ATLANTA—A growing trend for multifamily investors searching in secondary and tertiary markets is not only chasing yield but product that appeals to higher-income renters. So says Jake Reid, senior director of Atlanta multifamily investment sales for Franklin Street.
“Investors are beginning to recognize that higher income tenants are choosing to rent versus own and that this trend is not limited to major metropolitan areas,” Reid tells GlobeSt.com. “They are also realizing the importance of not only investing in quality product but also the proximity to restaurants and shopping in suburban downtown markets.”
As Reid sees it, the underlying value of the land far surpasses the value from a traditional multifamily standpoint. At a sales price of more than $75,000 per unit, he says the sellers realized a premium on existing net operating income.
“This metric was highly dependent on the lower density of the existing apartments coupled with desirable zoning,” Reid says. “ With a lot of interest for well-located sites in the market it was important for the sellers to know they were working with a buyer that had the true wherewithal and capacity to close at the proposed terms.”
While the residential market continues to steadily improve, Reid says certain markets are outperforming the rest. The popularity of both neighborhoods and the ability for the developer to move quickly towards the finished product should make these very successful projects.