ATLANTA—Multifamily is still the darling of commercial real estate in the eyes of many investors, especially in cities like Atlanta. But in this cycle some developers are looking back as they forge ahead.
Indeed, it seems a multifamily development trend from the 80s is back en vogue. What's old is new (and profitable) again.
Here's the reality: Due to high construction costs, it's not feasible to build a new apartment building unless the units inside rent for north of $2,000 per month. That means that renters are faced with living in apartments that aren't as nice as they feel they deserve (class C) or in one they can't afford (class A).
Kevin Finkel, executive vice president of Resource Real Estate, a global firm specializing in direct real estate investments, commercial real estate lending and global property securities, tells GlobeSt.com he sees an opportunity for real estate owners who can offer rents around $1,200 per month. And, he's doing just that by buying distressed suburban garden-style buildings from the 1980s and renovating them.
“Many middle class families' needs match up perfectly with what we're doing,” says Finkel. “They want to rent because they can't be tied down to a house, and they want to be in good suburban areas with a strong infrastructure and local services.
"Our ideal building is in a wealthy suburb. Many of these propped up in the 80s and never got the proper attention or upkeep. Now, the residents face structures with blemishes that lack security and even properly working appliances. That's where we come in.”
Are you seeing this trend in your market? Sound off.
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