Southern Hospitality

INVESTING IN ASHEVILLE Considering local fundamentals, the ticket to investment in Asheville may be in buying and repositioning existing product. On this front, Asheville’s multifamily inventory offers approximately 50 communities with an average size of 144 units, an average construction date of 1985 and an average occupancy of 95 percent. Rents sit at an average $715 per month.

On average, multifamily units in Asheville are selling for $90,000 to $100,000 per unit for higher-end apartments and $50,000 to $70,000 for Class B units. Rent growth, particularly for popular amenity-heavy units, is expected to reach between 3 and 5 percent in the coming year.

For the investor that understands local demand for amenities, profit may be found in purchasing an existing complex and improving it, such as was done in the emerging Enka Lake market by Florida-based Montecito Property Company. In June 2006, Montecito purchased the Northview at Biltmore Lake apartment community for $109,000 per unit and already has converted it into 252 upscale condominiums. Now named Seasons at Biltmore Lake, the property is more than half sold with per-unit prices ranging from $120,000 to the low $200,000s.

FULL HOUSE: Seasons at Biltmore Lake features 252 condo units. In a market that is carefully avoiding being overbuilt, any investor with the ability to turn non-multifamily buildings into quality, architecturally focused apartments or condominiums also would likely be very well received not only by renters but also by city planners. This follows closely with Asheville’s desire to maintain its award-winning reputation through development and making decisions submarket by sub-market to create lasting value.

John Minor is an advisor with Sperry Van Ness in Asheville.

MFE DOZEN: Asheville, N.C. (January) Southern charm wins big

Atlanta (February) Peachy deals crop up

Denver (March) Multifamily goes mile-high

Washington, D.C. (April) Capital efforts pay off

Chicago (May) Good news for the Windy City

San Jose (June) Golden opportunities abound

Minneapolis (July) New constructions in the Twin Cities

New Orleans (August) The Big Easy rebuilds

Providence (September) Promising developments in the Northeast

Dallas (October) Herding up new projects

Indianapolis (November) The heartland keeps ticking

Manhattan (December) The market that never sleeps

FAST FACTS Considering Asheville? Here’s what you need to know:

1) Population: 75,000

2) Occupancy: 96% for complexes over 100 units

3) Median Age: 39.2 years

4) Median Household Income: $37,000

5) Average Rent: $715

6) Unemployment: 3.2%

NOTABLE: Home to the Biltmore Estate, which is the largest private residence in North America. Local Black Mountain Golf Club has second-longest fairway in the world. The Mississippi River’s highest point (6,684 feet) is 20 miles northwest of Asheville.

Source: Marcus & Millichap Research Services