Home Sweet Home!
Multi-Family Commercial Real Estate
The population of the Triangle has increased by 31% in the last decade, that adds up to over 60 new people moving to the area every day of the past ten years (1). For the period of September 2017-September 2018, Apex was the 3rd fastest growing town in the US with a 7% increase (2). As a result, the demand for housing, especially multi-family housing has remained incredibly strong with a 95% occupancy rate for existing units and over 8,000 units currently under construction (3). Developers cannot build units fast enough to keep up with demand!
So just what is considered a Multi-Family Commercial property? Multi-Family Commercial Real Estate property is defined as comprising of five or more units. For investors, an apartment four-plex is also considered multi-family. Beyond this initial definition, specifics vary by location and the size of the structure. Much like Office Buildings Multi-Family can be classified into three asset classes: class A, B, or C.
Class A properties are the best-in-class and demand the highest rents in their respective markets. They offer things like lavish pools, barbecue areas, fitness centers, and other high-end amenities.
Class B are just a step down from Class A in terms of quality, location and features within the complex. They are still considered nice and aren’t necessarily outdated.
Class C properties are generally completely outdated and barely functional but are affordable to rent.
Within each of these classes there are Garden Style or Low, Mid, and High-Rise apartment buildings. Low Rise and Garden Style are generally found in suburban areas and are generally 2-4 stories high. Mid Rise are between 5-9 stories, while High Rise apartments are 10 or more stories.
Leases on multi-family units are generally much shorter than on office and retail. Ranging from month to month through 1-2 years depending on the market. This provides a less stable long-term investment but balanced by the advantage of higher cash flow rates.
(3) Avison Young, Raleigh Multi Family Q3 Report 2019.