ATLANTA—With 2014 coming to a close, many are planning theirstrategies for the year ahead. But what's can we expect in thecoming quarters? What sectors and cities are hottest? What weakspots remain the Southeast that investors should beware of?

| caught up with Kevin Finkel,executive vice president of Resource Real Estate,to get his thoughts on these questions in this two-part interviewseries. Be sure to come back this afternoon for the second half ofthis exclusive Q&A.

| What are the dominant commercial realestate trends you are seeing? What's really happening in terms ofemerging and growing trends?


Finkel: In the Southeast US and across 21states in the US, Resource Real Estate is focused on themultifamily sector. We are seeing some cleartrends.


Rent growth remains quite strong for class B and Capartment communities, especially thosecommunities that serve the US workforce renter. Rent growth isslowing a bit for class A properties.


The vast majority of new apartment construction is urban andhigh-end—class A-plus—construction that targets rents at or above$2,000 per month. There is virtually no newapartment supply being built for the workforce. Webelieve that this is a long-term trend, as there is no market orgovernmental mechanisms that encourage developers to create newworkforce housing that rents for around $1,200 per month given thehigh cost of land and construction.


$1,200 rents align with the current US median household incomeof approximately $51,000 per year. Therefore, we believe thatmultifamily real estate firms with the experience and capabilitiesto fully renovate the aged apartment inventory available today intoupgraded rental options that are in high demand by today'sworkforce offer a significant opportunity.

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