At Least 15 Apartment Communities in Forsyth County Have Been Sold in 12 Months

The Winston-Salem Journal ran a story in its June 8 edition highlighting the sale of 15 apartment communities in Forsyth County, and just today (June 20) another two were announced. The June 8 article does a nice job summarizing the many factors that contribute to the spike in transactions – demographics, lifestyle, costs – but one facet of the transactions that they pick up on is something that has been observed over the last year by apartment industry observers: a significant increase in out-of-town buyers of apartments. From the June 8 article:

Yet, there have been six apartment-complex purchases in Forsyth over the past three months, all by out-of-region and out-of-state buyers.

“Investors are trying to find what few pockets of value there are left in the apartment market,” said Mark Vitner, a senior economist for Wells Fargo Securities.

“Prices have been bid up so much in larger markets, such as Charlotte, Raleigh and Nashville, that investors are increasingly looking to markets that have been overlooked and show great potential for growth.

“Winston-Salem and Greensboro are at the top of the list of overlooked markets.”

If you’re wondering what the price points were for the transactions, we did a little “back of the napkin” calculating using the information from the article and some data we have in our membership files and found the following;

Those 15 communities have a total of 2,349 units and the combined total of sales prices was $136,640,000, or $58,169 per unit.

Report Shows Triad Rents Up, Vacancies Down in Past Four Quarters

According to a report from Marcus & Millichap, rents in the Triad have risen over the past four quarters thanks in part to investors looking for fertile territory after the Charlotte and Raleigh markets became a bit saturated. From the Triad Business Journal:

Rent for apartments increased 7.7 percent in the improving Triad market over the past four quarters, according to a Third Quarter 2017 report released by Marcus & Millichap (NYSE: MMI), a California-based, commercial real estate firm that provides research and advisory services in the U.S. and Canada.

The effective rent — the remaining cash after paying operating expenses — for landlords in the market was up 8.3 percent to $811. The vacancy rate dropped from nearly 6 percent to 4.5 percent over the past year.

By comparison, effective rents in Charlotte averaged $1,090 and in Raleigh they averaged $1,109

66-Unit Community Proposed in Southern Forsyth County

The City-County Planning Board in Forsyth County has indicated it supports a proposed 66-unit apartment community off of Peters Creek Parkway near the Davidson County line. From an article in the Winston-Salem Journal:

Image from Winston-Salem Journal

Gardner Capital Development wants to build The Reserve at Hickory Commons on 5.36 acres at 1295 Hartman Plaza Drive. The property is currently zoned for highway business-special use and has been commercially zoned since 1986. It is near A Child’s World Learning Center.

The project’s site plan shows four-, two- and three-story apartment buildings, along with a one-story clubhouse…

The planning staff has recommended approval of the project.

“It’s within the Oliver’s Crossing Activity Center and it is located along the Peters Creek Parkway Growth Corridor,” said Gary Roberts, a project planner for city-county planning and development services. “Legacy (2030 Comprehensive Plan for Winston-Salem and Forsyth County) calls for higher density residential along growth corridors and in activity centers.”

From Courthouse to Apartments

The Winston-Salem Journal has a good article about the transformation of the old Forsyth courthouse into 58 class-A apartments:

Old merges with new, as tenants walk across original marble floors or use an intricately-designed staircase still intact from the 1896 segment of the building. A star-shaped design in the floor on the Third Street side of the building has been incorporated into the building’s logo.

The large courtroom has been transformed into amenity space for tenants, with a kitchen, gym and lounge room. But the judicial bench and flags remain, as well as the original wood paneling, acoustical tile and crown molding.

“(It’s a) great space for them to hang out and enjoy the building, but also preserve the history of what this originally was,” said Amy Foster, regional manager for Clachan Properties…

The apartments have modern designs and appliances, but they each have their own unique character. One has an intricate historic doorframe as an entrance, while another has exposed brick walls from the bell tower and steel truss beams. The building’s smaller courtroom was transformed into two apartment units.

Clachan also developed the Winston Factory Lofts, but Coleman said the courthouse project was much different.

Coleman said, “In an old factory it’s wide open spaces. You really have maximum flexibility on what you can do. In the courthouse, you have to work within the confines of the building. For example, you can’t really modify the hallways, and there’s existing walls all over the place that have to be … integrated into the overall design of the building.”

The property is called 50 West Fourth and you can read more about the project on the Journal’s site.

Real Data Report Shows Triad Occupancy Over 93%

Today Real Data released the results of its latest market report for the Piedmont Triad and the numbers remain strong:

  • Vacancy – 6.9% (up slightly from 6.5% in Sep, ’14)
  • Average rent – $741 (up from $728 in Sep, ’14)
  • Average rent per SF – $0.788 (up from $0.744 in Sep, ’14)
  • Same-store rent change $ – $8.87 (it was $10.60 in Sep, ’14)
  • Same-store rent change % – 1.2% (it was 1.5% in Sep, ’14)

The sub-market that saw the greatest growth was the Central Forsyth market which added 322 units which helps explain the 12.5% vacancy rate in the area. Central Forsyth also has 397 units under construction, which is impressive but Central Guilford has 595 under construction. Long story short, the downtown Winston-Salem and Greensboro markets are exploding in terms of units. Rent per SF in those markets are by far the highest with Greensboro coming in at $1.018/SF and Winston-Salem coming in at $0.979/SF – the next closest is the NW Guilford sub-market at $0.809/SF.

Other highlights of the report include the fact that Alamance/Burlington has 401 units under construction and that the sub-markets with the lowest vacancy rates are Northern Guilford (4.4%) and Eastern Forsyth (4.5%).

You can buy a full copy of the report, which includes extensive demographic data and property-specific reports, at www.aptindex.com