11/4/21 Raleigh Mastermind Group Meeting

Raleigh November 2021 – Key Take Aways

• Lee-Moore Capital’s Kevin Scanlon reported access to capital on debt/equity side is good; costs are extraordinary. He is tandemly working on HUD and traditional financing for a 312-unit multifamily project in Pittsboro. Other members warned of the challenges of doing HUD. Uptick in MOSAIC retail and MOB interest, with general office soft.
• Bohler Engineering’s Mark Fletcher noted the Triangle is 2^nd top market, with a life sciences and data center surge, strong industrial, and hot high-density multifamily. Mark also spoke to the necessity of having a defined ESG program. Andrew Moriarity said cold storage is ramping up.
• Members discussed how the lack of materials due to supply chain issues impacts the industry, noting specifically long lag times on concrete and roofing. Substituting materials is common, but Marcus Acheson of Little is concerned about the lack of quality substitution materials. TradeMark’s Vijay Shah said restaurants cannot get equipment, and Little’s Sharon Crawford noted the inability to get office furniture.
• Labor shortage was another hot topic, with multiple members currently seeking talent at all levels. Members also voiced concerns about how vaccine mandates impact staffing. David Koehler said labor shortage has accelerated general manufacturers’ investment in automation.
• Marcus and Sharon feel a time pressure at Little on all projects, so much that Sharon’s last 10 projects have had only one phase. Sharon said not only are rents higher, but fit-ups have skyrocketed; Little is working on office to lab conversions.
• Jason Hall of Cherry Bekaert said half of proposed tax legislation was dropped last week. Cherry Bekaert is hosting a Real Estate Tax Planning Webinar on Dec 2. Jason warned of aggressive purchase agreements and noted the buzz around ESOPs as a business exit strategy.
• Wells Fargo’s David Koehler noted the bank is sole lender for the Bandwidth project on Edwards Mill Rd in Raleigh. He has new multifamily projects, at 65% loan to cost. Sample deals include a grocery-anchored acquisition and office closing. Spencer Wilson of First Horizon also said he’s seen office trades, with investors betting money on low-demand buildings.