Grubb’s Plans for Community Next to Repurposed GMAC Building

Probably the highest-profile project in Winston-Salem that isn’t in the Innovation Quarter is the repurposing of the old GMAC Insurance Building at 500 W. 5th Street. As part of that project, Grubb Properties is constructing a five-story mixed-use building that will include 224 apartments. Here are some of the details of their plans as described in an article in the Winston-Salem Journal:

Grubb has announced plans for a $48 million, five-story mixed-use facility that will stretch to the boundaries of Fourth and Poplar streets. It will contain a mini dog park and an adjacent “pocket park” off North Spruce Street.

Thomas said the plans include having five stories fronting on Fourth Street with retail on the first floor and four stories on the side adjacent to the 500 West Fifth Street tower...

Grubb has committed to making 5% of the apartments affordable to people making up to 90 percent of area median income, and 25 percent of the apartments having rents affordable by people making up to 110 percent of the median.

Developer Plans to Build Apartments in Opportunity Zone

A local developer is planning to build a 116-unit apartment community in an Opportunity Zone in Greensboro. From the Triad Business Journal:

Developer Jerome Myers has submitted a zoning application to the city of Greensboro for Technology Row, a 116-unit apartment community at 402-404 Penry Road, just west of the Interstate 840 urban loop in east Greensboro. Myers said the property is zoned for 72 units...

The property is in one of 12 Guilford County opportunity zones. An investor who holds an opportunity fund investment for 10 years can qualify for permanent exclusion from capital gains taxes…

The plan is for 96 flats – half to be two bedrooms and two baths – measuring 950 square feet, and the other half to be three bedrooms and two baths, measuring 1,150 square feet.

The remaining 20 units will be townhomes –11 with two bedrooms and 2 1/2 baths, measuring 1,050 square feet, and the others with three bedrooms.

The Rise of 5-Over-1 Apartments aka “Stumpies”

Bloomberg has an article that helps explain the rise of the “5-Over-1” apartment buildings that have proliferated over the last 20 years. From the article:

These buildings are in almost every U.S. city. They range from three to seven stories tall and can stretch for blocks. They’re usually full of rental apartments, but they can also house college dorms, condominiums, hotels, or assisted-living facilities. Close to city centers, they tend toward a blocky, often colorful modernism; out in the suburbs, their architecture is more likely to feature peaked roofs and historical motifs. Their outer walls are covered with fiber cement, metal, stucco, or bricks.

They really are everywhere, I discovered on a cross-country drive last fall, and they’re going up fast. In 2017, 187,000 new housing units were completed in buildings of 50 units or more in the U.S., the most since the Census Bureau started keeping track in 1972. By my informal massaging of the data, well over half of those were in blocky mid-rises.

These structures’ proliferation is one of the most dramatic changes to the country’s built environment in decades. Yet when I started asking around about them, they didn’t seem to have a name. I encountered someone calling them “stumpies” in a website comment, but that sadly hasn’t caught on. It was only after a developer described the style to me as five-over-one—five stories of apartments over a ground-floor “podium” of parking and/or retail—that I was able to find some online discussion of the phenomenon…

The boom has also been shaped by zoning that sometimes leaves downtowns and suburban commercial districts as the only practical spots for new housing. Ordinances requiring a minimum number of parking spaces per apartment unit factor in, too: Where minimums are relatively high, as in Texas, the best solution can be wrapping the building around a parking deck, a style known as the Texas doughnut. Where they’re lower, the ground-floor podium will do. City planners also often require developers to devote street-front podium space to shops and restaurants.

If you’re interested in why apartment construction has trended in this direction, you really should read the full article; it helps explain the impact that building codes, zoning and regulation can have on what’s built and where it’s built.

Keystone Wins Approval for Horse Pen Creek Apartment Development

With an 8-1 vote the Greensboro City Council approved rezoning for a proposed 380-unit apartment community off of Horse Pen Creek Road. The Greensboro News & Record has the story:

The council voted 8-1 in favor of rezoning 21.4 acres for the apartment project that developer Keystone Homes says will cost about $50 million and include up to 380 units. ..

City staff members and Keystone consultants told the council they believe a widened Horse Pen Creek Road can handle additional traffic from the project and required safeguards should protect the environment adequately…


Wallace said the apartment complex would attract “active adult” residents and young professionals drawn by its amenities, nearby commercial district and ready access to nearby highways and the Piedmont Triad International Airport.


Amenities would include a fully equipped chef’s kitchen, a variety of fitness facilities, a children’s game room, a pet spa and one- and two-car garages, he said.

How Will Tariffs Affect Multifamily Development?

In a post on the BMO Harris Bank site, Managing Director and Head of US Commercial Real Estate Kim Liautaud looks at how tariffs could impact multifamily development:

In the multifamily market, project underwriting has tightened across the board because capital providers are concerned that the sector is late in the cycle, according to Chris McKee, head of development at CRG, the real estate development arm of Clayco. McKee explains that while trended rents used to attract equity providers, there’s now a reluctance to underwrite projects unless they’re at flat rents. Tariffs have only exacerbated that effect.

“We’re seeing contractors start to plan for increased costs,” McKee says. “Steel and aluminum companies know the tariff increases are coming, and they’re passing the costs along to general contractors. With flat rents and construction costs on the rise, spreads have been squeezed and multifamily projects became more difficult to underwrite. Tariffs have only added to that, and that trend will likely continue for the foreseeable future.”

McKee notes that trended rents still drive multifamily developments in certain markets where availability is tight, such as Seattle, Lehigh Valley in Pennsylvania and Inland Empire in Southern California. Less constricted markets, however, require more caution. “You may get squeezed a little bit by those cost increases because you may not have the rent increases that you would get in some of the tighter submarkets,” McKee says…

When it comes to managing multifamily projects, McKee stresses focusing on fundamentals and relationships. “Look for the right opportunity in the right location,” he says. “If you have a long-standing relationship with an equity or debt provider, you can make a case for rent increases specific to a high-growth micro-market, such as Tampa or Fort Worth. It’s an advantage to have pre-existing relationships with equity lenders who trust and believe in you. So when you go to show them something, they know you’ll deliver.”

Labor Shortage a Challenge for Apartment Developers

Nationwide there is still ample demand for new apartments, but a shortage in construction labor is limiting the number of units being delivered. From an article on Realtor.com:

Rising construction costs and a tight labor market are slowing a nearly decade long apartment boom, likely easing a burgeoning glut at the top end of the market that has been forming across the U.S.

Multifamily building permits have fallen each month since March, according to federal data. That type of slowdown suggests there should be less new apartment construction over the next two years, the typical time it takes to build an apartment property of any scale…

“The demand is there,” said Paula Munger, the National Apartment Association’s director of industry research and analysis, referring to tenants. “But labor’s a big deal. It varies by position, but in general that’s what we’re hearing from our members. The actual completions are being more and more delayed for that reason.”

One silver lining from the delayed construction is that it will help reduce some of the inventory at the high end of the market, which has seen the most activity over the last few years and reverse the recent slow down in rent growth.

Charlotte Builder Looking at North High Point Multi-Housing Project

North High Point is experiencing a significant amount of growth, and now it looks like the area might be getting a 600-unit housing development, including apartments. From an item in the Triad Business Journal:

The report says that Bunker Land Group LLC filed zoning applications with the city to build the units on about 80 acres near N.C. 66 and North Main Street, just south of Interstate 74.

Bunker wants to build 350 multifamily units, filling in the rest with single-family homes, twin homes and townhomes.

Printworks Mill Project in Greensboro Ready to Go

The financing is in place and work is ready to begin on the Printworks Mill project in Greensboro. From the Triad Business Journal:

The Alexander Co., developer of the Printworks Mill commercial and residential project across Yanceyville Street from Revolution Mill in Greensboro, will hold an official groundbreaking on the site Wednesday morning with stakeholders, local politicians and government officials on hand…

…Alexander has settled on 217 apartment units in three buildings, leaving the first floor of a four-story building near the corner of Fairview and Ninth for retail and restaurant space. He said the remaining three floors of that building, plus all seven floors of an adjoining building, will become storage space…

…plans call for the approximately 100,000 square feet of retail and storage space to be complete by June. He said the apartments, which make up the remainder of the approximately 470,000-square-foot project, are scheduled to be finished in August 2020.

Apartment Community Proposed Next to Triad Golf Course

According to a recent filing with the NC Department of Environmental Quality there are plans to build a 238-unit apartment community adjacent to one of the Triad’s premier golf facilities. From the Triad Business Journal:

Koury Corp. is eyeing a 238-unit apartment complex in Grandover, according to a permit application filed with the N.C. Department of Environmental Quality…

The proposed complex would consist of five buildings with a mix of one-, two- and three-bedroom layouts. The buildings also would have eight garages and 455 parking spaces…

Koury is proposing that the five-building complex go on the western side of the fairway, which would place it between the fairway and Koury’s planned Grandover Village shopping center, divided by the new Grandover Village Road.

Multifamily Construction Input Costs Are Up. Way Up.

The National Apartment Association will be publishing an in-depth article and blog post on rising construction input costs, but in the meantime, they offered us some basic data comparing the Producer Price Index (not seasonally adjusted) in May 2018 vs. May 2017:

Source: Bureau of Labor Statistics

The three steepest increases were:

Lumber & Plywood – 13.9%
Copper & Brass Mill Shapes – 13.8%
Steel Mill Products – 10.5%

As we said, NAA will be digging into this in more detail soon so make sure you check their Research Page/Blog and the August issue of Units Magazine to see it.