Multi-family is still a seller’s market, said Mike Buhl, Commercial Realty Resources, whose 2013 apartment report came out this week.
“Following the trend of 2012, multi-family in Oklahoma rose to astronomical levels in 2013,” Buhl said.
In Moore and south Oklahoma City, there were numerous planned developments and construction starts, even before the May 20 tornado that destroyed around 1,100 homes.
“As of the end of November, the city of Moore reported that only 335 permits were issued for new homes in the storm-damaged areas, which has created more demand for permanent-type housing in many of the apartment communities,” he said.
Buhl reported that a “host of new data shows a surge in development activity in the multi-family sector.”
Developments under construction in the Cleveland County area include several projects in Moore.
“There’s a tremendous amount being built in Norman. In Moore and north Norman, there’s a lot of new development occuring,” Buhl said.
There are indications that both tenants and investments are driving the market.
“Multi-family construction is booming because vacancy is down and rents are rising, making investments in apartments particularly attractive. Despite the optimism, though, there is concern of overbuilding,” Buhl said. “There is such a pent-up demand from investors to buy apartments that it’s hard to tell if the demand for new units is being driven by investors or tenants.”
The University of Oklahoma is showing a slight decrease in enrollment, an indication that the need for more apartments isn’t the sole driver behind the market growth.
“The development that is occurring in Norman doesn’t match the statistics coming from the university,” Buhl said.
“According to Institutional Research and Reporting from the University of Oklahoma, Norman on-campus enrollment for fall 2013 totaled 23,944, a minus 0.8 percent change from 24,144 in fall 2012 and only slightly better than the 23,850 for fall 2011. New freshman enrollment was minus 2.1 percent between fall 2012 and 2013. Yet, there are 1,928 beds that have been added or planned for the Norman market,” he said.
Increased constuction could change the multi-family investment landscape, Buhl said, but while vacancy will increase, it shouldn’t deter demand.
“When you look at the last couple of years in Norman, occupancy has been near full,” he said.
Occupancy will likely return to normal levels with all of the developments occurring.
“Any increase would still leave vacancy tight — at below 7 percent industry-wide,” Buhl said. “Thus, the increase in construction activity, while notable, may only slow but not stop the momentum the industry has enjoyed.”
That doesn’t mean there isn’t demand from tenants, as well, Buhl said. Oklahoma is the 17th fastest growing state in the nation. The state grew by about 34,788 people over the past year, ending July 1.
This marks the second consecutive year the Oklahoma rate of growth has bested the previous year, Buhl said. When you look at population growth, it’s driven by the economy.
He said new residents need places to live, work and shop, which has led to a ramp-up in overall development, and multifamily has led the way.
Multi-family development in Cleveland County includes:
· Aspen Heights — 26 acres of the Sooner Mobile Park at 2601 S. Classen Blvd. in Norman; mixed-use PlannedUnit Development to include 194 units with 684 beds for student housing
· 16.53 acres at 3400 W. Tecumseh Road — multi-family apartment development with 230 units.
· The Avenue at Norman — 314 units at 3301 12th Avenue Southeast in Norman
· The Millennium at Lindsey Street and Classen Boulevard in Norman — 197 units with 705 beds for student housing
· The Icon at Norman at 36th Avenue Northwest and Indian Hills Road — 256 units under construction
· Falls at Brookhaven at 3730 W. Rock Creek Road in Norman — 154 units in final lease-up
· 16.63 acres at SW 19th and Telephone Road in Moore — Rezoned for a 314-unit, multi-family apartment development. Adjacent to the Royal Park Mobile Home community
· Traditions at Westmoore at 12209 S. Western Ave. — 16.37 acres for 615-unit, multi-family apartment development
· 17.24 acres at SW 34th and I-35 in Moore — 17.24 acres for multi-family apartment development