Market Insights Report

The Triangle
Raleigh-Durham-Chapel Hill
Multi-Family Market Summary & Activity Update
Winter 2014
THE TRIANGLE
Contents
Introduction
Introduction2
Market Commentary
3
Economic Overview
4
Sales Transactions
5
Proposed Development
8
Communities Under Construction
9
Why Choose Capstone?
11
NC State University
Estates at Wake Forest
CAPSTONE APARTMENT PARTNERS prides itself on the continual value contributions we
are able to offer our industry, and thus we produce periodic Multifamily Market Summaries to
further inform the clients and industry we serve. Capstone believes that this market snapshot
will be beneficial to current owners, operators, investors, and other industry professionals who
are active in the Triangle, as well as others who are looking to break into this market.
Raleigh-Durham Office
401 Harrison Oaks Blvd. | Suite 210
Cary, NC 27513
Andrew Klenk
John Ackiss
Partner
919.647.9510
[email protected]
Investment Advisor
919.370.6325
[email protected]
2
THE TRIANGLE
Commonly referred to as the “Triangle,” North Carolina’s RaleighDurham-Chapel Hill MSA enjoys many professional and recreational
advantages. Raleigh’s population is young and educated—almost half
of the residents over 25 hold a Bachelor’s Degree or higher, and, as
such, the market has become a thriving mecca for new business.
According to the North Carolina Employment Securities Commission,
the Triangle added more than 11,000 new jobs in 2013. This equates
to a year over year growth rate of 2.44%. In fact, Raleigh is growing so
quickly it landed the number 2 spot on Forbes annual list of “America’s
Fastest-Growing Cities,” and the magazine credits Research Triangle
Park and the major universities nearby as two of the main motivators
for that growth.
New and growing companies are attracted to this area for those same
reasons. The financial research firm, Ipreo, recently chose Raleigh for
its expansion, and the executive vice president, O’Hara Macken, stated
“the primary goal was access to talent, and the (Research) Triangle was
our top choice in the U.S.” In December of 2013, the unemployment
rate dropped to a pre-recession level of only 5.2%.
Work Hard, Play Hard
While the population jumped
an estimated 2.15% in 2013 and
20.0% over the last decade, the
fastest-growing Forbes’ ranking
accounts for more than a simple
population increase. Other
factors include phenomenal job
growth, low unemployment,
Class
Units
Multi-Family Fundamentals
The Raleigh-Durham MSA continues to be one of the hottest apartment
development markets in the country. Construction starts are booming,
and there are now 10,028 units under construction throughout the
Triangle MSA. An additional 4,902 units have been proposed. The
average vacancy rate has risen slightly to 6.7% as the first wave of new
construction is absorbed; however, rental demand continues to be
strong with 1,436 units absorbed over the past six months. While new
development thrives, existing communities lost 306 renters during the
same timeframe and were forced to lower rents by 1.7%. Average rent
still remains higher than it was a year ago at $893 per month. Capstone
anticipates vacancy rates could reach 7.0-8.0% in the next 12-24 months
as the new construction deliveries are leased-up and absorbed.
Apartment Comparison by Class
Vacancy Rate
Avg. Sq. Ft.
Avg. Rent
Avg. Rent/Sq. Ft.
Lease-up
4,370
40.3%
966
$1,107
$1.15
A (1-5 Years in Age)
10,684
5.9%
1,023
$1,143
$1.12
B (6-15 Years in Age)
35,915
4.9%
1,038
$982
$0.95
C (16-30 Years in Age)
34,062
5.0%
918
$821
$0.89
C- (30+ Years in Age)
25,084
6.0%
885
$718
$0.81
Stabilized Averages
105,745
5.3%
962
$884
$0.92
Totals/Averages
110,115
6.7%
962
$893
$0.93
MARKET COMMENTARY
Booming Job Growth
high average salaries, low cost of living, availability of higher education,
great healthcare, and a fairly temperate climate as well. The high level
of disposable income market-wide with a flat state tax of only 5.75%
not only creates a terrific apartment market, but allows residents to
enjoy the area’s museums, concerts, historic sites, sporting events, and
shopping in 11 major retail areas. Greater Raleigh truly offers a variety
of recreational venues in the parameters of a comfortable, enriched
lifestyle.
3
THE TRIANGLE
Employment
ECONOMIC OVERVIEW
Recent Employment Announcements
 Purdue Pharma Manufacturing, a pharmaceutical
manufacturer, will hire 100 employees at its new
plant in Durham.
 Ipreo, a financial technology firm, will add 250
jobs at its new facility in Raleigh.
ATI Industrial Automation, a robotic tools
manufacturer, will add 200 employees to its
operations in Apex.
 Teleflex, a medical device manufacturer, will add
75 employees at its new operations in Morrisville.
Wake County's Major Employers
Company
Industry
Rank
Employment
1
State of North Carolina
Government
24,083
2
Wake County Public School System
Education
17,572
3
IBM Corporation
Technology
10,000
4
WakeMed Health & Hospitals
Healthcare
8,423
5
North Carolina State University
Education
8,080
6
Cisco Systems, Inc.
Technology
5,500
7
Rex Healthcare
Healthcare
5,400
8
SAS Institute, Inc.
Business Software & Services
5,159
9
Wake County Government
Government
4,341
10
GlaxoSmithKline
Healthcare
4,140
Wages & Population
There are 514,310 employees in the Raleigh-Cary MSA who earn a mean hourly wage of $22.06 and average annual income of $45,880. The
Durham-Chapel Hill MSA's workforce of 272,250 enjoys an average hourly wage of $26.20 and a mean annual salary of $54,500. In comparison,
the state and national annual income averages are $41,750 and $45,790, respectively.
Historical Population
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Raleigh
313,829
322,083
332,728
347,681
363,267
379,106
393,692
405,612
403,892
416,468
423,179
Raleigh-Cary MSA
863,488
889,313
916,790
953,157
998,979
Durham
196,432
198,695
201,871
205,613
210,798
216,943
223,328
229,171
228,330
233,252
239,358
Chapel Hill
48,778
49,300
49,281
49,925
50,837
51,890
52,636
53,546
57,233
58,011
58,424
Durham-Chapel Hill MSA
441,951
446,376
451,315
458,118
468,250
479,218
490,907
501,228
505,894
513,900
522,826
North Carolina
Source: U.S. Census Bureau
4
The Triangle’s unemployment rate hit its lowest point since 2008 in December 2013 at
5.2% for the Raleigh-Cary market and 4.9% for the Durham-Chapel Hill area. Moreover,
the unemployment rate is well below the state’s average of 6.9% and considerably
healthier than the national average of 6.7%.
1,045,871 1,090,408 1,125,827 1,137,352 1,162,688 1,188,564
8,326,200 8,422,500 8,553,200 8,705,400 8,917,300 9,118,000 9,309,400 9,449,600 9,535,475 9,656,401 9,752,073
THE TRIANGLE
Sales Transactions: 2013 and 2014
Community
City
Sale Date
Units
Sale Price
Price Per Unit
Estates at Wake Forest
2013
Wake Forest
1/28/14
288
$37,200,000
$129,167
Remington on the Green
1986
Raleigh
12/27/13
200
$16,800,000
$84,000
Trinity Park
1993
Raleigh
12/27/13
380
$17,656,347
$46,464
Brentwood East
1977
Raleigh
12/23/13
214
$8,000,000
$37,383
Hawthorne at the Park
1993
Cary
12/20/13
247
$27,100,000
$109,717
Mebane Carden Place
2011
Mebane
12/18/13
240
$21,500,000
$89,583
The Landings
1980
Raleigh
12/17/13
392
$17,400,000
$44,388
Pinecrest
1974
Durham
12/15/13
192
$3,200,000
$16,667
Olde Raleigh
1995
Raleigh
12/13/13
228
$27,000,000
$118,421
Wakefield Glen
2001
Raleigh
12/13/13
246
$31,000,000
$126,016
The Forest Apartments
1982
Durham
12/11/13
272
$16,300,000
$59,926
86 North (formerly Timberlyne)
1985
Chapel Hill
11/26/13
144
$8,700,000
$60,417
Amberwood at Lochmere
1991
Cary
11/26/13
206
$18,100,000
$87,864
Lofts at Weston
2013
Cary
11/20/13
215
$38,300,000
$178,140
Valley Terrace
1965
Durham
11/19/13
130
$6,200,000
$47,692
St. Mary's Square
2013
Raleigh
11/19/13
134
$27,300,000
$203,731
Tree Top
1974
Raleigh
11/1/13
206
$10,500,000
$50,971
Bell Wakefield (formerly Woodlands at Wakefield Plantation)
2000
Raleigh
10/29/13
360
$46,800,000
$130,000
Honeytree
1985
Raleigh
10/8/13
92
$5,030,000
$54,674
Maple Ridge
1996
Holly Springs
10/8/13
95
$5,050,500
$53,163
Arium Research Triangle Park
2000
Durham
9/11/13
368
$33,750,000
$91,712
Madison at Treybrooke
1989
Morrisville
8/19/13
200
$20,000,000
$100,000
Casa del Sol
1972
Raleigh
8/1/13
176
$7,216,000
$41,000
Jamison at Brier Creek
2012
Raleigh
8/1/13
276
$42,200,000
$152,899
SALES TRANSACTIONS
YOC
5
THE TRIANGLE
Sales Transactions: 2013 and 2014
SALES TRANSACTIONS
Community
6
YOC
City
Sale Date
Units
Sale Price
Price Per Unit
Encore at the Park
2000
Durham
7/15/13
280
$28,840,000
$103,000
Northwoods Mews
1993
Cary
6/26/13
136
$11,000,000
$80,882
Mallard Park
1972
Raleigh
6/18/13
66
$2,900,000
$43,939
Alexan Garrett Farms
2010
Durham
6/12/13
308
$49,300,000
$160,065
Artisan at Brightleaf
2012
Durham
6/12/13
328
$43,800,000
$133,537
Legacy at Meridian (formerly 1520 Magnolia)
2001
Durham
6/3/13
280
$31,600,000
$112,857
Woodfield Creekstone
2012
Durham
6/1/13
256
$35,800,000
$139,844
Creekstone at RTP
2012
Durham
6/1/13
256
$35,800,000
$139,844
Perry Point
2009
Raleigh
6/1/13
432
$55,606,000
$128,718
Landmark at Water Crest
1986
Cary
5/8/13
344
$16,074,400
$46,728
Landmark at Eagle Landing
1987
Cary
5/8/13
443
$30,100,000
$67,946
Boundary Village
1999
Cary
5/1/13
186
$16,000,000
$86,022
Lodge at Crossroads
2001
Cary
5/1/13
432
$57,119,000
$132,220
Manor Six Forks
2010
Raleigh
4/12/13
298
$37,100,000
$124,497
Dunhill Trace
1994
Raleigh
3/1/13
250
$23,100,000
$92,400
Hawthorne at the Trace (formerly Dunhill Trace)
1994
Raleigh
3/1/13
250
$23,100,000
$92,400
Bridges at Wind River
1999
Morrisville
2/4/13
346
$32,586,000
$94,179
Bridges at Chapel Hill
1990
Carrboro
2/1/13
144
$11,631,000
$80,771
Century Trinity Estates
2000
Durham
2/1/13
270
$38,600,000
$142,963
Bell Preston View
2000
Morrisville
2/1/13
382
$40,300,000
$105,497
Oak Hollow (Phase 1)
1983
Cary
1/2/13
222
$15,900,000
$71,622
Oak Hollow (Phase 2)
1985
Cary
1/2/13
240
$16,700,000
$69,583
Woods Edge
1985
Durham
1/2/13
264
$18,707,000
$70,860
THE TRIANGLE
Average # of Units Per Transaction
Average Year of Construction
2010
350
300
297
2005
Class A
250
208
1995
1995
Class B
1991
1990
200
Class B
Class C
1980
1975
100
1970
AVERAGE
50
Class C
1976
AVERAGE
1965
Class A
Class B
Class C
1960
AVERAGE
Class A
$140,000
$45,000,000
$38,521,842
Class A
$132,857
Class A
$95,291
$100,000
$30,000,000
$25,075,353
$25,000,000
$18,128,171
$20,000,000
$15,000,000
Class B
$60,000
Class C
AVERAGE
Class B
Class C
Class C
$45,327
$40,000
AVERAGE
AVERAGE
$20,000
$5,000,000
Class A
Class B
$78,763
$80,000
$9,639,500
$10,000,000
AVERAGE
$120,000
$35,000,000
$0
Class C
Average Price Per Unit
Average Transaction Sales Price
$40,000,000
Class B
SALES TRANSACTIONS
1985
150
0
Class A
2000
255
231
2007
$0
Class A
Class B
Class C
AVERAGE
Class A represents properties built from 2014-2000, Class B includes properties constructed from 1999-1985, and Class C signifies properties constructed in 1984 or earlier.
7
THE TRIANGLE
Developer
Edward Rose Companies
*
92
Page Rd./I-40
Durham-Southeast
5602 Comstock Boulevard
312
Page Rd.
Durham-Southeast
Southern Village
68
200 Copperline Dr.
Orange County
*
Timber Hollow
95
101 Timber Hollow Ct.
Orange-County
*
The Avenues
297
Ratchford/Six Forks Rd.
Wake-Central
*
Valentine Construction & Realty
Courtland
156
Hillsborough/Concord St.
Wake-Central
Beacon Partners
The Edison
239
109 Davie St.
Wake-Central
Grubb Ventures
Glenwood Place
292
Womens Club Ave.
Wake-Central
Blue Ridge Realty
The Grammercy
203
West North St.
Wake-Central
Grubb Ventures
Greenway Village
280
Lake Boone/Horton St.
Wake-Central
The Lincoln
224
Martin/East St.
Wake-Central
Link at Glenwood South
203
201 North Harrington St.
Wake-Central
Post Parkside at Wade
400
5443 Wade Park Blvd.
Wake-Central
Harrington Street Partners
West Apartments
153
413 North Harrington St.
Wake-Central
Palms Associates
Beachwood Park
72
New Bern Ave.
Wake-East
NorthView Partners
Meridian at Sutton Place
180
805 Spring Forest Rd.
Wake-North
Two Capital Partners
Capital Creek at Heritage
214
Rogers Rd.
Wake-North
Clairmont at Capital
328
Wadford Rd.
Wake-North
Franklin Street Apartments
108
East Holding Ave.
Wake-North
Cady Construction
Villagio at La Scala
332
Starr Road and Capital Blvd.
Wake-North
Martin Fein Interests
Crabtree Commons
335
Creedmoor Rd.
Wake-Northwest
The Franklin
199
Jones Franklin Rd.
Wake-South
Dothan Properties
PROPOSED DEVELOPMENT
Submarket
Avellan Springs
Dean Painter
8
Communities Proposed (100 Units and Above)
Community
Units
Road/Intersection
Blue Heron Asset Management
Davis Development
Florian Companies
Grubb Properties
Post Properties
Kotarides
Franklin Street Apartments LLC
Dewitt Real Estate Services
* Second phase of construction.
*
*
THE TRIANGLE
Bainbridge Communities
Submarket
Patterson Place
322
SW Durham Dr.
Durham-Central
McCormack, Baron & Salazar
Rolling Hills
132
Lakewood Ave.
Durham-Central
Armada Hoffler
300 Jackson
183
300 Jackson St.
Durham-North
605 West
340
West Chapel Hill St.
Durham-North
Crescent Communities
Crescent Erwin West
208
15th St.
Durham-North
Crescent Communities
Crescent Ninth Street
303
749 Ninth St.
Durham-North
300 Swift
202
300 Swift Ave.
Durham-North
Federal Capital Partners
Liggett at West Village
196
West Morgan St.
Durham-North
Edward Rose Companies
Avellan Springs
196
Page Road/I-40
Durham-Southeast
Clairmont at Brier Creek
360
7651 Brier Creek Pkwy.
Durham-Southeast
Phillips Research Park
Phillips Development
80
Ellis Rd.
Durham-Southeast
*
Worthing Companies
Heights at Meridian
225
Meridian Pkwy./Exchange Pl.
Durham-Southwest
*
Palladian
298
Leigh Farm Rd.
Durham-Southwest
Bicycle Apartments
194
Martin Luther King, Jr. Blvd.
Orange County
Shortbread Lofts
85
West Rosemary St.
Orange County
401 Oberlin
243
401 Oberlin Rd.
Wake-Central
Southern Land Company
425 North Boylan
261
Tucker St.
Wake-Central
Kane Realty/Federal Capital Partners
Allister North Hills
110
430 Allister Dr.
Wake-Central
Davis Development
The Avenues
297
Ratchford Dr./Six Forks Rd.
Wake-Central
Carroll Companies
Bacarra
312
Western Blvd.
Wake-Central
Crescent at Cameron Village
282
2128 Clark Ave.
Wake-Central
Greens at Centennial
292
320 The Greens Cir.
Wake-Central
Jones Grant
243
Wake Towne Dr.
Wake-Central
Skyhouse
320
Wilmington St.
Wake-Central
Walnut Terrace
104
Martin Luther King, Jr. Blvd.
Wake-Central
Bainbridge Six Forks
165
110 Talisman Way
Wake-North-1
Flats on 401
300
Louisburg Rd.
Wake-North-1
Kane Realty Project
214
Market North Hills St.
Wake-North-1
Village at Town Center
288
Fox Rd.
Wake-North-1
EDR
Faison
Kotarides
Northwood Ravin
Trinitas
LTS Management
Grubb Ventures
Crescent Communities
Capital Associates
Davis Property Group
The Novare Group
Raleigh Housing Authority
Bainbridge Communities
South Atlantic Group
Midtown Green
Carroll Companies
*
*
COMMUNITIES UNDER CONSTRUCTION
Developer
Communities Under Construction (100 Units and Above)
Community
Units
Road/Intersection
9
COMMUNITIES UNDER CONSTRUCTION
THE TRIANGLE
10
Developer
Carroll Companies
Communities Under Construction (100 Units and Above)
Community
Units
Road/Intersection
Submarket
The Cliffs
312
New Falls of Neuse
Wake-North-2
Heritage Gardens
218
Rogers Rd.
Wake-North-2
Marshall Park on the Greenway
384
Blue Ridge Rd.
Wake-North-2
Pappas Properties
Solis Crabtree
293
Crabtree Valley Ave.
Wake-Northwest
Carroll Companies
Adeline White Oak
336
Salt Hill Rd.
Wake-South
Village at Marquee Station
35
2110 Cinema Dr.
Wake-South
*
Carroll Companies
Amberton at Stonewater
176
Teaching Dr.
Wake-Southwest
*
Northwood Ravin
Bradford
370
Davis Dr./High House Rd.
Wake-Southwest
The Bristol
130
3016 Bristol Creek Dr.
Wake-Southwest
Meridian at Harrison Pointe
248
2000 Banyon Grove Loop
Wake-Southwest
Parkside Place
294
5100 NC Highway 55
Wake-Southwest
Certus Partners
Woodfield Investments
JWH Properties
Wood Partners
Northview Partners
Dominion Realty Partners
* Second phase of construction.
St. Mary’s Square
401 Oberlin
Crescent Ninth Street
*
*
THE TRIANGLE
North Carolina
South Carolina
Georgia
Virginia
Tennessee
Kentucky
Alabama
The People Sell the Deal
Market Expertise & Product Niche
Capstone sits atop the private capital sector of multi-family investment sales for multiple reasons. Our deliberate and concentrated focus and
expertise in not just the primary markets of the Southeast & Mid-Atlantic, but namely the secondary and tertiary markets within our region,
identifies us as the ideal candidate for these assignments. Capstone’s investment sales team has completed a multitude of transactions across the
secondary & tertiary markets of the Southeast & Mid-Atlantic, and our track record of success can be attributed to our comprehensive coverage
and expertise among these markets, as well as our relationships with the owners and investors who remain active in this environment.
National Exposure via Cutting Edge Technology
Capstone has developed and maintains industry leading national databases, expansive information delivery methodologies, and various
proprietary activity tracking systems. These tools are utilized daily by the investment sales team, analysts, and back-office support staff allowing
for optimal operational efficiency. This enables Capstone’s investment brokerage team to spend nearly all of its time servicing clients, interacting
with industry players and active asset traders, and promoting transactions.
Reputation and Results
WHY CHOOSE CAPSTONE?
Capstone’s Southeast & Mid-Atlantic Investment Sales Team is among the market leaders within our industry
sector and respective region. We place client service above all else, and can guarantee that no one else will
work smarter and harder in achieving the highest level of results for our clients. We don’t rely on a logo to
sell the deal, but rather utilize the industry expertise and investment acumen, tremendous drive and work
ethic, and unbeatable salesmanship of the team members assigned to each project. At the end of the day, it’s
the individuals that drive value and sell the deal, and we know the capabilities of our individual team members are
second to none.
Capstone prides itself on its impeccable industry reputation and the core values and behaviors of the firm that drive daily operations. The
firm possesses an unblemished reputation and track record industry-wide, and, as such, the firm’s trusted relationships among the apartment
investment community continue to facilitate seamless, fluid, and successful sales transactions.
** Information in this report has been provided by the following resources: The Raleigh Real Data Report February 2014, REIS Report, Costar, The Triangle Business Journal,
Loopnet, Bureau of Labor Statistics, county tax records, and various multi-family industry contacts.
11