A new joint venture real estate investment group has made a $42 million investment in central North Carolina’s growing apartment market.
Kettler, a real estate development and property management firm based in Tysons, Virginia, has teamed with The Stillman Group of Scarsdale, New York, to acquire both the 144-unit Bridges at Chapel Hill apartment community in Carrboro and the 240-unit Waterford Place apartment community in north Greensboro for a combined $42 million.
The Kettler-Stillman partnership paid $15.5 million, or $107,639 per unit for the Carrboro property, according to Orange County records, and it paid $26.5 million, or $110,417 per unit, for the Greensboro property, according to Guilford County records.
In a separate news release about the deal, Kettler Chairman and CEO Robert C. Kettler stated that the investors plan to “enhance” operations at both communities with interior and exterior upgrades. Kettler’s property management arm has also taken over for previous owner and management company, Fairfield Residential.
With rents going up and the cost of borrowing money staying low, industrial tenants may find it more affordable to buy buildings they currently lease, according to a new Colliers International report.
Also, the Midlands industrial market is expected to strengthen despite the political uncertainty due to the upcoming presidential election in the United States and the United Kingdom’s vote to separate from the European Union, according to the report authored by Bryana Mistretta, research coordinator at Colliers.
“Investment conditions are expected to continue to improve with high rental rates, moderate capitalization rates and low interest rates which are expected to drop further by the end of the year,” the report said. “Long-term, the market will see positive growth with the expected expansion and investment of companies, new and existing, in the market.”
Average asking rental rates for industrial properties in the Columbia market climbed in the second quarter to $3.36 triple-net per square foot per year from $3.34 for the second quarter of 2015. Two years ago the average asking rate was $3.16 triple-net. (In a triple-net lease or NNN, the tenant pays real estate taxes, insurance, and maintenance.)
The topline figure for the first half of 2016 shows a 16% year-over-year decline in the volume of significant US commercial property sales, Real Capital Analytics says in its latest US Capital Trends report. Yet RCA cites “healthier trends” behind the headline.
“The commercial property investment market weathered three significant shocks” in the year’s first half, but has rebounded with “an upward trend in prices and ongoing investor interest,” according to the USCT report. The series of shocks began with turbulence in the financial markets early in the year, continued through an 18% Y-O-Y volume decline in property sales during the first quarter and concluded with the unexpected results of the UK referendum on leaving the European Union.
“The market has weathered these shocks with pricing largely intact,” according to RCA, which says the headline decline in H1 deal volume to $219.2 billion is “a little misleading.” In fact, RCA attributes much of the decline in deal activity to a limited number of portfolio and entity-level deals in the year’s first half, a trend that RCA says is in keeping with less investor demand for risk investments.
Holliday Fenoglio Fowler, L.P. (HFF) has announced that it has closed the $35 million sale of a two-building, 100-percent-leased, Class A industrial portfolio totaling 448,385 square feet in Durham, North Carolina.
HFF marketed the property on behalf of the seller, Stoltz Real Estate Partners. Principal Real Estate Investors purchased the portfolio.
The portfolio comprises Tech Distribution Center and Tri-Center North V. The 245,000-square-foot Tech Distribution Center is located at 2012 T.W. Alexander Drive and features a two-story glass entrance along with 30’ clear heights, 50’ by 50’ column spacing, 180’ deep truck courts and 24 dock-high doors. Completed in 2001, the facility has approximately 28,000 square feet of office area (11.4 percent of the building). Located at 3500 Tri-Center Boulevard, the 203,385-square-foot Tri-Center North V is situated on 20 acres within Research Tri-Center, a 130-acre master-planned industrial park. Originally constructed as a built-to-suit for IBM, the facility has both a 185’ deep truck court and a 120’-130’ truck court, providing a significant opportunity for on-site trailer storage in addition to almost 20,000 square feet of office space (9.7 percent of the building). The portfolio is home to The Steel Network, Professional Mail, Phoenix Telecom and Iron Mountain (NYSE: IRM). Both properties are within the RTP/I-40 submarket, the largest industrial submarket in the Raleigh-Durham area, and are adjacent to Research Triangle Park with easy access to Interstates 40, 85 and 540.
The HFF investment sales team representing the seller was led by senior managing director Chris Norvell.
Hartsville Mini Storage, a seven property self storage portfolio with 96,036 +/- net rentable square located in Hartsville, SC, was sold in June to a regional buyer. The buyer formed an LLC for the purpose of acquiring the facility.
Dale C. Eisenman, CCIM of Midcoast Properties, Inc. a leading self storage broker in the Southeast represented the seller and had the listing to market the facility.
The facility is located on multiple sites totaling approximately 14 acres, with over 700 climate and traditional self storage units and commercial spaces, one of which will serve as the self storage rental office. Onsite expansion is also available to the new owner.
NAI Earle Furman has released its Second Quarter 2016 Market Reports. Reports include market snapshots in the office, retail and industrial sectors of commercial real estate. The reports summarize the quarterly market statistics – including vacancy, construction, asking rents and absorption – across commercial property types and submarkets in the Upstate.
Among the highlights in the reports:
Office: The 2nd quarter of 2016 continues to show improved trends in the Greenville/Spartanburg office market. Upstate South Carolina progresses to perform like a market that is more confident from the landlord’s perspective. The vacancy rate increased only slightly from the 1st quarter and is currently 8% with net absorption totaling (25,129) square feet. DOWNLOAD HERE
Retail: The second quarter of 2016 experienced many of the same successful and positive trends that previous quarters have. Vacancy rates continued to fall from 5.8% in the first quarter of 2016 to its current state of 5.6%. Asking rental rates saw a slight increase from $9.99 per square foot in the first quarter to $10.02 in the second quarter. As vacancy rates continue to decline, retail construction continues to thrive and be successful. DOWNLOAD HERE
Industrial: Vacancy dips to the lowest rates in over 10 years as lease rates continue to move higher. Class A large products have made a rebound as of late, but the demand for smaller buildings in the 20,000 to 50,000 SF range still seems to be challenging to satisfy. The Greenville/Spartanburg Industrial market ended the 2nd quarter 2016 with a vacancy rate of 6.9%. The vacancy rate continues to remain low with net absorption totaling positive 3,186,525 square feet in the 2nd quarter. Landlords continue to see an increase in lease rates. Our average asking rental rates have seen positive growth, at $3.64 NNN per square foot. DOWNLOAD HERE
The two-property Mini Storage for Less portfolio in Anderson, S.C., was sold to a limited-liability company for $2.2 million. The facilities at 752 Simpson Road and 4013 Highway 81 S. comprise 47,352 net rentable square feet of storage space.
The seller, also a limited-liability company, was represented in the transaction by Brett R. Hatcher and Gabriel Coe, investment specialists in the Marcus & Millichap Columbus, Ohio, office. The buyer was represented by Mike MacManus and Stacey Gorman, investment specialists in the Marcus & Millichap Atlanta office. Broker Raj Ravi assisted in the closing.
CBRE Group, Inc. is pleased to have arranged the sale of 1333 Main Street in Columbia, SC. Patrick Gildea and Aaron Dupree exclusively represented the seller in the transaction. The portfolio sold to Albany Road Real Estate Partners on July 8, 2016.
1333 Main Street consists of a 203,307-square-foot multi-tenant office building, an adjoining surface parking lot, and a parking deck with 22,035 sq. ft. of street-level retail. Primely positioned adjacent to the thriving Vista entertainment district, 1333 Main Street is located in Columbia’s Central Business District, which is the dominant and strengthening office submarket. The CBD has witnessed an 18-month rental rate growth of nearly 16%.
Patrick Gildea commented, “There have been very few Downtown Columbia office tower sales; however, this sale is evidence of pent-up demand from the investment community. As pricing in larger markets becomes increasingly competitive, capital is turning to smaller markets in search of opportunities.”
CBRE will be retained for the leasing and management of 1333 Main Street, which is currently 94% occupied. Anchor tenants at 1333 Main Street include PricewaterhouseCoopers, South Carolina Education Lottery, South Carolina Workers’ Compensation Commission and Dovetail Insurance.
Newmark Grubb Wilson Kibler is a full-service commercial real estate company with four locations throughout the state of South Carolina. The firm provides a broad range of commercial real estate services including tenant and buyer representation, investment sales, project leasing, acquisition and disposition, property management, development and consultation and global corporate services.
Research reports for the industrial and office markets in Columbia, Greenville and Charleston are available by clicking on the logo below.
Greenville, South Carolina: Earle Furman, SIOR and Jon Good, SIOR of NAI Earle Furman represented the landlord, Camperdown Company, Inc., in leasing a 2,646 SF industrial space at 6003 Ponders Court to ROI Equipment, LLC.
Spartanburg, South Carolina: Kevin Pogue of NAI Earle Furman represented the landlord, Warrior DMA, LLC, in leasing 2,538 SF of office space in the Warrior Duck building to Hypersign, LLC.
Spartanburg, South Carolina: Stuart Smith of NAI Earle Furman represented the landlord, Cat Dog Properties, LLC, in leasing a 8,340 SF industrial space at 119 Ian Court to Roof Options, LLC.
Six Mile, South Carolina: Bernie Bastian; Hunter Garrett, CCIM, SIOR; and John Staunton of NAI Earle Furman represented the seller, Foxfire, in selling a 4,887 SF office property at 101 North Main Street to Prue & Kathy Dacus.
Anderson, South Carolina: John Powell, CCIM of NAI Earle Furman represented the seller in the sale of a 10,400 SF retail property at 1716 Pearman Dairy Road.
Anderson, South Carolina: John Powell, CCIM of NAI Earle Furman represented the seller in the sale of a 4,800 SF industrial property at 1509 Breazeale Road.
Cowpens, South Carolina: Stuart Smith of NAI Earle Furman represented the seller, Arthur State Bank, in the sale of an 8,664 SF industrial property at 125 Quality Korners Drive to Afanasiy Yevchev.
Woodruff, South Carolina: Ford Borders, SIOR; Grice Hunt, SIOR; and Clay Williams of NAI Earle Furman represented the seller in the sale of 219.47 acres of vacant land at the corner of Highway 101 and Highway 417.
Tell Marie Kerwin the city’s apartment vacancy rate has dropped a few notches – meaning a lot more units should be available – and she may beg to differ.
“There’s not a lot of options,” said Kerwin, “It took me months to find an apartment. I actually was calling every complex, every day.”
Kerwin and her husband, Christian, relocated to Asheville a year ago from Jacksonville, Florida, both taking jobs with the Earth Fare supermarket. Kerwin said they “got lucky” in finding a place at The Palisades, a 224-unit complex off Mills Gap Road in Arden that opened last summer.
For renters like the Kerwins, it might not seem like it, but the city’s apartment vacancy rate — famously pegged at 1 percent in a consultant’s report published a year-and-a-half ago that looked at Buncombe and three other counties — is dropping, meaning more units are available. That also should mean, theoretically, rents will decline, but that hasn’t happened.
A tight apartment market has dominated local discussions about affordable housing and livability in the Asheville area for nearly two years. But while that vacancy rate is dropping to a more livable range of around 6 percent, rents likely won’t fall over the next couple of years, experts say.
The self-storage industry is one that has not garnered much investor attention, but may start to, judging by the numbers. Vacancy rates continued to decline in the first quarter and rents climbed at a healthy rate.
The self-storage industry, like all property sectors, has a number of idiosyncrasies, including unit type. Most self-storage facilities rent units of many different sizes, from 5 ft. by 5 ft. to 10 ft. x 20 ft. and everything in between. Statistics are collected for five standard unit-size categories, and because every building has a different combination of unit types, rents are generally reported for the mid-sized category of 10 ft. x 10 ft. in order to ensure an apples-to-apples comparison for buildings, sub-markets and metros.
Moreover, most properties rent units that are climate-controlled, as well as those that are not. Accordingly, rents for climate-controlled units are higher than non-climate controlled units. These rents are reported separately, but they are not aggregated or averaged as the statistics on the physical space (net absorption, construction and vacancy rates) are.
Another idiosyncrasy is the seasonality of self-storage leasing. The chart below shows the steady decline in the national vacancy rate, but the quarterly statistics also clearly show how regularly vacancies decline in the second quarter of every year before climbing in the third and fourth quarters and holding steady in the first. Much of the drop is due to student turnover at the end of the school year. Also, the spring and early summer months are periods that see the highest volume of households moving. The vacancy rate for the first quarter of 2016, at 11.0 percent, is higher than that for the second quarter of 2015, but lower than every other first quarter over the last four years. The same data shows that occupancy has grown by 11.0 percent since the first quarter of 2012.
100,000 SF warehouse lease renewal to Suminoe Textiles of America at 630 Edgefield Road in Cowpens, SC.
17,000 SF new warehouse lease to Suminoe Textiles of America at 297 Lemuel Road, Gaffney, SC
43,000 SF warehouse lease to Jetline Promo located at 124 North Charleston Street in Blacksburg, SC. This will serve as an off-site warehouse for their growing Gaffney operation.
Cushman & Wakefield announced Monday that U.S. industrial markets absorbed a record-setting 70.1 million square feet (msf) of space in the second quarter of 2016, up 6.0 percent from the same period a year ago, and propelled year-to-date absorption to 132.2 msf. Strikingly, 38 U.S. markets saw over 1 msf of absorption during the second quarter with 11 markets witnessing over 2 msf of quarterly net occupancy growth. This marked 25 consecutive quarters of net occupancy gains for the industrial sector with the current quarter’s absorption reaching a new cyclical high.
The national industrial vacancy rate continued to decline in the second quarter, falling by 30 basis points (bps) from the prior quarter and 80 bps from the prior year to 5.8 percent. Industrial vacancy is currently tracking at the lowest level of the past 30 years and is a full 270 bps below the 10-year historical average.
Kevin Thorpe, Cushman & Wakefield’s chief economist, says that despite a series of shocks to the U.S. economy this year and heightened uncertainty emanating from Europe, economic fundamentals remain mostly solid.
New apartment development is booming in the Wilmington market. There are now more than 1,600 units under construction and another 1,600 units proposed, according to the latest report published by Real Data. Demand for apartments in Wilmington has been healthy over the last year. The average vacancy rate is now 4.6%. Apartments that are one to five years in age have an average vacancy rate of 4.0%, which is good news for developers planning new apartments.
The average rent for an apartment in the Wilmington area has increased to $954 per month, as compared to $907 per month just one year ago.