Multifamily Buyers Fight Over Value Assets
Institutionally capitalized groups and private syndicators are fighting over value-add multifamily assets within a day’s drive of a major Texas metro.
TEMPLE, TX—DFW’s multifamily pipeline remains robust to accommodate the region’s fast-growing population driven by the 122,000 jobs added in the last year. The development focus continues to be in central Dallas, where half of the development pipeline–28,000 units–are under construction, although all parts of Dallas and Fort Worth are active, according to a report by JLL.
This high-octane demand is resulting in growing multifamily investor interest across Texas resulting in numerous buyers vying for assets located within a day’s drive of any major metro. One Central Texas asset fitting that description recently caught the eye of a buyer.
Retreat at Western Hills, a 14-building 224-unit apartment community, sold to Prasiti Asset Manager for an undisclosed purchase price. JLL senior vice president Zar Haro and vice president David Fersing led the marketing and sales efforts on behalf of the seller, CEG Multifamily LLC.
“Retreat at Western Hills is a tremendous strategic value-add opportunity for the investor,” said Haro. “The property’s in a great centralized location surrounded by the region’s top employers. There’s terrific potential to boost rents with the right capital investments and opportunities for great long-term upside.”
Retreat at Western Hills is located at 601 North Twin Oaks Dr. The deal includes the 9.51 acres on which the property is located. Onsite amenities include a resort-style swimming pool, fitness center, clothing care center and resident clubhouse.
“We are seeing unprecedented demand for assets up and down the IH-35 corridor,” Haro tells GlobeSt.com. “A few years ago, we would see three to five offers from small investment companies and local owners. Today, it’s institutionally capitalized groups and private syndicators fighting over these assets. We’ve found that if an asset is within a day’s drive of a major Texas metro, buyers are fighting over it if it has some sort of a value story.”
Between 2016 and 2017, 51,000 units were delivered. Vacancy in these properties, which are either stabilized or are in late-stage lease-up, now averages 17.1%. Another 12,500 units were delivered in the first half of this year, says JLL.
Based on the pipeline for the remainder of this year, 2018 deliveries should total almost 31,000 units, with a similar level scheduled to hit the market in 2019. The projects beyond next year, specifically 2020 and 2021 projects, are in early planning and not yet finalized.
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