NORMAN — University Falls Apartments change hands
The multifamily market finished strong in 2012. Locally, several notable apartment sales were recorded, including University Falls Apartments in a a core historical area of Norman.
While many are enthusiastic about the upswing in multifamily housing construction, local apartment broker Mike Buhl, in his 2012 Apartment Report, expresses concern that overbuilding, spurred by low interest rates rather than high market demand, could create a volatile market in some sectors of Oklahoma multifamily housing.
“Money is cheap,” Buhl said. “Is build-out market driven or is it due to low interest rates? Time is going to tell us what the true answer is. I tend to think some of it is low interest rates.”
Buhl said that non-traded, or non-listed, Real Estate Investment Trusts were “very active in Oklahoma in 2012” and that could continue in 2013.
“At first glance this is positive, but could this buying trend also lead to greater volatility for propertietor submarkets?” Buhl said.
Buhl targets Moore, which is experiencing heavy growth, as a potentially volatile area during 2013. He predicts that “lender-owned properties are diminishing.”
“Opportunistic buyers looking for deep discounts in 2013 will be disappointed,” he said.
“A host of new data shows a surge in development activity in the multifamily sector. I estimate that new construction could see another 3,000-plus units in the Oklahoma City Metro that are leasing, under construction or planned in 2013,” Buhl said. “And it appears that apartment developers aren’t going to slow down anytime soon. It’s easy to see why multifamily construction is booming — vacancy rates are falling and rents are on the rise, making investments in multifamily particularly attractive.
“Despite the optimism though, there is concern of overbuilding,” he said in his annual analysis. “Also of concern is that the majority of new apartment units being delivered today fall in the luxury category and there are only so many people that can afford them.”
University Falls sale recorded in December
County records indicate several local apartment sales, Buhl reports. One notable sale in Norman is University Falls Apartments, 505 – 509 E. Boyd, purchased by Brian and Beck Wood of Canyon Lake, Calif. in December 2012 for $1,375,000. Former owner, Brent Swift, said he believes the new owners will continue the same rental business the apartments have had in the past.
University Falls had another potential buyer December 2011. The Elsey Brothers, developers out of Manhattan, Kan., wanted to tear down the 32 unit dwelling built in 1943 and erect a high density structure in its place.
Protests from area neighbors stalled those plans and sent the Elseys further west in the University of Oklahoma campus area. A lack of city zoning to allow higher density projects such as the one proposed by the Elseys promped a months-long community dialogue and city investigation to identify appropriate areas for high density multifamily dwellings and to create zoning districts to allow the future construction of such projects.
Sales in Moore during 2012 include Springs of Moore, 800 NW 12th which sold for $2,529,000. Built in 1973, Springs has 104 units equating to a sale price of $24,317 per unit.
Buhl reports that the Reserve on Stinson, a 612 bed community, sold for $112,488 per unit and the Cottages of Norman, a 644 bed community, sold for $193,103 per unit.
“The purchase price for Cottages of Norman at 1601 E. Imhoff Road was estimated to be $33,600,000 by applying an 80 percent loan-to-value on the $26,880,000 mortgage that was recorded of public record. Documentary Stamps for this transaction were not a reliable source to confirm this sale,” Buhl said.
Buhl operates CCR Multifamily Investment Services located at 611 24th Avenue SW, Suite 100 in Norman. He has 27 years of apartment brokerage and marketing service experience.