Investors home in on multifamily real estate

Editor’s note:

Steve Sinovic is the Journal’s new commercial real-estate reporter. Developers, brokers, architects, lenders – basically anyone with a hand in the commercial real estate market – may send news tips, high resolution photos and illustrations to ssinovic@abqjournal.com. Or call 505-823-3919.

Commercial property investors were betting on Albuquerque multifamily real estate in 2015.

sinovic_steve_BizOFive out-of-state buyers brought nearly $100 million in business for the year, said Albuquerque broker Cynthia Meister of Colliers International, who recently announced the sale of the 200-unit Presidio at Northeast Heights apartment complex and totaled the take. One new owner, Texas-based Olympus Properties, not only bought the Presidio, but acquired Encantada at Santa Monica as well.

According to Meister, investment activity slowed somewhat in the fourth quarter, but volume was still up 24 percent in 2015.

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Prices pushed higher, too. The median price in 2015 was $63,800 per unit, 26 percent higher than the 2014 median price.

Several of the deals were worked by both the Albuquerque and Phoenix offices of Colliers.

Meister said 2015 started strongly with sales of Silverado, Oak Park and Cantata at the Trails apartment complexes. “Albuquerque looks very attractive because of the affordability of its rental housing, said Meister. “We are sort of a steady Eddie.

“Multifamily investors may not turn a huge profit when they sell here, but well-managed Albuquerque rentals generally cash-flow nicely.”

Survey echoes apartment market stability

Another industry observer notes that multifamily properties historically have been a good bet – and then add in limited construction of new apartments plus tougher mortgage-lending standards and you’ve got a metrowide occupancy of around 94 percent.

The apartment market showed its resiliency this winter, posting small gains in the fundamental measures of occupancy and average rent.

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The takeaway is a market somewhat stronger than typical winters, according to the latest market survey of the Eagle Multifamily Housing Team at commercial real-estate services firm CBRE.

The local occupancy rate registered at 94 percent in January, said broker David Eagle. The rate was 93.6 percent at the same time last year.

The average monthly rent edged up 2.4 percent from $747 to $765. CBRE, which collected data on 140-market rate apartment complexes and 45 affordable properties, found that two-bedroom, two-bath units had the largest rent gain.

Apartment occupancy in the metro area has been driven by two basic types of renters, Eagle said.

“A good number are residents not able to purchase a home and unfortunately are rent sensitive. Others are more interested in the freedom that apartment living provides. They prefer not to spend time and money on the upkeep of a house,” he said.

Medical sector stays healthy

Lovelace Medical Group, with its plans to occupy a new medical office building at Jefferson and Osuna NE in the coming year, is not the only health-care player with an eye to expand.

As detailed in my Business Outlook story last week, Presbyterian Healthcare Services also has ambitious, multimillion-dollar plans for new space and remodels.

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Medical-office space is a hot commodity in well-trafficked areas of town, especially on the West Side, because it’s where a large medical center operates, said Ken Schaefer, director of brokerage services for Colliers International’s Albuquerque office.

Look for other established “medical users” – specialists, dentists, imaging clinics and allied health providers – to set up shop or branch out in the coming year, said Schaefer.

Schaefer said high-traffic retail centers in areas such as Rio Rancho offer a prized patient base, which could heat up the competition. Lenders are eager to fund new ventures, and landlords are eager to sign health-care tenants. “Many of the lenders will offer physicians 100 percent financing because they have a reliable revenue stream and there is less risk,” said Schaefer, adding that Colliers brokers are scouting locations for clients.

“They are very good tenants, and that’s a benefit for landlords.”

Overseas money

Capital flows into U.S. real-estate assets will remain strong this year. Economic and political turbulence is bringing overseas money to a “safe haven” in America, reports the National Real Estate Investor.

“The U.S. property market is the most stable, transparent in the world, making it an easy investment choice,” according to the publication. “(While) slowing growth in China and much of Europe may dampen currencies and incomes over there, there is still abundant non-U.S. capital looking for placement and still very high demand for U.S. assets, as 2015 proved with record inflows.”

Last year, foreign purchases of U.S. real-estate assets rose to $62 billion over the 12-month period ending in October, according to research firm Real Capital Analytics, with Canada, Norway, Singapore and China leading the wave.

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Veteran broker hits peak

At its annual Everest awards banquet, Colliers International recognized Albuquerque broker Bill Robertson as being among the company’s top performers for 2015 across the United States, Canada and Latin America.

Robertson was honored on Feb. 10 in Washington, D.C., during the awards luncheon at Colliers International’s largest annual meeting. Robertson has over three decades of experience in real-estate brokerage and has handled hundreds of acres of mixed-use land listings, specializing in office and industrial parks.

“It was an honor to receive this award, but it really was a team effort. The industrial team we have here at Colliers New Mexico is outstanding and a lot of credit needs to go to them as well,” Robertson said.

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