MARKET INSIGHTLOUISVILLE, 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 COLLINSSENIOR [email protected]
MIKE KEMETHERVICE CHAIR, MULTIFAMILY ADVISORY [email protected]
1LOUI SVI L L E , KEN T UCKYMARKET INSIGHTFirst 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 UCKYMARKET INSIGHTFirst 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: 1,121,2422010: 1,235,7122016: 1,308,4472021: 1,343,483
2000: 28.8%2010: 32.1%2016: 33.0%2021: 32.7%
2000: $40,9282010: $47,5552016: $57,6852021: $67,273
POPULATION
PERCENT RENTER
HOUSEHOLDS
MEDIAN HOUSEHOLD
INCOME
SUBMARKET OVERVIEW
RENTS & VACANCY BY SUBMARKET
UNDER CONSTRUCTION BY SUBMARKET
Source: Cushman & Wakefield | Commercial Kentucky ResearchNote: 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 UCKYMARKET INSIGHTFirst 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/
2016
6/1/
2016
9/1/
2016
12/1
/201
6
3/1/
2017
6/1/
2017
9/1/
2017
12/1
/201
7
3/1/
2018
6/1/
2018
9/1/
2018
12/1
/201
8
3/1/
2019
6/1/
2019
9/1/
2019
12/1
/201
9
3/1/
2020
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 UCKYMARKET INSIGHTFirst 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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commercialkentucky.com
Craig CollinsSenior DirectorCushman & Wakefield | Commercial Kentucky 333 East Main Street, Suite 510Louisville, KY 40202 Tel: +1 502 589 5150 [email protected]
Mike KemetherVice Chair, Multifamily Advisory GroupCushman & Wakevield1180 Peachtree Street, Suite 3100 Atlanta, GA 30309 Tel: +1 404 853 5269 [email protected]
