Inner Spark February 2025
Spark Multifamily Investment Group
I help you achieve financial freedom and create the life of your dreams through passive real estate investments.
Hi Everyone,
Laura and I celebrated our 21st Anniversary on February 5th.
Our time together has been wonderful.
Life in #Lauraland is Good.....
We look forward to many more adventures in the future. While we are very different in many ways, we are best friends and have fun simply being together.
Early on in our relationship, Laura told me: "You be you". It's a simple concept but expresses the value of being authentic - true to one's self - and the value of acceptance leading to happiness - accepting each of us for who we are - flaws and all. I am thankful for Laura.
And of course the same concepts apply to business relationships - I am thankful for Brian Walsh and Dan Rowley. We accept each other for the unique human beings we are, respect each other for the knowledge and expertise we bring to the partnership and enjoy working together. It's a formula for success.
Dan Rowley and I will be off the Salt Lake City next week for the Best Ever Commercial Real Estate Conference. Brian Walsh will remain in Greenville and tend to the operations of all our assets while we are away.
At Best Ever, Dan & I will be updated on industry trends, learn some new ideas that will make us better operators and investors, and connect with other professionals in the commercial real estate world. Dan and I actually meet at an online Best Ever event during Covid.
We look forward to the March Inner Spark where we can share some nuggets from the Best Ever Conference.
THE LATEST NEWS FROM SPARK
All of our existing assets continue to perform well with occupancy rates at 97% and renewal rates of close to 75%. In addition to retaining a high percentage of our residents, we are also averaging rental increases of approximately 4.3% upon renewal. Maintaining high occupancy rates, minimizing vacancy and turnover costs while consistently increasing rental income is critical in an environment of increasing expenses for fire insurance, labor and material. By doing so, we are able to maintain if not increase property net operating income and therefore cash flow.
We are very excited to commence our value add business plan at our most recent acquisition, the Flats @ Old Buncombe.
Rents were below market at the time of purchase and we have made offers to all residents to extend their rental agreements along with rent increases between $100 and $150.
Even with these increases, rent at this property are still among the lowest in Greenville. to date, 22 of our existing residents have accepted our offer while only 2 have declined and they will be moving.
Vacated units will be renovated as needed.
We have determined the exterior cap ex plan - estimated cost $200,000 and have commenced the construction activities. We will install all new windows and exterior common doors, refurbish the common halls and stairways, paint the entire exterior, and install a new driveway and parking lot. In addition, we will remove some trees and install perimeter fencing along one side of the property.
We can't wait to see how it all turns out and will share pictures of the progress as we go.
The final exciting update is that the $2B Union Bleachery Redevelopment located one half mile from the property has commenced. This is a huge project that will be 5 to 10 years to complete but will significantly update the San Souci location in the coming years.
Dan Rowley has been busy preparing all the year end 2024 reporting we provide out investors as well as working closely with our CPA to get tax returns completed and K1s out to all of our investors in a timely manner.
This Month’s Newsletter
Once again, we’re delighted to offer educational content about multifamily investing to you through Inner Spark. Much of this content deals with the ever evolving multifamily market. After several boom years, we are entering a new phase of the economic cycle. In this edition, you’ll find:
- A CRE Daily article on 6 Key Takeaways from NMHC's Annual Meeting.
- A CBRE article on Multifamily U.S. Real Estate Market Outlook 2025.
- A Who's on the Move article on Colliers Greenville-Spartanburg Multifamily Report: Robust absorption reflects new demand environment.
- A South Carolina Realtors article on Greenville-Anderson Named as top housing hot spot for 2025 by National Association of Realtors?.
- A MHN news article on A Better Balance for Multifamily in 2025?
Spark on,
6 Key Takeaways from NMHC's Annual Meeting
The NMHC Annual Meeting highlighted a multifamily market in transition, with investors adopting a wait-and-see approach amid interest rate uncertainty. While deal flow remains slow, optimism persists for a late 2025 rebound. Apartment demand is holding steady, and supply growth has peaked, leading many to anticipate a return to rent growth even in high-supply markets. Institutional investors continue targeting high-quality assets, but distress is emerging in older properties with heavy capital expenditure requirements.
Investors are also navigating regulatory risks, shifting capital from highly regulated cities like New York and San Francisco to emerging "gateway-adjacent" and Sun Belt markets. Operational efficiency is a major focus, with AI-driven leasing and centralization strategies gaining traction. Despite relatively stable insurance premiums in 2024, concerns are rising for 2025 due to natural disasters. Ultimately, patience remains the prevailing strategy as investors wait for rate stability and improved buying opportunities in the latter half of 2025.
Click the link to read the whole article.
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Multifamily U.S. Real Estate Market Outlook 2025
The U.S. multifamily real estate market is poised for a cyclical recovery in 2025, with improving fundamentals driven by strong renter demand and a slowdown in new construction. The national vacancy rate is expected to decline to 4.9%, while annual rent growth is projected to reach 2.6%. The peak of new deliveries in high-supply markets, particularly in the Sun Belt and Mountain regions, is expected to subside, leading to increased occupancy and a reversal of negative rent trends seen in 2024. High home prices and mortgage rates will continue to make renting a more attractive option for many households, sustaining strong demand in the multifamily sector.
Despite regional disparities, markets in the Midwest, Northeast, and key gateway cities are expected to outperform the national average, with annual rent growth surpassing 3% in 2025. Investors will remain focused on these stable markets while monitoring the long-term potential of the Sun Belt and Mountain regions, where supply-driven challenges are expected to ease. The cost-to-buy premium remains significantly higher than renting, reinforcing the shift towards extended rental tenures. While this premium is expected to decline slightly as mortgage rates stabilize and rent growth accelerates, homeownership affordability will remain a barrier for many, further strengthening the multifamily market's prospects in the years ahead.
Click the link to read the whole article.
Colliers Greenville-Spartanburg Multifamily Report: Robust absorption reflects new demand environment
The Greenville-Spartanburg multifamily market demonstrated strong absorption in Q3 2024, surpassing new deliveries and pushing occupancy above 89% for the first time since 2022. As the region moves past a four-year construction boom, new project starts have declined due to financing challenges, with most ongoing developments expected to complete by Q4. Asking rents have stabilized at over $1,300 per month, and Spartanburg County remains the most active submarket, supported by strong job growth and affordability for households earning a median income of $67,000.
Investment activity in the market rebounded from a slow first half of 2024, with Q3 sales volume reaching $143.9 million. Unlike previous years, transactions were concentrated on older, high-occupancy properties rather than newly stabilized developments. The market's resilience mirrors national trends, where a cooling construction pipeline and stable rental pricing set the stage for improved fundamentals in 2025. Colliers, a leading real estate services firm, continues to track these shifts, noting that Greenville-Spartanburg remains well-positioned for future growth, driven by employment gains and sustained housing demand.
Click the link to read the whole article
Greenville-Anderson Named as top housing hot spot for 2025 by National Association of Realtors?
Greenville-Anderson, South Carolina, has been named one of the top 10 housing hot spots for 2025 by the National Association of Realtors? (NAR). The selection is based on key economic, demographic, and housing factors that position the metro area as a strong performer amid stabilizing mortgage rates. According to NAR Chief Economist Lawrence Yun, top markets like Greenville-Anderson benefit from affordability, available housing inventory, and positive net migration.
The region stands out for its economic growth and stability, making it one of the most promising markets on NAR’s list. Alongside Greenville-Anderson, cities such as Boston, Charlotte, Phoenix, and Kansas City were also recognized for their favorable housing conditions. This designation reflects a strong outlook for homebuyers and investors seeking affordability and long-term value. The South Carolina Association of REALTORS? welcomed the recognition, emphasizing Greenville’s quality of life and economic vibrancy. As home prices are expected to continue rising at a modest pace in 2025, the area remains a key destination for those looking to purchase a home in a competitive but sustainable housing market.
Click the link to read the whole article.
A Better Balance for Multifamily in 2025?
The multifamily market in 2025 is expected to see an increase in investment activity, but challenges such as high capital costs and lingering uncertainty will prevent a rapid surge. With three interest rate cuts in 2024 totaling one percentage point, along with positive economic signals from the Federal Reserve, lenders have started showing signs of increased activity. However, the transition to a new presidential administration introduces additional volatility in Treasury rates, which could impact investor confidence and market behavior. Industry experts suggest that the real opportunity for large-scale investment may not fully materialize until 2026, with some major investors already positioning themselves for long-term gains.
While the COVID-era surge in multifamily construction has begun to slow, its effects will linger into 2025, particularly in Sun Belt markets where an influx of new supply has limited rent growth. Yardi Matrix data suggests that construction starts peaked in 2022 and have been gradually declining, with a more significant drop expected after 2025. As a result, rent growth is anticipated to remain below historical norms, except in select Midwest and Northeast markets where affordability and demand remain strong. Though challenges persist, 2025 marks a transition toward a more balanced and sustainable multifamily market, setting the stage for improved fundamentals in the years ahead.
Click the link to read the whole article.
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