SALES DERBY As a result of these factors, a variety of investors have found a home in Kentucky. The sales velocity for apartments continues to increase in Louisville and Lexington as the healthy economies of these markets attracts out-of-state investors seeking higher initial yields and stable future cash flows.
Investors are looking at population and job growth factors, pricing that’s below national averages, and cap rates trending higher than other mid-sized markets. The modest levels of stable supply also continue to attract investment. Capital comes into these markets from both coasts, as well as from regional investors in Chicago and Texas.
Buyers continue to seek both value-add rehab opportunities and core deals with steady cash flow, good initial yields, and long-term growth prospects. Investors such as PRG Real Estate out of Philadelphia and Continental Realty Advisors from Denver continue to build their Louisville portfolios. Continental picked up the Park Laureate and Canter Chase properties over the past year, while PRG purchased River Oak in fourth-quarter 2007. One of the largest recent transactions was the purchase of The Overlook of St. Thomas by locally owned NTS Corporation, who purchased the high-end property from Northwestern Mutual Life in March 2007. Lexington also continues to see out-of-state buyers with PRG, Sterling American out of New York, and B&M Enterprises from Montgomery, Ala., buying apartments in 2007. B&M recently bought the Class A Fountains of Andover in fourth-quarter 2007.
Louisville and Lexington will continue to see investors from across the country seeking diversification in growing markets. Thanks to educational and technological strengths, and cultural benefits that draw businesses and jobseekers alike, these two economies are poised to get ahead in the multifamily race.
MFE DOZEN: Raleigh, N.C. (January) A not-so-sleepy Southern town
Houston (February) Lone Star success
Huntsville, Ala. (March) A military movement
Lexington/Louisville, Ky. (April) No blues in the Bluegrass State
Seattle (May) A city on the rise
Orlando (June) A heated market
Kansas City (July) Feeling Midwestern momentum
Colorado Springs, Colo. (August) Rocky Mountain growth
Philadelphia (September) Independent streak
Columbus, Ohio (October) The heart of it all
San Antonio (November) Big-time development
San Francisco (December) Bayside building sets sail
FAST FACTS Considering Louisville, Ky.? Here’s what you need to know:
- Population: 1,231,300
- Occupancy: 92.4%
- Median Age: 37.54
- Median Household Income: $33,154
- Average Rent: $781
Unemployment: 5.4% NOTABLE: Although Louisville is home to the famous Kentucky Derby, Lexington is known as the “horse capital of the world.” The city boasts two historic horse racing tracks, Keeneland and The Red Mile Harness Track.