Carolina Woods Latest in a String of Winston-Salem Apartment Transactions

The Winston-Salem Journal ran a fairly in-depth article on the sale of Carolina Woods and the plans the new owner has for the community. Here’s a taste:

The Carolina Woods apartment community near Bethabara Park will go through a major renovation initiative as part of its new owner’s push into the North Carolina and Southeast metro markets…

Weiss owns and manages more than 600 multifamily units, more than 20,000 square feet of commercial space, and an 89-room boutique hotel, banquet hall and restaurant.

However, until it closed on the Carolina Woods community, all of its investments were in New Jersey and New York.”

The article also had an interesting bit of info about all of the apartment transactions in Winston-Salem over the last six months:

“The others include: 213-unit Loxley Chase in Winston-Salem selling for $16.25 million; 234-unit Morgan Place in Clemmons for $14.3 million; 204-unit Twin City Townhomes in Winston-Salem for $10.15 million; 144-unit Salem Crest in Winston-Salem for $7.5 million; 96-unit Woodlawn in Winston-Salem for $3.5 million; and the 49-unit apartment complex at 1976 Maryland Ave. in Winston-Salem for $1.45 million. “

One-Off or Early Signs of a Trend?

Those of us who were around pre-Great Recession can remember a time when it was relatively commonplace for apartment communities to be converted to condos. Then the mother of all recessions happened and rental housing became the most lucrative, and safest, real estate game in town and we stopped seeing those conversions – if anything we saw condos converting to rental units.

That’s what makes the news of this move in Winston-Salem pretty interesting. From a story in the Triad Business Journal:

Winston-Salem investors Ben Bloodworth and Taylor Williams purchased the 836 Oak Street Lofts apartments in downtown Winston-Salem for $2.75 million with plans to convert the 26 apartments in the former mill facility into condos.

The purchase included 1.22 undeveloped acres adjacent to the apartments.

Bloodworth told Triad Business Journal that all current leases would be honored, and the units would be upfitted and sold as the leases expire.

Downtown Winston-Salem is experiencing a boom of new housing, retail, restaurants and entertainment with the growth of the Wake Forest Innovation Quarter, including the Bailey Power Plant, and the office renovation projects at the GMAC tower.

Downtown Winston-Salem is a particularly hot market in the Triad right now, so this might portend a larger trend across the region, but it will be interesting to see if other investors follow suit, especially in the downtown markets of the Triad’s cities.

Beverly Hills Company Buys Two Triad Properties for $14.6 Million

A Beverly Hills-based company has entered the Triad market with acquisitions in Winston-Salem. From a story in the Triad Business Journal:

A Beverly Hills, California, real estate investment firm has purchased adjacent Triad apartment communities for a combined $14.6 million, and is rebranding them under one name.

Evan Goldenberg, the principal of EBEX Holdings, told Triad Business Journal that The Ledges and 96 Ardsley, located along Ardsley Street in Winston-Salem’s Ardmore neighborhood, would be combined for rebranding as “The Residences at Diamond Ridge.”

Goldenberg said the purchases from LLCs managed by Charles Douthit of Raleigh are EBEX’s first in the Triad. He told TBJ that he has at least one other Triad apartment deal in the works, but is not ready to announce it. EBEX owns the 348-unit Arcadian Village apartments in Charlotte and two 100-unit complexes in Spartanburg, S.C.

Wellington Advisors will manage Diamond Ridge.

433-Unit Community in Winston-Salem Sold to Colorado Company

The Triad Business Journal reported that Interurban Companies of Centennial, CO has purchased The View at 5010, a 433-unit apartment community located off of University Parkway south of Shattalon Drive. Interurban bought the community from Elite Street Capital (Houston, TX) for $26.3 million, and Elite Street paid $19.49 million for the community, then known as Ambercrest, in December 2016.

Synco Properties will manage The View at 5010, and assistant property manager Mark Longwill told the Business Journal that the new owners will continue with renovations that Elite Street Capital had started.

PTAA Members Briefed on Planned Business 40 Closure in Winston-Salem

Representatives from NCDOT met with PTAA members in Winston-Salem to provide them with information about the closure of Business 40 for construction. While work on the project began last year, the closure of all lanes of traffic between Peters Creek Parkway on the west, and US 52 on the east, isn’t expected until Fall of 2018.

 

At that point, the major access points to downtown Winston-Salem will include:

From the east:

  • MLK Jr. Blvd exit off of Business 40 east of US 52
  • US 52 north to MLK Jr. Blvd or Liberty St
  • US 52 south to Research Parkway

From the west:

  • Peters Creek Parkway
  • Main Street north from Silas Creek Parkway
  • Academy from Peters Creek Parkway

NCDOT’s representatives were able to answer questions from attendees about the anticipated impact the construction will have on downtown businesses and residents; address concerns about whether the project will be completed on time; advise them on how to educate their prospects and residents about the project.

You can request a full copy of NCDOT’s presentation slides by emailing PTAA staff at info AT piedmonttaa.org.

Is Condo Conversion Early Sign of a New Trend?

Since the great recession the primary residential real estate story has been the conversion of, well, everything to apartments. Historic buildings, existing commercial, condos, etc.  We have not, however, seen any apartments converted to condos over the last 10 years, but that might be getting ready to change.

The Triad Business Journal reported that the Oak Street Lofts apartments in Winston-Salem will be converted to condos as existing leases begin to expire. From the story:

Bloodworth told Triad Business Journal that all current leases would be honored, and the units would be upfitted and sold as the leases expire.

Downtown Winston-Salem is experiencing a boom of new housing, retail, restaurants and entertainment with the growth of the Wake Forest Innovation Quarter, including the Bailey Power Plant, and the office renovation projects at the GMAC tower.

Bloodworth said the one- and two-bedroom condos, each of which has a unique layout, is planned to sell for between $165,000 and $275,000.

“This is irreplaceable real estate and we are excited to offer these updated condos for sale at this price point,” Bloodworth said.

So is this the first indication that we might be seeing a shift in the local multifamily market? There’s no way to tell, but this 2011 article from Multifamily Executive might help explain why it’s worth watching:

But simple economics also points to an emerging cost-of-housing dichotomy that has traditionally been the undoing of the apartment operator: Rents are going up, and condo prices are coming down. If the cyclical nature of multifamily construction proves out, the endgame of that dichotomy means renters will slowly leave apartments to purchase condo units, and builders and investors will chase them down, attempting to convert rental buildings into condos along the way. 

Interestingly, the article, which was written just as the apartment industry was entering into its historic growth period, accurately predicted that a trend towards condo conversion wasn’t likely to happen in the near future. Seven years later, with the cost of ownership solidly below the cost of renting, we might finally see the chilling of the apartment market. But, given the fact that the apartment boom has consistently defied historic precedents over the last seven years that’s not a sure thing at all.

Over 19,000 Apartments Needed to Meet Housing Demands in Piedmont Triad

The National Apartment Association (NAA) and National Multifamily Housing Council (NMHC) recently commissioned a study by Hoyt Advisory Services on the housing market in the Piedmont Triad and concluded that almost 19,000 new apartment units will need to be constructed by 2030 in order to meet the region’s housing needs. The study also found that this new construction will require all types of apartments at all price points.

The study found that the Piedmont Triad currently has an estimated 101,020 apartments with residents of all ages and income levels. Of those units, 66% were built before the year 2000, which is a key factor in addressing housing affordability; as new housing units are built they free up older housing stock for workforce housing.

While multiple factors contribute to the need for new apartments, including shifting lifestyle preferences, such as delayed homebuying, as well as the aging American population, a critical component to increased demand for all housing in the Triad is an influx of 25,000 new residents from other parts of the country.

Here’s a link to a PDF version of an overview of the study results for the Triad. Metro MF Overview Piedmont Triad 3-Nov-17

You can also find results at the weareapartments.org website.

 

Rents Up, Vacancies Down in Piedmont Triad Apartment Market

Real Data’s October, 2017 market report for the Piedmont Triad was just published and the trends look good. Here are the highlights:

  • Vacancy rate: 5.2% (was 5.6% in October, 2016)
  • Average rent/SF: $0.876 (was $0.843 in October, 2016)
  • # of units: 67,560 (was 64,196 in October, 2016)
  • 1,814 units have been absorbed in the last year
  • 2,646 units are under construction, and another 1,870 are proposed

Real Data expects vacancies to remain around 5.0% over the next year.

Also of interest is how the various submarkets are performing. Most notable:

  • Highest rent per SF: Guilford-Central ($1.131) and Forsyth-Central ($1.056)
  • Lowest vacancy rate: Guilford-High Point (3.3%)
  • Highest vacancy rate: Guilford-Southwest (7.8%)
  • Most units under construction, as a percentage of all units surveyed: Alamance-Burlington (10.79%)

To get a full copy of Real Data’s Triad market report visit www.aptindex.com

West End Station is Newest Addition to Downtown Winston-Salem

Source: Winston-Salem Journal

Much of Winston-Salem’s downtown apartment development has been concentrated near the Innovation Quarter and the central downtown area, with the notable exception of the Link Apartments Brookstown, which is across the street from BB&T Ballpark on the west side of downtown. That’s about to change with the addition of West End Station, which should deliver 229 apartment units to Winston-Salem’s West End within 24 months. From an article in the Winston-Salem Journal:

The $35 million development will provide 229 apartments in a block that’s close to both the center of downtown and the BB&T Ballpark, said Porter Jones, the president of DPJ Residential, a Charlotte-based developer doing its first project in Winston-Salem…

DPJ Residential and Chaucer Creek Capital of Raleigh are going 50/50 on the development. Chaucer Creek Capital owns the Gallery Lofts apartment community in downtown Winston-Salem, but the West End Station is the first development here for DPJ Residential…

Jones said West End Station will have a saltwater swimming pool and a fitness center, a two-story clubhouse with an outdoor terrace and gas grills, and two elevated courtyards above the parking deck on the lower floor of the building that faces Brookstown Avenue. In all, there will be 300 parking spaces.

Offering a mix of one- and two-bedroom apartments, the development will have rent ranges from $1,200 to $1,300 per month for the one-bedroom units, Jones said, to $1,600 to $1,650 for the two-bedroom units.

Developer Faces Uphill Battle for Zoning Approval of 144 Unit Community in Winston-Salem

A proposed apartment development in Winston-Salem, which the developer is describing as a “gateway into the city,” is facing an uphill battle. City planning staff is recommending against approval for the project, but its fate will be determined at a planning board meeting tonight (August 10, 2017).

Despite the planning staff’s recommendation, the project could get through the approval process because the developer, Daniel Donathan, has set aside 15% of the units for “reduced subsidized rentals” which addresses a key concern of city leaders: a dearth of affordable housing units in the city. From an article in the Winston-Salem Journal:

Monthly rent for the majority of the apartments is expected to range from $1,400 to $1,700.

But plans are to have 15 percent of the new apartments available “for reduced subsidized rental” at an estimated monthly rate of $650 to $750, Donathan said.

“I’m talking about having the possibility of those people that we relocate coming back into the same area,” he said.

Overall, the proposed project would result in 144 units and would be located between Peters Creek Parkway and Fourth Street, just south of Business 40.