A— June 28 - July 11, 2013 — Mid Year Review — Mid Atlantic Real Estate Journal
www.marejournal.com
ummer slowdown? Not for multi-family invest- ments, the “hottest” com- By Ken Uranowitz, Gebroe-Hammer Associates Mid-Year Report: Multifamily investments continue scorching reign S M ulti F amily I nvestments conversions and other energy conservation measures.
Throughout theMid-Atlantic region, institutional investors, individuals and private invest- ment groups lead the pack when it comes to augmenting their apartment-building port- folios. Despite a substantial imbalance in supply of avail- able for-sale product and de- mand, stabilized properties are garnering the greatest atten- tion across all class categories. Today’s experienced investors are discovering the greatest value by minimizing expenses in the current rent environ- ment while implementing tried-and-true management efficiencies, such as oil-to-gas
ranged the sale of 261 apart- ment-rental units and five commercial units in the multi- family investment stronghold of Northern New Jersey. These mid-rise properties offered a tremendous opportunity for the respective investors, each of whom recognized the long- term potential. From simple common-area refurbishments, like painting and new flooring, to unit up- grades, including new kitchens and bathrooms with modern appliances and fixtures and enhanced amenities, current and new owners are increas- ing the appeal of their product.
This return to core fundamen- tals, through visible improve- ments, is making rising rents more palatable to current ten- ants while owners cast their net to attract an even wider renter pool. One interestingnewphenom- enon within the multi-family investment sector is the cur- rent influx of once-distressed properties being delivered to market. Troubled just 18 to 24 months ago, these newly stabi- lized, income-producing build- ings are attracting new ten- ants and fortifying occupancies thanks to a much-needed capi- tal infusion. Rent appreciation now renders these formerly under-performing properties highly competitive, with rents approaching or exceeding last year’s U.S. average of approxi- mately $1,048.46, as reported by REIS. Today’s long-time owners, many of whom are second- and third-generation family mem- bers, acknowledge there is no time like the present to sell. Favorable market conditions, an extended tenant life cycle and compressed cap rates that contribute toward competitive- to-aggressive pricing put those considering a disposition at an advantage. This trend to monetize as- sets is illustrated by a recent 1031 Exchange engineered by Gebroe-Hammer Associates. A long-time client of the firm and a veteran multi-family investor had owned a well- located property package in a popular commuter hub for 28 years. The package, comprised of 29 apartment-rental units and an adjacent two-bedroom single-family home containing a 19-space parking lot, met the requirements of the buyer, who successfully completed the back-end of an Exchange, while simultaneously selling a 39-unit building the buyer owned for several years. The sale of this high-quality, high- performing multi-family asset allowed the seller to maximize the return on his original in- vestment with a per-unit price of approximately $160,000. Some of the most densely populated counties inAmerica are located throughout the Mid-Atlantic region, where apartments are the favored residential living option of choice. Investors have always had, and always will have, a penchant for these commuter- continued on page 13A
Even though Class A/B+ product will always be the investment superstar, albeit extremely scarce in terms of available inventory to buy, Class B and C buildings are easily outpacing their more upscale counterparts. With a high concentration of these post-war era buildings stra- tegically situated along the Northeast Corridor, investors are looking beyond a building’s bricks-and-mortar façade to realize its value-add opportuni- ties. Such was the case when Gebroe-Hammer recently ar-
mercial real estate sector. At mid-year, steady rent growth, amid a still strug- g l i ng r e s i - dential home market, and abundantly
Ken Uranowitz
available financing – at his- torically low interest rates – continue to add fuel to the investment fire, with momen- tum on pace to increase for the third straight year.
Dominance: “...most influential, having a commanding position.” (Webster’s) Q1 2013 • 23 DEALS • Averaged 2 Deals per Week DOMINANCE. New Jersey’s dominant brokerage firm specializing in the sale of
multi-family, retail, and commercial investment properties for private investors, REITS, and other institutional clients.
INVESTMENT REAL ESTATE 2 West Northfield Road, Livingston, NJ 07039 Tel. (973) 994-4500 Fax (973) 994-9752 Visit us on the web at: www.gebroehammer.com Email: info@gebroehammer.com
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