Multifamily Market Overview HUNTSVILLE, ALABAMA
Presented to:
The Apartment Association of North Alabama (AANA) December 6, 2018 By: David Wilson, MAI
TOPICS TO COVER ยง Market Fundamentals ยง New Construction ยง Renovations ยง Transaction Activity
TOPICS TO COVER
ALABAMA MAJOR MARKET SUMMARY AxioMetrics Data 3Q18 Effective Rent per Unit
Effective Rent per SF
Effective Rent Growth Annually
Birmingham
$931
$0.92
3.8%
94.7%
1.2%
$32
Huntsville
$817
$0.85
5.9%
96.9%
1.8%
$15
Montgomery
$803
$0.78
2.7%
93.1%
-0.2%
$27
Mobile / Baldwin County
$799
$0.82
1.1%
94.4%
.20%
$25
Market
Occupancy Change Annually Occupancy Rate Concession Value
ALABAMA MAJOR MARKET SUMMARY CoStar Data 3Q18 Total Units in Survey
12 Mo Delivered Units
12 Mo. Absorption Units
Occupancy Rate
12 Mo. Asking Rent Growth
Birmingham
55,344
329
1,020
92.5%
4.2%
Huntsville
26,286
20
510
93.9%
6.4%
Montgomery
20,044
0
81
88.8%
2.4%
Mobile / Baldwin County
26,618
126
270
92.6%
2.5%
128,292
475
1,881
Market
Total
MARKET FUNDAMENTALS
Huntsville Area Effective Rent & Occupancy Trends Since 2013 $825
99%
97%
$800
95% $775 93% $750 91% $725 89% $700
87%
Effective Rent
Occupancy Rate
Most Recent Survey Attributes Total Properties: 106 Total Units: 19,946 Average Year Build: 1992 Average Unit Size (SF): 962 Source: AxioMetrics
3Q18
2Q18
1Q18
4Q17
3Q17
2Q17
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
85% 1Q13
$675
Huntsville Area Rent & Occupancy Trends 1Q15 to 3Q18
$840
98%
$820
97%
$800
96%
$780
95%
$760 94% $740 93% $720 92%
$700
91%
$680
90%
$660 $640
89% 1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16 Asking Rent
4Q16
1Q17 Occupancy Rate
Most Recent Survey Attributes Total Properties: 106 Total Units: 19,946 Average Year Build: 1992 Average Unit Size (SF): 962 Source: AxioMetrics
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
Huntsville Area Concession Trends Since 2013
Percent Offering Concessions
Concession Value
Most Recent Survey Attributes Total Properties: 106 Total Units: 19,946 Average Year Build: 1992 Average Unit Size (SF): 962 Source: AxioMetrics
3Q18
2Q18
1Q18
4Q17
3Q17
2Q17
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
$0 3Q15
0% 2Q15
$10
1Q15
10%
4Q14
$20
3Q14
20%
2Q14
$30
1Q14
30%
4Q13
$40
3Q13
40%
2Q13
$50
1Q13
50%
Huntsville Area Concession Trends 1Q15 to 1Q18
$50.00
100%
$45.00
90%
$40.00
80%
$35.00
70%
$30.00
60%
$25.00
50%
$20.00
40%
$15.00
30%
$10.00
20%
$5.00
10%
$0.00
0% 1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
Current Concession Value
4Q16
1Q17
2Q17
Current Period Concession Level
Most Recent Survey Attributes Total Properties: 106 Total Units: 19,946 Average Year Build: 1992 Average Unit Size (SF): 962 Source: AxioMetrics
3Q17
4Q17
1Q18
2Q18
3Q18
Huntsville Area Employment Trends 245,000
7,800 jobs added in past 12 months
240,000
235,000
230,000
225,000
220,000
215,000
210,000
205,000 3Q08
3Q09
3Q10
Source: CoStar
3Q11
3Q12
3Q13
3Q14
3Q15
3Q16
3Q17
3Q18
Huntsville Area | Year Over Year Job Growth
Source: CoStar
Huntsville Area | CoStar 3Q2018 Stats Property Class
Units
Vacancy Rate
Asking Rent
Effective Rent
4 & 5 Star
8,120
3.2%
$ 1,042
$1,035
3 Star
13,678
6.8%
$ 713
$703
1 & 2 Star
4,488
9.6%
$ 555
$545
Overall Market
26,286
6.1%
$798
$789
Huntsville Area | CoStar 3Q2018 Stats 12 Month Change Occupancy
6.1%
Net Absorption
510 Units
Net Deliveries
20 Units
Rent Growth
6.4%
Effective Rent Growth
7.6%
Huntsville Area | CoStar Submarkets
Huntsville Area | CoStar Sample Submarket Inventories (3Q2018) #
Submarket
Properties
Units
% Metro
1
Central
12
1,360
5.17%
2
Limestone County
16
1,200
4.57%
3
Madison/Airport
32
6,817
25.93%
4
Outlying Madison County
15
995
3.79%
5
South Madison County
25
4,417
16.80%
6
Southwest
57
3,226
12.27%
7
University/Research Park
37
8,271
31.47%
194
26,286
TOTALS
Huntsville Area | CoStar Stats Submarket Rents (3Q2018) Asking Rents
Effective Rents
#
Submarket
Per Unit
Annual Growth
Per Unit
Per SF
Annual Growth
Concessions
1
Central
$1,046
10.20%
$1,039
$1.09
11.9%
0.80%
2
Limestone County
$645
4.00%
$643
$0.69
4.90%
0.30%
3
Madison/Airport
$918
9.50%
$911
$0.87
10.4%
0.80%
4
Outlying Madison County
$644
3.90%
$638
$0.68
4.40%
0.80%
5
South Madison County
$760
5.70%
$752
$0.77
7.60%
1.00%
6
Southwest
$529
2.60%
$521
$0.70
3.40%
1.40%
7
University/Research Park
$811
5.00%
$800
$0.85
6.70%
1.30%
Conclusion - Market Fundamentals §
§
§
94%+ Occupancy Rate – In Each of Last 4 Quarters (Wow!!) §
Highest Sustained Occupancy Average – Since Records Have Been Kept (24 Years)
§
2007 and 2008 Each Had Occupancy Rates in 94% Range, But Only at Mid-Year
§
1997 Had Three Sustained Quarters at 93% per The David Wilson Company, LLC
Record-Setting Effective Rent Growth §
Highest I Can Remember in 24 Years
§
CoStar just ranked Huntsville #4 in the USA for annual effective rent growth (behind Reno, Las Vegas and Phoeinx)
Lowest Concession Usage – Since Records Have Been Kept (24 Years) §
Both in $$ Amount and % of Properties Offering
NEW CONSTRUCTION
New Unit Delivery History | Huntsville/Madison
Source: David Wilson, MAI
Actively Under Construction Actively Under Construction as of Dec. 6, 2018 Project Name
Submarket
Previously Delivered
Units Under Construction
432
96
Class B, 3-story
Comments
ACTIVELY UNDER CONSTRUCTION 1
Limestone Creek**
West Huntsville
2
Heights at Monte Sano
SE Huntsville - Big Cove
0
172
Class A - Phase 2 of Hampton Falls
3
Palladian at Promenade**
Madison - North
46
64
110-unit, 1 and 2-story, duplex-style with garages
4
Watermark at Bridge Street**
West Huntsville
0
244
Class A, 4-sty elevator, surface park, no retail
5
Virtuoso Living (fka Dry Creek)**
West Huntsville
0
400
1-story modular, near Village of Providence
6
The Station at Town Madison
Madison - South
0
274
Class A, 4-sty elevator, surface park, no retail
7
Legacy at Jones Farm Phase II
SE Huntsville
248
173
Class A, 4-sty elevator, surface park, no retail
8
The Avenues Madison
Madison - South
0
190
Class A, 4-sty elevator, surface park, no retail
726
1,613
TOTAL UNDER CONSTRUCTION
** Actively in Lease-up
5 Mixed-Use Projects With Multifamily Project Name
Location
Master Developer
§
Town Madison
City of Madison – South
Breland Companies
§
CityCentre
Downtown Huntsville
RCP Companies
§
Constellation
Downtown Huntsville
Scott McLain, CCIM
§
MidCity
West Huntsville
RCP Companies
§
Clift Farm
Madison – North
Breland Companies
Mixed-Use – Madison THE STATION AT TOWN MADISON
Part of 500-Acre Mixed-Use Site Retail/Restaurants, Office, Hotels, Multifamily, Singlefamily, Residential Condos, Baseball Stadium, Parks Future 600-unit “Big House” Apartments Being Planned
Apartment Units
274
Location
Near I-565, between Zeirdt Road and Wall Triana Hwy
Type
Urban Elevator
Parking
Surface
Start
May/June 2018
1st Deliveries
Late-2019
Avg Rent
Confidential
Cool Features
Expansive Pool Courtyard
Master Developer
Louis Breland
Multifamily Developer
Ingram Tynes (Birmingham)
Mixed-Use – Downtown Huntsville CITY CENTRE
AC Marriott Hotel Underway Retail/Restaurants, Office, Hotel, Multifamily
Apartment Units
280
Location
Williams Avenue Across From Embassy Suites and Big Spring Park
Type
Urban Elevator
Parking
Structured
Start
Early 2019
1st Deliveries
2020
Avg Rent
Confidential
Cool Features
Great Views of Big Spring Park Very Walkable to Publix
Master Developer
RCP Companies (Huntsville)
Multifamily Developer
Spring Bay Property Co.
Mixed-Use – Downtown Huntsville CONSTELLATION
Part of 19-Acre Site Retail/Restaurants, Office, Hotels, Multifamily
Total Units
222
Location
Memorial Parkway / Clinton Ave
Type
Urban Elevator
Parking
Structured
Start
Early 2019
1st Deliveries
2020
Avg Rent
Confidential
Cool Features
Edgy Architecture Rooftop Pool & Amenity Area
Master Developer
Scott McLain, CCIM (Huntsville)
Mixed-Use – Adjacent to Research Park MIDCITY – 140+ ACRES
Retail/Restaurants, Music Venues, Office, Hotels, Multifamily, Residential Condos, 38-Acre Park with Amphitheater, TopGolf
Apartment Units
300 (Phase 1)
Location
University Drive / Research Park Boulevard
Type
5-Story Urban Elevator
Parking
Structured
Start
Early / Mid-2019
1st Deliveries
2020
Avg Rent
Confidential
Cool Features
Best-in-Class Finishes Great Views Super Walkable Partially Over Retail
Master Developer
RCP Companies (Huntsville)
Multifamily Developer
Confidential
Under Construction & Lease-Up | Madison PALLADIAN AT PROMENADE
Developer
Allan Rappuhn (Florence, AL)
Location
Madison - North
1st Deliveries
November 2018 (46 Units)
Completion
January 2019
Total Units
110
Unit Mix
2 and 3 bedrooms
Avg Unit Size
1,894 SF $0.83/SF average rent
Average Rent 2 Bedrooms - $1,475 3 Bedrooms - $1,575 to $1,625 Occupancy
Features / Amenities
100% on 56 delivered units 1 and 2-Story Direct-Access Garages Private Driveways 17-Foot Vaulted Ceilings Stainless Appliances
Under Construction & Lease-Up | West Huntsville WATERMARK AT BRIDGE STREET TOWN CENTRE
Pre-leasing Has Just Begun Via Off-site Office
Developer
Watermark Residential (Indianapolis)
Location
Bridge Street Town Center
1st Deliveries
March 2019 – 122 units
Completion
June 2019
Total Units
244
Unit Mix
1x1, 2x2 and 3x2 floorplans
Avg Unit Size
936 SF
Average Rent
$1.50/SF range
Features / Amenities
Urban Elevator Property Surface Parking 50 Detached Garages 9-Foot Ceilings Granite Countertops Stainless Appliances
Under Construction & Preleasing | West Huntsville VIRTUOSO LIVING
Developer
JCM - Chicago
Location
Across creek east of Villages of Providence
1st Deliveries
December 2018 / January 2019
Completion
To be determined
Total Units
400
Unit Mix
1 and 2 bedrooms
Avg Unit Size
Under 950
Average Rent
Modular Prefab Structures (formerly named Dry Creek Villas) No Units Delivered Yet
1x1 / 700 SF / $1,305 1x1 / 800 SF / $1,505 2x2 / 900 SF / $1,705 2x2 / 1,000 SF / $1,805 2x2 / 1,300 SF / $2,255
Avg Rent / SF
$1.85 +-
Unique Features
Single-Level Duplex and Detached Private Yards Private Driveways
Under Construction | Big Cove Area HEIGHTS AT MONTE SANO Developer
Charlie Sealy, III (Huntsville)
Location
Southeast Huntsville “Over the Mountain�
1st Deliveries
Mid- 2019
Completion
Early 2020
Total Units
172
Comments
Adjacent to Hampton Falls Apartments, its sister property, but will have its own clubhouse, pool and amenities. Monte Sano Elementary District
Under Construction - Southeast Huntsville LEGACY AT JONES FARM – PHASE 2
Phase 1 is 248 Units Best-In-Class Property (for entire state of AL)
Total Units
173 Units in Phase 2
Location
Jones Valley
Type
Suburban Elevator
Parking
Surface
Start
June/July 2018
1st Deliveries
Late-2019
Avg Rent
Confidential
Cool Features
Killer Pool & Amenity Area
Developer
Jones family
Conclusion – Active Construction §
Only Four Properties in Lease-Up
§
Three of Which Just Started Leasing in Nov./Dec. 2018
§
§
§
Virtuoso Living – Modular One-Story
§
Palladian at Promenade – Madison
§
Watermark at Bridge Street
New Construction Deliveries Have Been at an Unusually Slow Pace in 2018 §
Allowing for Record-Setting Rent Growth – Strong Rent Growth Should Continue Into Late-2019 at Least
§
Fewer Concessions Due to Healthy Conditions and Limited New Supply
The Active New Construction Is Diverse §
Some Fringe Locations
§
One Class B Project (Limestone Creek)
§
One Modular Project (Virtuoso)
§
One-Story | Urban-Elevator | Class A+ | Workforce | Garden
Future Starts Project Name
Submarket
Units
Comments
Developer
1
City Centre at Big Spring
Downtown Huntsville
280
Class A urban; Part of mixed use
Kevin Fitzpatrick / RCP Companies
2
Constellation
Downtown Huntsville
222
Class A urban; Part of mixed use
Master Developer is Scott McLain
3
Mid-City, Phase I
West Huntsville
300
Class A urban; Part of mixed use
RCP Companies and Confidential Developer
4
Avondale
West Huntsville
252
McCrary Road, behind Weston Ranch
Charlie Sealy, III
5
Cottages at Watercress, II
West Huntsville
42
Mostly 1-story with garages
Bo Bailey
6
Town Madison Big House, I and II
Madison - South
600
Class A, 2-story – 2 Phases 300-units each
Louis Breland
7
Old Gurley Pike (Name TBD)
East Huntsville
370
Hwy 72 East at Moores Mill (Chase Creek)
Edward Rose & Son
8
Enterprise Way (Name TBD)
West Huntsville
260
Enterprise Way at Rime Village Drive
Nicol Investment Co -Unit Count Approximate
9
Villas at Nature Walk, Phase III
West Huntsville
50
Class A, 1-story, Martin Road near Zierdt Road
Louis Breland
10
Clift Farm 1 (Name TBD)
Madison - North
270
Class A, 3-story walk-up, Balch Road, N of Hwy 72
Confidential – out-of-state
11
Clift Farm 2 (Name TBD)
Madison - North
300
Class A 3-sstory elevator, Hwy 72, W of Wall Triana
Confidential – out-of-state
12
Arbor of River Landing
West Huntsville
348
Class A, 3-story, near Huntsville airport
Gross Builders
13
Balch Road (Name TBD)
West Huntsville
258
Class A, 3-story, Balch Road, south of Hwy 72
James Bobo - Florence
14
Villas at Kelly Springs
West Huntsville
108
Off Highway 53 and RPB – 1 story
Wade Gilcrest / Allan Rapphun - Florence
15
Confidential
West Huntsville
200
Class A, part of mixed-use (size approx./fluid)
Confidential
16
Confidential
West Huntsville
180
Class A with structured parking
Confidential
TOTAL
4,040
Near-Term Start – West Huntsville BOBO FAMILY PROPERTY – BALCH ROAD
Total Units
258
Location
Balch Road, south of Hwy 72 W
Type
Garden-Style
Parking
Surface
Start
May 2019
1st Deliveries
Spring 2020
Avg Rent
Undisclosed
Cool Features
Walkable to Huntsville Hospital’s Madison Campus
Developer
Bobo Family (Florence, AL)
Conclusion – New Construction §
New Apartment Unit Deliveries in 2018 were at a 6-Year Low §
80% Lower Than Each of Past 3 Years | Job Growth has been at an Accelerating Above-Average Pace
§
Result – A Record Year of Strong Effective Rent Growth and Record Occupancy Rates
§
New Deliveries in 2020 Will Likely Be Highest Since 1980’s - But So Should Job Growth
§
Single-Family Housing Inventory is at 20-Year Low – Good for Multifamily
§
Rising Construction Costs, Rising Interest Rates and New Deliveries Will Throttle Pace of Starts
§
History Will Hold True - The Robust Pipeline Will Take Years to Come to Market §
§
Future Supply Pipeline was Higher in 2008 (16 project with 4,630 Units)
Prediction – Average Rent for a New Urban Project will Exceed $2.00/SF in 2020
RENOVATIONS
Significant Renovations
RENOVATION EVERYWHERE TOO MANY TO TALK ABOUT
TRANSACTIONS
Sales Summary | Past 12 Months Property Name
Submarket Name
Number Avg Unit Of Units Year Built Size Sale Date
The Moderne at Providence
West Huntsville
300
2017
998
Capital Park at Seventy-Two West
West Huntsville
233
2015
Madison Park
West Huntsville
308
SE Huntsville
$44,700,000 $149,000 $149.38
5.51%
1,085
10/19/17 $31,455,000 $135,000 $124.39
5.90%
2008
958
11/30/17 $37,010,000 $120,162 $107.89
5.39%
80
2014
1,350
1/31/18
$9,300,000 $116,250
$86.12
5.50%
Madison
204
1991
1,294
12/7/17
$18,400,000 $90,196
$69.70
6.07%
SE Huntsville
241
1965
769
1/10/18
$13,700,000 $56,846
$73.90
5.15%
The Park at Summerhill
West Huntsville
224
1985
839
6/17/18
$8,750,000 $39,063
$46.54
n/a
The Park at Bellingham
West Huntsville
152
1985
899
6/17/18
$5,780,000 $38,026
$42.24
n/a
SW Huntsville
104
1979
842
11/1/17
$3,900,000 $37,500
$4.52
n/a
Chaney Place Townhomes Magnolia Pointe at Madison Malibu
Silver Stone
9/12/18
Sale Price
Price Per Price Per Actual Unit SF Cap Rate
Sales Summary | Past 12 Months Property Name
Submarket Name
Number Avg Unit Of Units Year Built Size Sale Date
Sale Price
Price Per Price Per Actual Unit SF Cap Rate
Maple Tree
SW Huntsville
40
1979
650
11/30/18 $1,020,000 $25,500
$45.41
n/a
Millstream
SW Huntsville
79
1986
450
1/25/18
$59.07
n/a
Treehaven Glenn
SW Huntsville
62
1984
837
8/24/18
$560,100
$9,034
$10.79
n/a
Ascent at Jones Valley
SE Huntsville
431
1978
1,211
3/9/18
n/a
n/a
n/a
n/a
$2,100,000 $26,582
The Moderne at Providence 30 Gates Mill Street Huntsville, AL 35806
Year Built Number of Units Average Unit SF Sale Date Sale Price Per Unit Per SF CAP
2017 300 998 09/12/2018 $44,700,000 $149,000 $149.38 5.51%
CLASS A – West Huntsville * Berkadia brokered the land
RECENT SALE - HIGHEST PRICE PER UNIT
Chaney Place Townhomes 1060 Chaney Drive Huntsville, AL 35803
Year Built Number of Units Average Unit SF Sale Date Sale Price PPU PPSF CAP
2015 80 1,350 1/30/2018 $9,300,000 $116,250 $86.12 5.55%
CLASS A – Southeast Huntsville Condo-quality * Berkadia brokered sale
RECENT SALE
RECENT SALE
Malibu
8003 Benaroya Lane Huntsville, AL 35802
Year Built Number of Units Average Unit SF Sale Date Sale Price PPU PPSF CAP
1965/1971 241 769 1/11/2018 $13,700,000 $56,864 $73.90 5.15%
CLASS B – Southeast Huntsville Lowest Cap Rate for Huntsville * Berkadia brokered sale
The Park at Bellingham & The Park at Summerhill 5001 Galaxy Way NW Huntsville, AL 35816
Year Built Number of Units Average Unit SF Sale Date Sale Price Per Unit Per SF
4515 Bonnell Drive NW Huntsville, AL 35816
1986 152 842
06/2018 $5,780,000 $38,026 $45.12
CLASS C – West Huntsville (Sparkman Drive)
1985 224 838
RECENT SALE - PORTFOLIO
Major Renovation Underway
06/2018 $8750,000 $39,062 $46.59
The Park at Summerhill The Park at Bellingham
Conclusion – Transactions §
Record-Setting Prices §
Blew Away the Prior $135,000/Unit High in 2018
§
Previously Haven’t Had Much New Product Come To Market
§
Low 5% Cap for Very Stable 1960’s Vintage Deal (Malibu)
§
Aggressive Capital Chasing Few Deals in Economy Gaining Momentum
§
Investor Interest in Huntsville is Very Strong and Growing
§
A Great Time to Sell
THE TEAM
a Berkshire Hathaway and Leucadia National company ALBUQUERQUE, NM
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