SOUTHEAST SNAPSHOT, APRIL 2007

Greensboro, North Carolina Multifamily Market

The Triad area of North Carolina has a very active sales market for existing multifamily properties in the size range from about 100 units and larger.

Class A product is almost exclusively being purchased by TIC Syndications at capitalization rates mostly in the 6 to 6.5 percent range. The real estate investment trusts (REITs) and pension funds are currently not buyers in this market but have consistently been sellers during the past 1 to 2 years. Class A and B properties are being developed renting in the $650 to $850 range.

Class B and C product is being purchased by private equity sources from throughout the country but with a significant concentration coming from the markets of California, Florida and the Northeastern United States. Many of these investors have sold apartment properties at high unit prices and low capitalization rates and want to trade into a market that has been flat; but that they believe has the potential for upward movement. In essence, many believe the Triad market in general, represents a value opportunity and ideally they hope to find value-added properties within this market. Class B and C properties are mostly trading at capitalization rates from about 7 to 8 percent.

Greensboro is primarily a local developer market. The majority of development is taking place in the heart of the Triad, which is showing the best job growth. Chris Park is being developed in two separate complexes for a total of 510 units in south Winston-Salem. This could force leasing concessions in older properties. The average rental rates in the Greensboro area are $500 to $1000 per month; and the overall market vacancy rate is approximately 12 percent. Last year’s sales totaled approximately $360 million.

— David Sullivan is a broker with Brown Investment Properties/TCN Worldwide in Greensboro, North Carolina.


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