July 25, 2014

Realtors Calling "The Age of Multifamily" Residential Development As North Carolina Sees the Impact

Multifamily residential is hot.  Real hot.  

What's multifamily residential?  In its most common form, it is an apartment complex.  According to the National Association of Realtors, "The 10's are the apartment decade."  In other words -- well, in financial-speak -- "[M]ulti-family has become the darling of commercial property investors, whose seemingly endless appetite for product has pushed cap rates for Class A properties below 5 percent in many top markets."  Translation:  Investors are so hungry for multifamily residential opportunities in good markets, and you can probably divine what those markets are, those investors are willing to accept a lower rate of return simply to crack the good markets.

Why is this?  Well, you've probably seen the "rent v. buy" articles floating around on the web and in print, in which "rent" will sometimes win, but the answer may be quite simple.  By some research, renter demand justifies investor exuberance for multifamily.  It's been cited by MPF Research in Dallas that "[n]ational apartment occupancy averaged 94.6 percent at the end of 2011, almost three percentage points higher than the bottom point at the end of 2009."

The Southeast in general, and North Carolina in particular, is riding this wave.

Here is a very small sampling of some transactions and news in the multifamily and apartment "space" in the Triangle region of North Carolina -- Raleigh, Durham and Chapel Hill -- since only August of this year.

A 360-unit multifamily apartment complex in Durham was purchased for $28.1 million.

A 393-unit multifamily apartment complex in Cary was purchased for $54 million.

A 160-unit multifamily apartment complex in Chapel Hill was purchased for $11.6 million.

A 186-unit apartment complex in Durham was purchased for $22 million.  The same complex was purchased 25 months ago for $17.55 million.

A 188-unit multifamily apartment complex in Carrboro was purchased for $11 million.  The purchase price is more than 10% over the tax value of the complex.

A developer is looking to expand the size of its planned multifamily project in Durham.  Instead of the 88 units planned at a cost of $10 million, the developer is now looking to build 183 units at a cost of more than $20 million.

A Chapel Hill developer is planning an upscale, 125-room hotel and 68-unit multifamily apartment building project in Chapel Hill.

This matters to the investors, the residents and to economy at large but it also matters to lawyers and their clients as well as lawmakers at the state and local level.  There are many political, legal and financial issues to navigate when purchasing, developing, or modifying any real estate.  And multifamily residential is no exception.

It will be interesting to see the issues that arise and solutions we develop as multifamily transactions--whether purchases, refinances or with local governments--continue to grow momentum.

Copyright © 2014 Womble Carlyle Sandridge & Rice, PLLC. All Rights Reserved.

About the Author

Michael C Thelen, Womble Carlyle Firm, Litigation Attorney

Mike represents myriad clients – from Fortune 500® companies to smaller, privately-owned organizations – in cross sections of business throughout the many stages of federal and state litigation.  From his years of practice in New York and North Carolina, Mike primarily has experience in the areas of land use, local/municipal government law and real estate litigation, having handled zoning, development agreement, land use planning, eminent domain and condemnation, construction, retail and commercial landlord-tenant, partnership dissolution, state law torts, and civil...


Boost: AJAX core statistics

Legal Disclaimer

You are responsible for reading, understanding and agreeing to the National Law Review's (NLR’s) and the National Law Forum LLC's  Terms of Use and Privacy Policy before using the National Law Review website. The National Law Review is a free to use, no-log in database of legal and business articles. The content and links on are intended for general information purposes only. Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor.  

Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. The National Law Review is not a law firm nor is  intended to be  a referral service for attorneys and/or other professionals. The NLR does not wish, nor does it intend, to solicit the business of anyone or to refer anyone to an attorney or other professional.  NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. 

Under certain state laws the following statements may be required on this website and we have included them in order to be in full compliance with these rules. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. Statement in compliance with Texas Rules of Professional Conduct. Unless otherwise noted, attorneys are not certified by the Texas Board of Legal Specialization, nor can NLR attest to the accuracy of any notation of Legal Specialization or other Professional Credentials.

The National Law Review - National Law Forum LLC 4700 Gilbert Ave. Suite 47 #230 Western Springs, IL 60558  Telephone  (708) 357-3317 If you would ike to contact us via email please click here.