By Jim Harris
Jim Harris is Executive Vice President at TradeMark Properties of Raleigh, North Carolina.
Apartments and multi-family housing have been growing in popularity for many reasons. These properties are wise economic choices for families. The current economic climate has made purchasing homes difficult for many people. Today, more and more families welcome the convenience and affordability of smaller, temporary dwellings compared to purchasing homes.
What is most remarkable and is good news for the Raleigh/Durham area is that, even in tough economic times, the region’s employment has consistently grown. According to Pierce Eislen, an apartment information service-provider, the Raleigh/Durham market has experienced three percent growth during the past 15 to 18 months. This has expanded the multifamily need, and national developers and investors have taken notice.
Nearly 5,000 apartments and multi-family units have either recently been completed or are being built in the greater Triangle area. The Raleigh/Durham area trails behind only Austin, Texas and San Francisco in terms of employment gains, putting Raleigh/Durham in the top five major markets for apartment development since there is a positive correlation between employment gains and apartment growth. Rooftops generally start a cycle that retail, then office, follow, and our region is leading these cycles.
In comparison to other markets, Raleigh/Durham is shattering records for sales of multifamily structures. The Oberlin Court Apartments, a 370-unit project with 30,000 square feet of retail near downtown Raleigh, sold for approximately $72.3 million at the end of 2011 and set a record in the area at $180,000 per unit. Following the sale of Oberlin Court, Park & Market apartments (409 units) in the North Hills neighborhood of Raleigh sold for $82 million, a price of $200,489 per unit.
The sales of these apartments are positive signs for the future of the commercial and residential real estate industries in the Raleigh/Durham area. Although commercial and residential real estate are separate entities, they are closely linked and each market affects the other in a significant manner.
The past 24 months have been highly competitive in multi-family projects, of which our company has sold more than $30 million in the last two years including a complex located at 3529 Roxboro Road in Durham and The Townes at University Pointe, located at 336 Blackhawk Road in Charlotte. Although this is more of a residential trend, the commercial side of our business has also seen tremendous growth across all investment sales sectors, including office, medical, retail, industrial and even land sales.
Although these are areas that have recently been slow, there is great optimism to invest and people are interested in putting their money in places where they know it will grow and be successful. Many of the large parcels of land have been purchased by big residential developers looking forward to the next five years when people will be heading out of apartments into their own homes.
We anticipate a great amount of growth in this area and continued improvement in the local and regional real estate markets. CNN Money, Forbes and other publications are calling for residential recovery, albeit slow, across the nation. The Raleigh/Durham area had less trouble in residential assets than many parts of the country, and if those other parts of the country are recovering, we are surely doing even better.
Housing starts are back to pre-2008 levels, and when residential real estate is strengthened, commercial real estate is sure to follow. As the housing situation becomes better and additional local residents are able to purchase single-family homes, commercial development will follow and the cycle will yield even greater results. When there is an increase in residential real estate development, more activity within commercial real estate development is certain to follow.
Jim Harris is Executive Vice President at TradeMark Properties, a full-service commercial real estate brokerage in Raleigh, North Carolina. In his role at TradeMark, Jim leads corporate strategy and business development efforts, both inside and beyond the Research Triangle area. While also serving the company as a commercial real estate broker, Jim has worked with multiple area clients, including M*Modal and UNC Healthcare.