March 4, 2023 Weekly Investor Update

Life Bridge Capital Weekly Investor Update

March 4, 2023

The Latest in Commercial Real Estate (CRE), Economy & Markets





Mortgage Rate (30-Year Fixed): 6.65% (as of 3/2)


Existing Home Sales: -0.7% (January 2023)

New Residential Sales: +7.2% (January 2023)

Median Sales Price for New Houses Sold: $427,500 (January 2023)

Construction Spending: +5.7% YoY (January 2023)

New Residential Housing Starts: 1.339 million (January 2023)

New Residential Housing Completion: 1.406 million (January 2023)


Homeownership Rate: +65.9% (4Q22)

Rental Vacancy Rate: +5.8% (4Q22)


Sources: NAR, BLS, Federal Reserve Bank, MBA

Note: Rates listed are estimates and may not reflect actual rates depending on term, sponsor location, and other factors involved.



10. Phoenix multifamily investing reaches $10.5 billion

Despite a drop of 0.4% in rent in the 12 months leading up to October 2022, Phoenix managed to register a record-breaking number of 11,258 completed units in November, with another 38,406 units in the pipeline. Investment volume, on the other hand, totaled $10.5 billion, with a 31.6% YoY increase in the price per unit to $325,644. Part of the demand was driven by employment growth in sectors such as education and health services, professional and business services, and trade, transportation and utilities.


9. Miami mixed-use apartment project completes first phase

The first phase of a Miami mixed-use development, Link at Douglas, has been completed after developers 13th Floor Investments and Adler Group announced that they have finished constructing the 421-unit CASCADE tower. The entire project consists of two residential towers situated in a seven-acre master-planned community, with an estimated 1,600 apartments, office spaces, retail centers and a public park. Construction on the second phase is expected to begin later this year.


8. Property tax law firm believes in strength of multifamily industry amid downturns

Rachel Duck and Nick Machan of property tax law firm Popp Hutcheson announced that multifamily properties are typically less affected than other types during downturns, since people tend to prefer renting over home ownership during uncertain times. Although inflationary costs can delay multifamily construction and limit the supply, multifamily rents only fell by 8%, while office, industrial, and retail rents fell by 14% to 17% during the last recession. This resilience makes multifamily properties a good investment during unstable economic conditions, according to the Austin-based tax consultancy. During a recession, interest rates usually continue to rise, which can lead to reduced transaction volume and price contraction in commercial real estate as buyers take on more risk.


7. Average apartment size is contracting

According to a report by RentCafe, the average size of new multifamily units in the United States has decreased by 54 sq ft in 2022 compared to 2012, with the average size now at 887 sq ft. The trend towards smaller units is driven by several factors, including demand for more housing across the country. Tallahassee, FL registered the largest new apartments in the country at 1,182 sq ft, while Seattle had the smallest at 659 sq ft. On the other hand, Tucson, AZ, recorded the biggest size increase over the last decade with up to 300 sq ft, while Silver Spring, MD had the largest decrease at 114 sq ft. Despite these challenges, the trend towards smaller units is expected to continue, as developers seek to balance affordability and profitability in a rapidly changing housing market.


6. Urban Land Institute and NMHC endorse commercial-to-residential building conversions

A new report from the Urban Land Institute and the National Multifamily Housing Council suggests that commercial buildings could play a significant role in addressing the US multifamily market’s shortfall of 600,000 units to bring the rental market back to equilibrium by 2035. The report cites a significant volume of commercial space available for conversion, with many buildings over 40 years old and up to 25% being at least 60 years old. Class B and Class C office buildings were the most commonly converted types, followed by hotels, industrial facilities, and retail spaces. The report emphasizes the complex nature of the conversion process, with factors such as asset class, financial strength, occupancy, resident demographics, and expected returns greatly impacting the feasibility of projects. Some developers purchase assets at non-discounted rates and terminate leases, while others intentionally select properties that have significantly deteriorated due to years of vacancy at a discounted price.


5. Inland Empire multifamily market has a great potential

The Inland Empire multifamily market in Southern California is expected to have a bright future due to factors such as relatively low rents and high demand for housing, according to Northmarq. Vacancy rates have been decreasing in the area, coupled with strong job growth in industries such as logistics and e-commerce. The area’s population is also expected to continue growing, with higher demand for more affordable rental communities. The group predicts high investor interest in the Inland Empire multifamily market, with very low vacancy rates in the coming years.


4. Middletown 414-unit apartment development approved

A massive 414-unit apartment development has been approved in Middletown, CT by the Middletown Planning and Zoning Commission. The development will be spread close to 50 acres and will include three- and four-story buildings. The site is located in a growing area with proximity to major employment centers and highways. Construction is expected to be completed by 2028, and will employ green construction practices according to the Middlesex County Chamber of Commerce.


3. CBRE arranges sale of 204-unit Farmington, CT multifamily site

CBRE has arranged the $7.8 million sale of a 204-unit multifamily development site in Farmington, CT. The site is situated in a growing area and is adjacent to Pond View Corporate Center and several retail and dining amenities. The property has already been approved for multifamily development, which is in high demand due to a lack of multifamily housing supply. The buyer, Skala Partners, is expected to gain from the strong demand for rental units in the region. CBRE’s multi-housing experts facilitated the transaction on behalf of the seller, New York-based real estate investment firm Sovereign Partners.


2. Atlanta multifamily sets record-high deliveries in 2022

Atlanta’s multifamily market is showing strong signs of growth. Developers supplied 10,100 units in 2022 through November and had another 33,086 units in the pipeline where almost 16,000 of these developments broke ground in 2023. Investment totaled $10.8 billion, for a price per unit up 14.5% YoY to $204,909, just below the $215,443 U.S. average, according to Yardi Matrix. On the other hand, employment grew by 5.9% in the 12 months ending in September, performing better than the 4.2% US rate.


1. Cincinnati multifamily pipeline within highest levels

Cincinnati still exhibits strong multifamily growth with its current pipeline already within peak values at 6,200 units, which is 4.6% of inventory. The US average stands at 5.3%, making the metro one of Midwest’s most active development markets, according to CoStar. During the Midwest Real Estate News’ annual commercial real estate summit,  Kurt Shoemaker, senior vice president at CBRE, opined that there are still segments of the Cincinnati community that are seeking rental units, whether for conversions or new buildings.



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