By: Karlin Conklin, Principal & Executive Vice President, Investors Management Group
Published: July 19, 2019
CNBC reported this week that The American Institute of Architects (AIA) Architecture Billings Index fell into negative territory in June. The article’s headline “Bad sign for commercial real estate” is eye-catching for multifamily investors, although the message isn’t “bad” so much as “balanced.”
Softer demand for architectural services points to a slowing commercial real estate pipeline. It’s unfortunate news for architects, but points to a more balanced supply going forward. The article notes that while apartment rental demand is still strong, developers are becoming concerned about oversupply. It’s a reasonable outlook and positive news for apartment investing in competitive markets.
Here in Portland, Oregon, multifamily housing deliveries overshot the 2009-2015 demand surge. The market has shifted in favor of renters with moderating rental pricing and plenty of inventory. Oregon’s controversial new rent control laws will undoubtedly influence a market that’s already seeking a natural balance.
Nationally, demand for apartments is still quite strong and growing. The “Sun Belt” particularly benefits from dynamic population growth, job gains, and rent upside. IMG owns and operates over 1,700 units in the Southeastern U.S. – our fastest-growing portfolio region – with a current offering in Raleigh, NC and a recent closing in the Atlanta metro.
My takeaway? Our firm’s unique IPA apartment investing strategy remains unchanged. IMG will continue acquiring properties in high-barrier-to-entry markets that we can rehabilitate to enhance renter value and build investor equity. It’s been our successful strategy through changing real estate cycles, like this one.
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