Similarly, a range of investors are showing interest in Huntsville, even as the credit crunch makes some deals less appealing on paper. Total multifamily transaction volume experienced a whopping 58 percent increase from the $150 million to $200 million annual average of the early Birmingham, Ala.-based REIT Colonial Properties, which develops and owns commercial real estate across the Sun Belt, reinforced this positive market uptick when it sold two significant retail properties in exchange for local multifamily units last December. Colonial Properties is also building multifamily space in the area—take its planned 80-acre, $90 million, mixed-use property west of Huntsville and north of Highway 72, which will include a cinema, a Wal-Mart Supercenter, and an apartment complex.
Out-of-area investors, particularly those from the coasts, remain drawn to the below 7 percent cap rates being achieved for Class A purchases and the 7 percent to 7.5 percent cap rates offered for B and C properties. The credit shift has caused a slight dip in local pricing, causing buyers and sellers to become more creative in their deal structures, but the lull is not expected to last long.
Indeed, jobs are coming to Huntsville and, along with them, roads, retail, dining and entertainment, and commercial space. And, of course, apartments will be needed to fill the subsequent demand. For the next three to six months, however, Huntsville may still be a buyer’s market. While they can, investors may well want to consider their ability to purchase multifamily property here and owners should hold tight: An already thriving Huntsville is poised to skyrocket.
Summer Shelkey is an associate broker and national advisor for Sperry Van Ness, where Neil Victor, CCIM, is a senior advisor.
FAST FACTS Considering
Huntsville, Ala.?
Here’s what you need to know:
- Population: 376,000
- Occupancy: 94.3%
- Median Age: 36.7
- Median Household Income: $60,000
- Average Rent: $605
Unemployment: 2.5% NOTABLE: Huntsville is home to the U.S. Space and Rocket Center, which is the state’s largest tourist attraction. More than 100 languages and dialects are spoken in the city. Plus, the Twickenham historic district contains the state’s largest collection of pre-Civil War homes.
2000s to a record-breaking $453 million in 2006, according to the Huntsville Apartment Survey. Now, with $100 million in transactions in play, 2007 and 2008 will likely surpass this record.