Multifamily Advisory Group | East Region WE KNOW KNOXVILLE€¦ · KNOXVILLE. Specialized Real...

COLLIERS INTERNATIONAL MULTIFAMILY ADVISORY GROUP P. 1www.ColliersMultifamilyEast.com

Multifamily Advisory Group | East Region

Accelerating success.

WE KNOW KNOXVILLESpecialized Real Estate Investment Services

COLLIERS INTERNATIONALP. 2 MULTIFAMILY ADVISORY GROUP COLLIERS INTERNATIONAL MULTIFAMILY ADVISORY GROUP P. 3www.ColliersMultifamilyEast.com www.ColliersMultifamilyEast.com

WE KNOW WHO YOU ARETennessee is a business-friendly state. Corporations, as well as citizens, benefit from the Tennessee tax structure. It is profitable to do business in Tennessee and cost effective to live here. Various tax credits are applicable, further lowering tax liability of corporations within the state. Tennessee is one of the few remaining state with no personal income tax.The Knoxville area is frequently cited in national surveys as a quality place in which to live. The University of Tennessee calls Knoxville home, making an array of educational and cultural opportunities available to area residents.Affordable housing, health care costs below the national average, a low crime rate, and a pleasant climate with lakes and mountains nearby are factors which make Knoxville an attractive place to settle.


Multifamily Absorption and Supply

Annual 2Q16 Annual Forecast

2013 2014 2015 Market National 2016F 2017F 2018F 2019F 2020F

Total Units Absorbed

658 235 1,475 1,360 322,402 608 197 402 991 639

New Supply 336 344 724 879 350,290 1,067 700 818 656 389

Inventory Growth 0.3% 0.7% 1.3% 1.6% 1.4% 2.0% 1.5% 1.6% 1.4% 0.9%

Market Employment and Permitting

Annual June-16 Annual Forecast

2013 2014 2015 Market National 2016F 2017F 2018F 2019F 2020F

Employment (000s) 369.3 376.4 386.0 391.5 144,185.0 394.7 401.4 406.2 411.5 417.2

Job Gain (000s) 1.8 7.1 9.6 8.7 2,411.0 8.7 6.7 4.8 5.3 5.7

Job Growth (%) 0.5% 1.9% 2.6% 2.3% 1.7% 2.2% 1.7% 1.2% 1.3% 1.4%

Total Residential Permitting 1,854 2,292 2,807 2,623 1,058,258 2,988 2,994 3,245 2,613 2,099

Relative Change 17.3% 23.6% 22.5% 9.1% 3.9% 6.4% 0.2% 8.4% -19.5% -19.7%

Single Family Units Permitted 1,544 1,606 2,339 2,287 658,769

Relative Change 28.9% 4.0% 45.6% 22.8% 10.9%

Multifamily Units Permitted 304 680 464 332 370,060

Relative Change -18.9% 123.7% -31.8% -38.5% -6.6%

Multifamily as a % of Total 16.4% 29.7% 16.5% 12.7% 35.0%

Demand/Supply Ratio Job Gain / Total Residential Units Permitted 1.1 3.8 4.2 3.6 2.4 3.1 2.2 1.6 1.6 2.2

Job Gain / Single Family Units Permitted 1.5 4.6 6.0 4.7 4.1

Job Gain / Multifamily Units Permitted 4.8 23.3 14.1 16.1 6.1

WE KNOW YOUR MARKET

RECENT SALES

SUPPLY AND DEMAND

Source: AXIOMetrics. RCA

Market Survey Results and ForecastsSequential Month Annual

3Q15 4Q15 1Q16 2Q16 Jul-16 2014 2015 2016F 2017F 2018F 2019F 2020F

Effective Rent Per Unit $893 $899 $897 $912 $923 $863 $884 $912 $937 $958 $988 $1,025

Per Sq. Ft $0.88 $0.89 $0.89 $0.90 $0.92 $0.85 $0.87 $0.90 $0.93 $0.95 $0.98 $1.01

Effective Rent Growth - Annually 2.5% 4.8% 3.8% 4.0% 4.1% 1.3% 2.4% 3.2% 2.7% 2.3% 3.1% 3.8%

Effective Rent Growth - Quarterly 1.8% 0.7% -0.2% 1.7%

Occupancy Rate 95.4% 96.2% 95.4% 95.6% 95.3% 94.4% 95.1% 95.5% 94.8% 94.0% 94.5% 95.0%

Occupancy Change - Annually 0.5% 1.7% 1.4% 1.1% 1.0% 0.0% 0.7% 0.5% -0.8% -0.8% 0.5% 0.6%

Occupancy Change - Quarterly 0.9% 0.8% -0.9% 0.2%

Economic Concessions Concession Value $-8.07 $-8.40 $-15.46 $-9.70 $-7.82 $-12.08 $-12.07

As a % of Asking Rent -0.9% -0.9% -1.7% -1.1% -0.8% -1.4% -1.4%

According to the Bureau of Labor Statistics, job growth in Knoxville, TN Metro Area was 2.3% in July 2016, reflecting 8,700 jobs added during a 12-month period. The metro job growth figure was above the national number of 1.7%.

Axiometrics forecasts Knoxville, TN Metro Area’s job growth to be 1.7% in 2017, with 6,674 jobs added. Job growth is expected to average 1.3% from 2018 to 2020, with an average of 5,266 jobs added each year.

On the supply side, permits for 649 multifamily units were issued in the 12 months ending in July 2016, up 185 units from the prior year’s sum. In terms of total residential housing, 3,149 units were permitted in the 12 months ending July 2016, an increase of 342 units from the prior year’s total.

Date Property Name Address City Units Year Built Price in $ $/Units

Aug-16 Clinton Towers 150 N Charles G Seivers Blvd Clinton 149 1980 / 2003 8,550,000 57,383

Jul-16 Gate Manor 1200 Fowler Ln Clinton 80 1981 3,606,573 45,082

Jun-16 Gateway at Knoxville 301 Lippencott St Knoxville 192 1995 / 2002 18,199,986 94,792

Mar-16 Hammond 4619 Sunflower Rd Knoxville 156 1970 / 1988 7,100,000 45,513

Mar-16 Element at Cedar Bluff 9015 10 Mile Rd Knoxville 223 1980 / 1988 6,790,000 30,448

Jan-16 Adair Manor Apts 2132 Adair Dr Knoxville 159 1970 / 1982 5,200,000 32,704

Nov-15 Parkview West 10914 Kingston Pike Knoxville 84 2008 26,000,000 309,524

Jun-15 Quarry Trail 3999 Highland Crest Way Knoxville 210 2008 42,000,000 200,000

May-15 Tara Hills Apartments 101 Elmhurst Dr Oak Ridge 214 1975 / 2014 9,000,000 42,056

May-15 Country Oaks Apartments 1000 Country Oaks Cir Knoxville 350 1981 / 1987 28,050,000 80,143

May-15 Teller Village 100 Teejay Dr Oak Ridge 80 2002 2,720,000 34,000

May-15 The Heights of Knoxville 1319 Knotty Pine Way Knoxville 204 1999 19,739,000 96,760

Apr-15 The Landings Riverfront Apartments

814 Landings River Way Knoxville 206 2011 26,500,000 128,641

Feb-15 Bell Maryville 100 Enterprise Way Maryville 192 2008 18,876,000 98,313


IDENTIFIED SUPPLY PIPELINEAs of August 28, 2016, Axiometrics has identified 916 apartment units scheduled for delivery in 2016, of which, 322 have been delivered. As a comparison, there were 588 apartment units delivered in 2015. Properties delivered to the market in the last 12 months have achieved an average asking rent of $1,144 per unit, or $1.16 per square foot. Effective rent has averaged $1,109, or $1.12 per square foot, resulting in an average concession value of $-34.58. As a comparison, existing properties in the market had an average asking rent of $922 per unit ($0.91 per square foot) and an average effective rent of $912 per unit, or $0.90 per square foot, in 2Q16. Concessions for existing properties averaged $-9.70.

Submarket Delivery Schedule

Pipeline Delivery Schedule Pipeline Lease Up Trend

Units Absorbed Asking Rent Effective Rent

Top Submarkets 2014 2015 2016 Total Totals PPM Per Unit PSF Per Unit PSF Central/Southeast 49 713 762 191 11 $1,329 $1.67 $1,246 $1.56

Northwest 60 160 203 423 171 13 $1,154 $0.92 $1,124 $0.90

Other 272 428 700 182 12 $991 $0.98 $986 $0.98

Knoxville, TN 381 588 916 1,885 544 12 $1,157 $1.18 $1,119 $1.14*Based on 2016 deliveries *Trend based on a trailing 12 month period

# Name Status Owner Address Market Units1 Knox Ridge Lease Up Oculus Development LLC 1436 Cherokee Trl Outer Southside 862 Marble Alley Lofts Lease Up Marble Alley Development, LLC 300 State St Downtown Knoxville 1163 Knoxville Riverwalk at the Bridges Under Construction Southeastern Development

Associates137 E Blount Ave South Knoxville 350

4 River's Edge Apartments - Phase II Under Construction Dominion Management Group, LLC 1703 Island Home Ave South Knoxville 825 The Standard at Knoxville Under Construction Landmark Properties 711 17th St Fort Sanders 2376 The Villas on Wallace Road Under Construction Murphy Development 1211 Gary Birch Way Westside 767 Vintage at Emory Under Construction TDK Construction Company 7401 Vintage Point

WayOuter Northside 220

8 Wellsley Park at Deanna Hill - Phase II Under Construction The Sterling Group, Inc. 7300 Sir Walter Way Westside 1029 Riverfront Station Proposed Southeastern Development

Associates313 W Blount St South Knoxville 136

Total Units 1,269

Source: CoStar

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WE CAN HELPAs an investor in multifamily properties, you need a firm that provides experience, broad reach and the ability to market an asset no matter how challenging the economic environment. You need a team that specializes in your market you need The East Region Multifamily Advisory Group.

Colliers International has one of the largest and most experienced teams in the industry, strategically located in key markets throughout North America. Our combination of market dominance, expertise, and singular focus, make us uniquely successful in helping our clients achieve their disposition objectives.

How are we able to bring together the skills and tools necessary to complete challenging assignments? Our East Region Multifamily Advisory Group is connected by purpose and focus. Our team is dedicated to sharing information on market opportunities, capital sources and buyers/sellers to achieve the best results for our clients.

WHO WE AREOne of the largest and most

experienced teams of multifamily

specialists in the industry

Units sold since 2011

30,000MORE THAN

Group gross transaction value in since 2011

$2.0B

Dedicated Multifamily Professionals & Advisors

50MORE THAN

Expansive geographic footprint

20COVERING OVER

STATES

Overlook at Allensville SquarePhase IIKnoxville, TNUnits: 288

Overlook at Allensville SquarePhase IKnoxville, TNUnits: 288

Renaissance at Peacher’s MillClarksville, TNUnits: 216

RENAISSANCE AT PEACHER’S MILL | Clarksville, TN

CHALLENGE: This was a difficult and cumbersome transaction as the debt execution consisted of an assumable HUD loan which dramatically narrows the pool of buyers and extends the process. Additionally, the East Region team reviewed the seller’s proforma and found they were charging too high an administrative fee to each renter. STRATEGY & RESULTS: After reducing the fee, ownership was able to achieve an $80,000 annual NOI increase, which resulted in an increased sale price. To sell the property the team, broadly marketed to work with an active HUD buyer comfortable with the process.

Selling this property resulted in the highest price per unit in the history of Clarksville.

CLIENT: JA Murphy Group UNITS: 216

OUR PROVEN TRACK RECORD

“We were extremely pleased with the East Region team and its ability to attract an incredible amount of interest in our 3 assets. The number of offers received and the end results exceeded our expectations. They have a talented group who was a pleasure to work with. Their performance stands out against any of the groups we work with nationally.”

Nels Billsten, Vice President | CORE Realty Holding Management

COLLIERS INTERNATIONALP. 10 MULTIFAMILY ADVISORY GROUP www.ColliersMultifamilyEast.com

John AshleyASSOCIATE | EAST REGION

[email protected] +1 615 850 2715

www.ColliersMultifamilyEast.com

To learn more, scan this with a QR code reader or visit:

Will MathewsPRINCIPAL | EAST REGION

INSTITUTIONAL CLIENT GROUP


Brooks ColquittASSOCIATE | EAST REGION


Craig BrownASSOCIATE | EAST REGION


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