Richmond March 2023 – Key Take Aways
Andy Little – John B. Levy & Company
John B. Levy & Company is a boutique style real estate investment company.
- Why do you think the market volatility is a surprise?
Based on historical market trends, things would have leveled out. This is a new scenario that isn’t following historical trends.
- How big of an issue is the interest rate hike yesterday?
Banks will be more reluctant to lend because they will be securitized by the fed and investors.
- Do you think bank lending will loosen up?
Once stability comes back, investors may come back.
- Multifamily housing builds are slowing down, there is a higher need causing higher rents; what do you see withing 6 months – 1 year for renters?
This is a real problem. In Richmond, there are many new units coming available within the next 12 months because of new builds which should balance the rental growth and level the rental rates. This is not true in most areas. Minneapolis & St. Paul have established rent caps causing some builders to stop building in those areas.
Beyond 18 months, there will be a problem with demand in Richmond as well as other areas because high interest rates and cost of construction is resulting in less new construction.
5-10 year outlook, there will be more demand than supply on rental units.
Charles Piper – Quinn Evans
- There is continued activity in public markets more than private.
- VCU is looking into renovating Johnson Hall dorms:
- Johnson Hall shut down during the pandemic due to mold issues.
- This will be an auxillary project
- The scale of cost against continuing bond capacity is restraining – it is conceivable people will have a hard time putting deals together that VCU will see viable because of the restaints.
Brian Gullette – Cardinal Partners
- Looking at several distressed deals others have walked away from.
- Raw land prices haven’t moved much; trying to establish a lower price point.
- Biggest deals at the moment are in NC and SC
- 85,000 units under contract
- Warehouse and industrial side of business is going well.
- Detroit and Greenville areas are robust.
- Investors are desperate to find deals that work but financing is making it hard.
Richard Gjerulff – Geneva Financial
- Geneva Financial is a commercial brokerage serving mainly Mid-Atlantic.
- Geneva Financial has a secondary opportunity feeding capital into Arizona for residential financing.
- Delinquencies on multi-family units in Richmond are very low during the pandemic and post pandemic.
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