approximately 5,600 will be renters.

    The following are Cushman & Wakefield’s projections over the near term:

    DEVELOPMENT / INVENTORY

    DEMOGRAPHIC FUNDAMENTALS

    MULTIFAMILY FORECAST

    VACANCYREN TS P IP EL INE % G ROWTH Forecast is 12-month outlook

    2000: 1,121,242 2010: 1,235,712 2016: 1,308,447 2021: 1,343,483

    2000: 28.8% 2010: 32.1% 2016: 33.0% 2021: 32.7%

    2000: $40,928 2010: $47,555 2016: $57,685 2021: $67,273

    POPULATION

    PERCENT RENTER

    HOUSEHOLDS

    MEDIAN HOUSEHOLD

    INCOME

    SUBMARKET OVERVIEW

    RENTS & VACANCY BY SUBMARKET

    UNDER CONSTRUCTION BY SUBMARKET

    Source: Cushman & Wakefield | Commercial Kentucky Research Note: Submarkets are defined by Integra Realty Research

    Source: Integra Realty Research

    $845

    $950

    $1,050

    $950

    $1,200

    $1,200

    $1,105

    $1,295

    $800

    New Cut Rd

    So. Preston Hwy

    So. Bardstown Rd

    Mid-Bardstown…

    Shelbyville Rd

    East Brownsboro/Westport Rd

    Frankfort Ave/Brownsboro Rd

    CBD

    Dixie Hwy

    Avg Rents

    2%

    3%

    3%

    4%

    5%

    4%

    4%

    8%

    2%

    0% 10% 20% 30% 40% 50%

    New Cut Rd

    So. Preston Hwy

    So. Bardstown Rd

    Mid-Bardstown Rd/Taylorsville Rd

    Shelbyville Rd

    East Brownsboro/Westport Rd

    Frankfort Ave/Brownsboro Rd

    CBD

    Dixie Hwy

    Vacancy Rate

    0

    200

    400

    600

    800

    1,000

    1,200

    1,400

  • 3LOUI SVI L L E , KEN T UCKY MARKET INSIGHT First Quarter 2020

    Multifamily investment activity for Q1 2020 in the Louisville MSA dipped slightly. With occupancy rates high and the recent rent increases, the market remains very active.

    Regional and national apartment funds have been the largest active players for acquiring multifamily in the Louisville marketplace. Private capital also continues to play a major role in the B & C market.

    Class B – KBS Shelby Crossing, LLC sold Shelby Crossing Apartments (90 units) to 1Sharpe Capital for $88K per unit. The asset is located in the Shelbyville Road corridor.

    Class B – Heritage Hill Multifamily Partners sold Viera Anchorage Apartments, (163 units) located in the Shelbyville Road corridor to Lexerd Capital Management. The sale price was $141K per unit.

    Class B – Sundance Bay sold Woodbridge Apartments (360 units) to Buckingham Companies for $117K per unit. This property is located in the Shelbyville Road corridor.

    INVESTMENT ACTIVITY

    NOTABLE SALES

    PRICING & CAP RATES

    HISTORICAL SALES VOLUME

    Source: Real Capital Analytics, Commercial Kentucky | Cushman & Wakefield Research

    Source: Real Capital Analytics, Commercial Kentucky | Cushman & Wakefield Research

    $0

    $100

    $200

    $300

    $400

    $500

    $600

    0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%

    3/ 1/

    20 16

    6/ 1/

    20 16

    9/ 1/

    20 16

    12 /1

    /2 01

    6

    3/ 1/

    20 17

    6/ 1/

    20 17

    9/ 1/

    20 17

    12 /1

    /2 01

    7

    3/ 1/

    20 18

    6/ 1/

    20 18

    9/ 1/

    20 18

    12 /1

    /2 01

    8

    3/ 1/

    20 19

    6/ 1/

    20 19

    9/ 1/

    20 19

    12 /1

    /2 01

    9

    3/ 1/

    20 20

    Avg Cap Rate

    Louisville Average National Average

    -60.0%

    -40.0%

    -20.0%

    0.0%

    20.0%

    40.0%

    60.0%

    80.0%

    100.0%

    Change in Sales (YOY)

  • 4LOUI SVI L L E , KEN T UCKY MARKET INSIGHT First Quarter 2020

    SELECT MULTIFAMILY LOUISVILLE MARKET NEWS

    • Louisville’s urban sector continues to add more units, with Aptitude Development completing a 10 story 232-unit complex on S. Fourth St , along with the renovation of the 275-unit Kentucky Tower building.

    • LDG Development has changed gears on a proposed multifamily project on Bohannon Avenue in southwest Louisville. Despite this move, LDG has filed plans with the city for more than 1,300 new apartments this past month. Most recently, LDG filed for a rezoning of a 10-acre site on Hikes Lane to build up to 507 new apartments. Other recent projects by LDG include a 283-unit apartment community on Magazine Street at West Chestnut and a 432-unit apartment community on Cooper Chapel Road.

    • Gray Street Apartments, another LDG Development property planned for East Gray Street at South Shelby Street, appears to be growing. LDG has filed revised plans with the city to add approximately 94 additional units to the original 250 proposed for the site.

    • Deliveries since Quarter 3 of 2019 include NTS’ Upton Oxmoor Apartments (301 units), Cityscape Residential’s Flats at Springhurst (249 units), and Jefferson Development’s The Ivy (274 units).

    • Jefferson Development has immediately begun planning Phase II for The Ivy , which would add more than 300 units to this community in northeast Jefferson County.

    • Louisville developer, Sunshine Builders, LLC is seeking rezoning of 22 acres on South English Station Road near I-64. Currently used for storage buildings, Sunshine Builders has proposed a 166-unit apartment community and 59 patio homes.

  • Copyright © 2020 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.

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