Inner SPARK May 2024
Spark Multifamily Investment Group
I help you achieve financial freedom and create the life of your dreams through passive real estate investments.
Hi Everyone,
We hope you all had a memorable Memorial Day weekend, taking the time to gather with loved ones while also reflecting on the profound sacrifices made by our brave military personnel in defense of our nation and the freedoms we cherish.
Laura and I feel immensely grateful and privileged to call the United States of America our home.
As Memorial Day marks the unofficial beginning of summer, we wish you all the joys of the season – relaxing family vacations, exciting travel adventures, and a chance to slow down and appreciate life's simple pleasures.
May this time bring you a well-deserved respite from the demands and stresses of work.
At Spark Investment Group, we firmly believe that the American dream is alive and well. Our mission is to empower individuals and families to achieve financial success and freedom through strategic multifamily investing. We understand that the pressures of earning a living can often be overwhelming, and by working together to alleviate financial burdens, we can help you attain a healthier work-life balance, enabling you to focus on what matters most.
As your trusted partners in this journey, we remain committed to identifying promising investment opportunities, managing our portfolio with diligence and expertise, and delivering results that support your financial goals.
Your success is our success, and we are honored to play a role in helping you build a brighter, more secure future.
Thank you for your continued trust and partnership.
We look forward to sharing more updates on our progress and the exciting opportunities that lie ahead.
In the meantime, enjoy the summer season, and please don't hesitate to reach out if you have any questions or if there is anything we can do to support you further.
THE LATEST NEWS FROM SPARK
First and foremost, we are very pleased to announce that Dan Rowley has formally joined Spark Investment Group after several years as an LP investor with us and more recently as a key member of the Spark GP team.
Dan is a San Francisco Bay Area transplant (like Laura and I) and moved to Cary NC with his wife, Jami, and his two daughters, about 4 years ago. Dan recently resigned from his "day job" after 31 years in corporate finance roles to devote more time to other pursuits including real estate investing. Dan has been able to make this choice and leave the corporate world in large part to the real estate investments he has made over the past 14 years in markets all across the US.
Dan and I met over 4 years ago at a "virtual" real estate conference and since that time have become close friends with Brian Walsh, Spark's primary operational partner, and I. Over this time period and numerous investments together, it was clear that we have similar investing approaches and enjoy working together. As we complete the Townes @ Wofford Pine and Townes @ Silos acquisitions next month, this will bring the number of syndication deals we have worked together on as general partners to four. We are excited Dan has made this decision - given his significant personal real estate investing experience along with his skills in financial analysis and accounting.
The Spark PPOG team is stronger with Dan formally onboard.
As noted above, the capital raises for Wofford Pine and Silos are just about fully subscribed - we have full loan approval for both properties - and construction of the brand new duplexes in Taylors and Easley nears completion.
We are excited to complete these acquistions and are actively looking for more.
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:
Spark on,
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KKR Market Review April 2024
Multifamily real estate remains robust, with strong fundamentals and healthy net operating income growth in core markets. Fixed-rate debt financing has supported sufficient cash flow for most assets to meet debt service. Forecasts suggest commercial real estate will benefit from peaking inflation and interest rates. Historical data indicates multifamily resilience even in severe downturns, with optimism for rent growth by 2026, particularly in Sun Belt markets.
The sector benefits from a structural housing shortage, with many turning to rentals due to declining housing starts and affordability challenges. While some distress exists, especially in select markets and projects, much of the market is backed by long-term, fixed-rate debt or negotiated extensions, providing opportunities for well-capitalized investors to acquire properties at attractive yields or discounts.
Click the link to read the whole report.
CRE Sales Transaction Showing Signs of Recovery
The multifamily real estate sector is showing promising signs of recovery within the broader CRE market, which has seen a year-over-year transaction decline narrow to -8.0% in Q1 2024 from -18.4% in Q4 2023 and an all-time low of -55.1% in Q2 2023. This improvement is significantly driven by substantial transactions in larger sale categories ($50 - $100 million and >$100 million), which have seen growth rates of 43.1% and 16.4%, respectively. Despite the high cost of borrowing, investor interest in large multifamily projects remains robust, reflecting confidence in the sector's long-term prospects.
The lending environment for multifamily investments is also becoming more favorable, with banks' tightened lending standards for nonresidential properties now at their loosest in two years. This, combined with potential interest rate cuts by the Federal Reserve later this year, is expected to further stimulate multifamily transactions. Investors' willingness to commit to large-scale multifamily projects amid the current interest rate climate underscores the sector's resilience and the positive outlook for its continued recovery.
Click the link to read the whole article.
领英推荐
Multifamily Reports APARTMENT UPDATE? Q1 2024 National Multifamily Report
Berkadia's Q1 2024 Multifamily Market Report reveals significant trends in the multifamily investment sector, offering essential insights for strategic planning. The market demonstrated strong performance with the absorption of 317,241 net units over the past year, effectively reversing the previous year's negative absorption. Additionally, the delivery of 479,367 new units marked a 2.5% annual inventory growth, an improvement from the 1.8% growth rate seen the prior year. Monthly effective rents saw a steady increase, averaging $1,807, which represents a 1.2% year-over-year rise.
The sustained demand in the multifamily market is further supported by a robust job market, with U.S. employers adding an average of 243,000 jobs per month in 2023, equating to a 1.9% annual growth rate. These combined factors underscore the resilience and attractiveness of the multifamily sector, providing investors with valuable data to inform their acquisition, disposition, and financing strategies for the remainder of the year.
Shifts in Young Adult Population Began Long Prior to COVID
Jay Parsons highlights long-term shifts in the young adult population across the U.S., noting that these changes began well before the COVID-19 pandemic, although the pandemic did accelerate them. The data, which focuses on the top 20 and bottom 5 metro areas for absolute growth among young adults (ages 20 to 34) from 2010 to the present, shows significant trends. Provo and Austin lead the way in booming growth, followed by San Antonio, Charlotte, Nashville, Orlando, Dallas/Fort Worth, Denver, Greenville, Raleigh, Tampa, Phoenix, Seattle, Houston, and Atlanta.
Conversely, some major coastal markets have seen declines, with San Francisco, New Orleans, Los Angeles, Chicago, and New York experiencing contraction. It's noteworthy that not all coastal markets are shrinking; Boston and Seattle have remained attractive to young adults despite recent declines. The resilience of interior markets is expected to continue, driven by factors such as job growth and relative affordability, unless a significant unforeseen event occurs.
Click the link to read the whole post.
U.S. Rental Market Sees a Shift as Build-to-Rent Gains Momentum Amid Aging Housing Stock
The U.S. rental market is undergoing a transformation due to an aging multifamily housing stock and a decline in new multifamily construction. According to the U.S. Census Bureau's 2023 American Community Survey, 17.6% of multifamily properties with five or more units were built before 1959, highlighting the need for rejuvenation in the nation's rental housing. With a significant drop in new multifamily construction permit applications in 2023, the build-to-rent (BTR) sector has emerged as a key alternative, gaining popularity as lifestyle renting becomes more prevalent.
BTR developments, designed specifically for rental rather than sale, offer high-quality units that address the supply-demand imbalance. These communities, resembling single-family homes with modern amenities and professional management, appeal to a broad demographic, including lifestyle renters, Baby Boomers, and Generation Z. The BTR sector has attracted substantial investment from institutional investors, driven by its robust fundamentals and faster rent growth compared to traditional multifamily units. As the sector continues to expand, it is expected to play a crucial role in mitigating the housing shortage in the U.S., with regions beyond the Sun Belt, such as New York, Virginia, and Maryland, now experiencing increased BTR activity.
Click the link to read the whole article.
Best Places to Live in the U.S. in 2024-2025
Greenville, SC, has achieved an impressive ranking of 4th place among 150 major cities in the U.S. News & World Report's Best Places to Live in 2024-2025. This ranking highlights Greenville as an area with excellent value, a strong job market, and a high quality of life. These factors make it a desirable location for both living and investment, reflecting its appeal to a wide range of demographics and its robust economic potential.
The methodology behind these rankings considers several critical aspects, including affordability, desirability, job availability, and quality of life. Greenville’s high ranking underscores its attractiveness and growing reputation as a prime destination for residents and investors alike, making it a focal point for multifamily investment opportunities.
Click the link to read the whole report.
Americans Moved to Low-Tax States in 2023
Recent data from the U.S. Census Bureau, U-Haul, and United Van Lines indicate a clear trend: Americans are migrating from high-tax states to low-tax states. Between July 2022 and July 2023, states like New York, California, Hawaii, Alaska, and Illinois saw the highest population losses due to interstate migration. Conversely, states with lower tax burdens, such as South Carolina, Delaware, North Carolina, Tennessee, and Florida, experienced significant population growth. South Carolina led the way with a 1.6% increase in population due to net domestic inbound migration.
This trend underscores the appeal of lower-tax, lower-cost states, where 24 of the 32 states with below-average tax burdens saw net inbound migration in FY 2023. Notably, states like Florida, South Dakota, Tennessee, and Texas, which do not tax wage income, have become particularly attractive to movers. The overall data suggests that favorable tax structures and economic environments are key drivers of population growth, a trend likely to continue as more states adjust their tax policies to attract residents.
Click the link to read the whole report.
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