NORMAN — Investors seeking deals means demand is outstripping supply in the current apartment real estate scene, according to one industry expert.
“There are simply not enough apartments for sale to satisfy the over-abundance of investors searching for deals,” said Mike L. Buhl of CRRC Multifamily Investment Services. Buhl released his mid-year report earlier this month.
“Has the optimism that closed out 2012 carried forward to 2013? Not only do we think it has, but we think it is gaining momentum in all facets of the market — occupancy, rental rates, sales and development,” Buhl said.
Buhl pointed to Oklahoma’s low unemployment rate, existing and emerging technologies, and the low cost of living as propellants fueling the apartment industry to “all-time highs.”
In April, the state unemployment rate was at 4.9 percent, according to U.S. Bureau of Labor statistics, keeping the Sooner state below Texas and on par with Arkansas at 5.2 percent and Kansas at 4.1 percent. That number jumped to 5.2 percent in June but is below the national average, according to the Oklahoma Employment Security Commission.
Cleveland County unemployment is at 4.6 percent, and Norman’s unemployment rate runs even lower. The Bureau of Labor Statistics put Norman at 3.3 percent unemployment in April.
“Investors will have to look beyond core assets to find opportunity,” Buhl reports. “Class B and C properties (broadly) represent a good investment opportunity.”
Buhl said that multi-family rental and occupancies rates are keeping apartments at the top of the investment desired list.
Pre-1980s properties selling this year include Sooner Crossing Apartments in Norman. Built in 1972, the 118-unit property sold for $32,610 per unit. Buhl describes it as “typical 1970s vintage with flat mansard roofs with limited amenities.”
“Expect to see more stabilized properties sell in the second half of the year that will generate prices in the upper $20s to $30,000 per unit for this category,” he said.
With demand strong, multi-family accounts for nearly a quarter of new residential construction. The Oklahoma Employment Security Commission’s June report “Oklahoma Economic Indicators” recently was released and reports May residential permitting.
“Single-family permitting activity accounted for about 75 percent of residential permitting activity in May, while multi-family permitting accounted for about 22 percent,” the report states.
Tornado outbreaks in May are expected to have a “significant impact” on residential construction. The Oklahoma Department of Emergency Management reported an estimated 1,150 homes destroyed in the May 20 tornado that hit Moore and south Oklahoma City.
Insurance claims are expected to exceed $1 billion. No information on damaged apartments was included in the report, but Moore Emergency Manager Gayland Kitch said apartments were damaged at 19th Street and Santa Fe.
Kitch said an initial assessment estimates that 55 apartment and duplex units were destroyed, 16 had major damage and 15 had minor damage.
The Greens in Moore, 2100 S. Santa Fe Ave., had 198 apartments that needed repairs, according to apartment staff. All of the people in those apartments had to move out. All of the livable apartments at the Greens are occupied at this time.
The Fairways in Moore, 800 SW 19th St., also sustained damage.