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Mar 09 2018

Multi-Family State of the Market

Today I attended an event in Boston hosted by CoStar, titled: Multi-Family State of The Market. The two panelist included Mark Hickey and Lee G. Everett, both of whom are seasoned experts in the Real Estate and analytics fields. Mark is a real estate economist with the CoStar Group, the leading provider of data and analytics to the commercial real estate industry. Lee is a managing consultant at CoStar Portfolio Strategy, where he focuses on client advisory work as a thought leader on the multi-family sector.

 

The discussion included data supported analysis about the multi-family sector, both nationally and regionally. The takeaway included a broader discussion about the history of the sector, its growth since 2010, and the forecast ahead. The presentation included impressive graphs and charts providing a thorough analysis which was displayed electronically via the big screens. The data was very convincing; it clearly showed how the multi-family markets nationwide have changed since the 2015’ peak.

 

In particular, it revealed the impact of new deliveries on both class A & B inventory and further demonstrated how the increase in concessions and vacancies occurred as a result. Also, the discussion included the ongoing impact due to the lack of available construction trades and its impact on the timely delivery of apartments into the market. The data was clear, nationally and in Boston rental concessions are common especially in the Class A & B products. Due to the delays in deliveries, we will never know how the absorption rates will likely have been impacted. Some might suggest that if the deliveries occurred according to schedule, then the absorption rates would have been substantially challenged.

 

In summary, the presentation and analysis was thorough and thought-provoking. Lee noted: “Nationally rent growth will continue to be muted due to both demand and supply-side factors. Moreover, as we move forward in the coming years, demand-side factors will favor product aimed at both seniors and aging Millennials.”

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Jan 16 2018

In Town Concord Event

I recently attended the (CIBOR) Commercial Investment Board of Realtor sponsored event, organized by the organization known as In Town Concord. Their mission is to promote and enhance the business environment, cultural activities, housing and appearance of historic downtown Concord, New Hampshire. The event drew a large crowd of local citizens from all backgrounds, interested in learning more about the ongoing exuberance and resurgence in Concord’s downtown!

 

The event included tours of the city’s main street and visits to several redevelopment projects, the owners and developers were onsite to discuss these exciting changes. We visited Michael Simchik’s Capital Commons building on South Main Street; he is in the early stages of developing a boutique hotel on the location’s third and fourth floor. The hotel will have 35 to 37 rooms, many overlooking shops on Main Street and the Capital Building.

 

Also, we toured the legendary Concord Theatre, located at 16-18 S. Main Street. The main hall once squeezed 499 stiff seats in front of a 30-foot screen in the heart of downtown. The grand old theatre will be rescued and preserved by local developer and longtime Concord resident, Steven Duprey.  He plans to rebuild the facade and second floor “the exact same way it was when it became a theater. The total cost of the project could range between $4.2 million and $5.2 million. He said his hope was to start construction in the fall and be open for September 2018.

 

The historic Star building, owned by the Aznive family for many years was recently sold to Manchester Developers, Elm Grove Companies. They have purchased several downtown buildings and have plans to redevelop the properties into modern apartments and offices. The historic Kearsarge building will be renovated into luxury apartments and modern court yards will be created, offering outside gathering spaces for residents.

 

We concluded the tour at the historic Phoenix Building, owned by local resident Mark Ciborowski.  Located in the heart of Main Street, “Phenix Hall replaced “Old” Phenix Hall, which burned in 1893. Both the old and new buildings featured auditoriums on the top story used for political speeches, lectures, theater productions, boxing and wrestling matches, agricultural fairs, and firemen’s dances. The existing 500-seat theater has a stage that rolls out into the audience. Abraham Lincoln spoke at the old building in 1860; Theodore Roosevelt spoke at the new building in 1912.

 

The panel of speakers who included local brokers, merchants, owners and developers discussed the “Buzz” that Concord has experienced in the past year. Perhaps the City of Concord’s recent revitalization of Main Street, costing $15,000,000+-, has served as the catalyst for the positive redevelopment changes that we see now. Investors and developers are clearly confident in Concord and its future; they continue to invest millions of dollars in redesigning new apartments, adding boutique hotels, and revitalizing historic theatres.

 

In closing, the City of Concord is undergoing a renaissance of sorts. Its main street is vibrant and active, local merchants continue to bring in interesting and useful boutique stores. The restaurants and pubs and breweries continue to enhance the landscape of our modern streets, while protecting the vision and nostalgia of the past. The political will is clearly there to support this progress; developers and businesses continue to receive concessions whenever possible, in order for the community to grow and prosper.

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Jan 06 2018

New Hampshire Market Forecast 2018

According to most of the national models, the primary markets have peaked; therefore investors seeking higher yields continue to flock to outlying areas where opportunities exist. We continue to see countless examples of both local and outside developers, who are buying “value add” opportunities across New Hampshire.

 

Often times, these properties have been owned by the same families for multiple generations and therefore debt is low or nonexistent. They are often managed for the benefit of the family, and as a result the rents are below market and upgrades to the units are limited. For example, recently in Concord, New Hampshire Michael Charron and Tom Duffy brokered the sale of nearly a half a dozen, prominent downtown brick buildings. They sold to outside investors with redevelopment plans to revitalize the buildings, by renovating into modern apartments and offices. The City of Concord recently invested over $15,000,000 in the downtown, in an effort to modernize the city and its streetscape. The streets were reconfigured to allow for outside dining at local restaurants, and to encourage social spaces for tourists and locals to gather. Local developers like Steve Duprey and John Chorlian have been instrumental in promoting Concords progress and vision for many years.

 

There are robust opportunities to be had by investing in multifamily assets located in New Hampshire cities. Derrick Hawthorne, Vice President of asset management and acquisitions at Draper and Kramer noted the following in a recent article in the Multi-Family Executive: “The best add value opportunities are in rising markets where values in general are increasing.” As a result of increased fundamental drivers like job growth, technology,  start-up companies, regional medical centers and long standing higher education institutions, renter demand is strong.  Investors are confident investing in communities like Nashua, Manchester, Portsmouth and Concord due to the strong fundamentals. For instance, Michael Charron and Tom Duffy recently brokered the sale of over 90+ units in Nashua for $6,300,000.  A prominent New Hampshire family had owned and managed the portfolio for many years.

 

As growth in New Hampshire spreads across the state, we continue to see groves of technology and startup companies coming into areas like Manchester, Portsmouth and Concord. Real Estate investors like WBC Properties, a Manchester company who owns hundreds of apartments, have recently purchased 1087 Elm Street in downtown Manchester. They have redeveloped part of the circa 1900’s building into WBC Office Suites. The co-working class A-space offers co-working flexible spaces for professionals like engineers, attorney’s, project managers, developers and entrepreneurs. They provide co-working spaces and flexible plans from hot-desks to private offices.

 

According to the fundamentals and by all measures, New Hampshire’s growth and prosperity has never looked better. National companies continue to invest in our towns and cities, and ambitious developers and entrepreneurs are reshaping our downtowns, according to how we want to live and play. The opportunities to invest in multi-family and downtown assets have never been greater.

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Oct 23 2017

How Much longer can this bull market continue?

I recently attended the annual Multi-Family Summit hosted by the New England Real Estate Journal and the Economic Summit hosted by Dicicco, Gulman & Company LLP. Many of us in the multi-family space continue to ask the same question, “How much longer can this bull market continue?” According to both panels, the outlook for 2018 could not be better; some have suggested that it could be one of the best years ever!

 

This great economic expansion is expected to continue. There are no signs of excess in the markets, consumer and business confidence is high, unemployment rates are low and wage growth is up by 2.5-3% nationally, and expected to pick up. Already, this is the 3rd largest economic expansion in American history; some anticipate that this 8 year expansion could become the largest economic expansion ever! Many of us believe that due to the changes characteristic of the Millennials and how they live, spend, and work; that our economic forecasting abilities leave us in uncharted waters.  Millennials those born between 1980 – 2000, ages 17-37 consist of 92.5 million people nationwide.  For example: As of 2016’, only 69% of millennials drive automobiles. They have the highest rate of college degrees. They grew up with the internet. And their online spending habits have nearly obliterated the retail sectors and reinvigorated the industrial sectors beyond belief. Boston is considered a millennial city; they consist of 30% of the population, which exceeds the national average by 2%. In an interest to work where they live, lifestyle centers are forming in the suburbs around Boston.

 

In closing, the demand for rentals in Boston and nationwide continues to be strong. Even with recent available new inventory, absorption rates appear healthy and strong. Consumer and business confidence is high and the S&P index continues to rally. The economic expansion is expected to continue and the multi-family sector is expected to be strong. The largest working population, millennials, continues to positively impact our economies, both local and beyond. They are educated, mobile and resilient; they require smaller living spaces located in metropolitan cities, where they prefer to walk or bike to work. They hold professional jobs and have discretionary income, to live and spend at their choosing. It is clear, they will continue to positively impact changes in our markets.

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Apr 30 2017

Secondary or Tertiary Markets

This is a subject that I’ve read a lot about. From other investor’s blogs to news headlines, many are delivering the message of slowing sales volumes in the multi-unit sector. However, these data tend to overlook the activity in the tertiary markets.

 

From working in the New Hampshire market every day, I see the nuances in its multi-unit sector versus that of secondary markets. From my experience so far into 2017, I can only see continued robust demand for mutli-units throughout the state.

 

Feel free to read to my full article here.

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Jun 17 2016

Deal of the Year!

Last week my partner Tom and I were presented with the NH CIBOR 2015 Residential Investment Deal of the Year Award. Being one of the biggest deals in the state, we knew it was sure to garner to press and attention, but nothing had quite prepared me for the barrage of requests for interviews and congratulatory emails and phonecalls.

“Most analyst across the country have noted that this sector is overvalued in the primary areas, as a result investors are seeking higher yields and lower risk in secondary and tertiary markets like New Hampshire” – Me, during an interview

More important than the deal itself, however, is what the deal indicates. If we are able to sell a $12.5 million New Hampshire asset, and in the same year also sell the Riverside Trust Portfolio for $11.125 million, this clearly demonstrates the insatiable appetite among investors for large mutli-unit properties within the state.

 

Feel free to check out the full article here.

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Dec 12 2015

Riverside Trust

What better way to top off the holiday season than this amazing deal. I cannot stress enough my incredible appreciation for the professionalism demonstrated on both sides of this transaction. Everyone was an absolute pleasure to work with.

 

The week following this deal, many people (bankers, other realtors, developers, ect.) approached me asking for market forecasts and advice, and generally I’ve held the same notion that the market is showing a certain level of robustness. The appetite among investors for large multi-unit properties in the state of New Hampshire is only getting stronger. This deal remains a signal of that.

 

Regarding this deal, Tom and I were mentioned in the acclaimed New England Journal of Real Estate. Check out the article here.

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