April 8, 2023 Weekly Investor Update

Life Bridge Capital Weekly Investor Update

April 8, 2023

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



Mortgage Rate (30-Year Fixed): 6.28% (as of 4/6)


Existing Home Sales: +14.5% (February 2023)

New Residential Sales: +15.3% (February 2023)

Median Sales Price for New Houses Sold: $438,200 (February 2023)

Construction Spending: +5.2% YoY (February 2023)

New Residential Housing Starts: 1.450 million (February 2023)

New Residential Housing Completion: 1.557 million (February 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. Increasing number of seniors staying in their homes longer, impacting multifamily demand

Recent research by Chandan Economics reveals that households with at least one baby boomer (59-77 years old) have contributed more to the total number of households staying in their homes longer. The group recorded 51.2% of seniors between 2007 and 2021 who chose to remain in their homes, thus limiting housing supply. Commercial real estate firm CBRE reports that the average monthly mortgage payment is 37% higher than the average monthly apartment rent, making multifamily rentals a better option for many. CBRE expects this trend to continue, supporting rental growth and a healthy multifamily market.


9. Multifamily properties remain the most attractive for foreign property investors in the U.S.

Foreign investors are still interested in the US commercial real estate market, with multifamily and industrial properties remaining the most attractive, according to a survey from the Association of Foreign Investors in Real Estate (AFIRE). New York is now the top preferred city for investment in the US, while London remains the top choice globally. Multifamily and industrial properties are seen as the most attractive, with 94% of investors finding them very attractive, and some willing to accept lower expected returns to invest in more affordable housing. The US remains a preferred global investment destination, with allocations increasing by 6% in 2022, according to the survey, while European investment decreased by 5%.


8. Philadelphia multifamily project nears completion

The Gotham Organization and Brandywine Realty Trust are finishing construction of the 326-unit multifamily project, Avira, in Philadelphia. The development is part of Brandywine’s Schuylkill Yards and will be built above a mixed-use building on JFK Blvd. The residences will include studio, one- and two-bedroom floor plans and occupy the top 18 floors of the building, with indoor and outdoor amenity space, retail space, office and life sciences space, structured parking and a park. The first units will be available for occupancy in the summer.


7. Baltimore multifamily rents projected to accelerate

Baltimore saw $2.9 billion in asset trades in 2022, the second-highest volume of the decade following a record-high $3.3 billion in 2021. Despite this, the number of completed units slowed, with just 996 units coming online in 2022 and 4,524 more units underway as of the start of 2023. Yardi Matrix predicts that rents in Baltimore will grow by 2.1% in 2023 due to a balance of supply and demand and markets returning to pre-pandemic dynamics.


6. San Jose, CA office tower planned for conversion

DivcoWest, a San Francisco-based developer, is considering converting the Silicon Valley tower at 2 West Santa Clara St. in downtown San Jose, California, into apartments or a hotel due to reduced demand for office space in the San Francisco Bay Area, according to CoStar. DivcoWest invested millions of dollars to convert the tower into creative office space for tech clients, but has filed a preliminary proposal with the San Jose Planning Department for alternative uses such as co-living, hospitality or multifamily units. San Francisco officials recently proposed an ordinance that would allow for more flexibility in converting traditional office properties into housing or retail spaces, as part of the city’s efforts to adapt to a post-pandemic economy and move away from its previous focus on the tech industry.


5. Orlando multifamily market getting more stable

Despite the national and Central Florida rental rates contracting by 0.3% on a trailing three-month basis, Orlando’s YoY rental rates still increased by 6.5%, reaching $1,813, which is higher than the national average of $1,701, with a 5.5% increase. The metro area experienced strong job growth, adding 71,000 positions in the 12 months leading up to November. However, construction activity has slowed down due to lending conditions. In January, two multifamily projects with a total of 520 units were completed, and developers started construction on only 150 units, compared to 1,922 units in January 2022.


4. Salt Lake City apartment market expected to remain stronger

According to Cushman & Wakefield’s Mid-Year SLC Apartment Market Report, the Salt Lake County apartment market is expected to remain strong. Demand is projected to continue to outpace supply, leading to a vacancy rate that is not expected to exceed 4% in 2023. Rental rates are also expected to continue increasing at a double-digit pace. The Downtown market is experiencing the highest demand and rental rates, and this trend is expected to continue into the future. With the high cost of home ownership in Salt Lake County also expected to put upward pressure on rental rates and increase demand for multifamily housing, demand from investors for quality multifamily products is expected to remain stable.


3. South Seattle multifamily project acquired

Bode, a Seattle-based real estate development and management firm, has acquired a 1.5-acre development site on Martin Luther King Jr. Way S. in South Seattle for $2.1 million in an all-cash transaction. The site will be used for the development of a 330-unit multifamily project, and Bode is currently in escrow on other sites across the Puget Sound region. The Mogharebi Group represented Bode in the transaction and helped negotiate a fair price within 48 hours of the site coming to market, leveraging their relationships with local developers.


2. Houston multifamily market getting back to normal

The Houston multifamily market has moved into more sustainable levels after two years. In January, the market experienced a typical slowdown for the winter season with rent gains stagnating for the third consecutive month. Despite this, on a YoY basis, rental rates still grew by 4.1%, averaging at $1,327. Luxury types made up the bulk of the 17,676 units completed by developers last year, with more than $9.7 billion in multifamily properties traded in Houston in 2022.


1. Multifamily market showing positive signs

According to RealPage Market Analytics and Yardi Matrix, Q123 showed positive signs for multifamily metrics. Net apartment demand rebounded back into positive territory, ending a streak of three straight quarters of negative absorption. However, the rebound was described as a “tepid step” toward pre-COVID normalcy, with Q1 marking the softest Q1 since 2013, despite an improvement over 2022’s negative absorption. In March, average U.S. asking rents for apartments and single-family rentals increased by $3 and $5, respectively, after four months of declines.


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