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Apartments remain strong
Multifamily construction still a bright spot in economy
031813 BIZ REAL ESTATE 01
Working with Jerrod Lee Construction, John Lee cuts some drywall as renovations continue on the Magnolia Village apartments on Grady Street Monday. Multiple occupancy dwellings are a strong growth area in the local real estate market. - photo by SCOTT BRYANT/staff

Student and multifamily housing developments are hot, both in Statesboro and across the nation.
Cal Evans, a regional appraiser for Synovus Financial Corp. in Athens, Ga., addressed two separate groups Thursday in Statesboro as part of Sea Island Bank’s “Invested in You” business banking series. Sea Island is a division of Synovus Bank.
First, he spoke to developers at a luncheon, and then he addressed a larger group of real estate professionals in the afternoon.
This is the second
seminar presented by Evans in Statesboro. His first was in 2010, when more than 350 people attended.
Evans is responsible for reviewing several aspects of the bank's regional real estate interests, including collateral review, appraisal review, property tax issues, education and market research.
In his first presentation, Evans spoke specifically on the relationship that he and his staff have uncovered between the development and rents being charged for student housing and the development and rents being charged for multifamily housing (apartments not designated for student living).
Given the large amount of student housing currently under development in Statesboro, his topic was of keen interest to local developers attending the lunch presentation.
"Cal gave us market projections that surprised me somewhat," local developer Donald NeSmith said. "Based on his research, per-bed student rents could get as high as $600 per month in the next five years or so. Right now, we are averaging rents in the range of $300 to $450 per bed. So, we will see if that comes to fruition."
Evans said his research shows that student debt is at record levels, driven in no small part by the amount that his being loaned to cover living expenses.
"There is over $1 trillion in student debt in this country right now," Evans said. "Financial aid allotments take into account what it cost a student to live on campus in student housing. Those costs have increased 15 to 20 percent since 2009. In same cases, students are paying much more to live in antiquated facilities. Of course, they are going to pay an extra $50 to $100 more per month to have a nice apartment with amenities. This is the formula that developers of student housing complexes use when projecting revenue."
Evans said a circular relationship is evolving. As the cost of living while attending postsecondary institutions is increasing, subsequent student debt is increasing to cover it.
When students graduate, they find that their debt prohibits them from buying a home, so they turn to multifamily (or apartment) housing to live in. Evans pointed to the data to support his claim.
"In quarter four of 2009, the national vacancy rate for multifamily housing was 8 percent," he said. "It was 4.8 percent in 2012. These properties are very hot right now. It is where investors are going."
Local Realtor Jack Conner said he has seen increased demand for high density zoned residential property.
"The demand for that property has most definitely increased, and in this area it is from developers around the country," he said. "I certainly can't predict how long this intense demand will last but, overall, I see some very positive signs with our real estate market here."
Sea Island Bank senior vice president Kim Brannen coordinates the bank's ongoing business banking series.
"Our research has shown that real estate is a topic of great interest to local business owners, business leaders, and community leaders," Brannen said. "We feel like we have an obligation not only to our banking customers, but to our community as well to provide value-added services such as these seminars to keep those in our community well-informed about important, relevant issues. The entire Sea Island team is honored to host this ongoing series."
The next seminar in the series is scheduled for April 25. The topic will be “Overview of the Patient Protection and Affordable Care Act.”

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