ATLANTA—With 2014 coming to a close, many are planning their strategies for the year ahead. But what's can we expect in the coming quarters? What sectors and cities are hottest? What weak spots remain the Southeast that investors should beware of?
GlobeSt.com caught up with Kevin Finkel, executive vice president of Resource Real Estate, to get his thoughts on these questions in this two-part interview series. Be sure to come back this afternoon for the second half of this exclusive Q&A.
GlobeSt.com: What are the dominant commercial real estate trends you are seeing? What's really happening in terms of emerging and growing trends?
Finkel: In the Southeast US and across 21 states in the US, Resource Real Estate is focused on the multifamily sector. We are seeing some clear trends.
Rent growth remains quite strong for class B and C apartment communities, especially those communities that serve the US workforce renter. Rent growth is slowing a bit for class A properties.
The vast majority of new apartment construction is urban and high-end—class A-plus—construction that targets rents at or above $2,000 per month. There is virtually no new apartment supply being built for the workforce. We believe that this is a long-term trend, as there is no market or governmental mechanisms that encourage developers to create new workforce housing that rents for around $1,200 per month given the high cost of land and construction.
$1,200 rents align with the current US median household income of approximately $51,000 per year. Therefore, we believe that multifamily real estate firms with the experience and capabilities to fully renovate the aged apartment inventory available today into upgraded rental options that are in high demand by today's workforce offer a significant opportunity.
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