🌎 5 best cities for renters in 2024

👋 Hello, Best Ever Community! The United States turns 248 today. It’s been a heck of a run. Celebrate safely.

In this week’s newsletter, Charleston wins, rate cuts stall (again), and one investor explains why 2025 will be the year of multifamily.

Today’s edition is brought to you by Agora. Raise capital faster and discover real growth with Agora’s comprehensive real estate investment management platform.

🎆 Let’s see some fireworks!

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CRE HEADLINES

✂️ No Cuts Coming: Federal Reserve Chair Jerome Powell said this week that it’s too soon to say whether the Fed will lower interest rates by the end of the summer, declining to commit to a September rate cut.

⏳ Slow to Fill: Despite record-high demand, apartments are taking longer to rent, as just 47% of U.S. apartments that were completed in Q4 2023 were rented within three months, down from 60% a year earlier.

📉 Self-Storage Struggles: Street rates for self-storage units took a negative turn in May in all top metros, according to Yardi Matrix’s self-storage national report, with the national average annualized same-store asking rent falling 3.8% YoY.

💣 Boom to Bust: Surging inventory, STR struggles, and skyrocketing prices have pandemic boomtowns like Austin, TX, and Jacksonville, FL, in danger of going bust, with one expert saying the Austin market is “legitimately crashing.”

🍿 Bottomed Out?: Goldman Sachs suggests the office market may have hit bottom, drawing comparisons to the eight quarters it took to rebound after the Global Financial Crisis. Still, a full recovery is likely distant due to high interest rates and structural issues.

_{🎓 ASHCROFT CAPITAL}
FREE LIVE WEBINAR

Join Travis Watts as he presents Ashcroft Capital’s latest investment opportunity, Braxton Waterleigh, a premier Class A trophy asset being acquired at a remarkable 23% discount compared to recent sales comps. In this webinar, you will:

🕵️ Discover how Ashcroft Capital is acquiring a 2021-built Class A asset at an incredible 5.5% cap rate. 

🎓 Gain valuable insights into the thriving Orlando real estate market and the asset’s prime submarket location in Horizon West, one of the top three fastest-growing master-planned communities in the U.S.

🤓 Explore current market conditions, interest rate forecasts, rent growth projections, and the factors driving Orlando’s rapid population increase and rental housing demand. 

This webinar will dive deep into the booming Orlando market and the rapidly growing Horizon West submarket with this all-new 506(c) offering for accredited investors. 

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5 BEST CITIES FOR RENTERS IN 2024

RentCafe recently revealed its annual list of best cities for renters. Weighing key metrics in housing and cost of living, quality of life, and various economic factors, the list provides a snapshot of where renters are getting the most of out their renting experiences in 2024, and where investors choosing new markets should focus their attention.

🥇 The Top Spot: Charleston, SC, tops the list for the second consecutive year, ranking second in local economy and seventh in affordability, both key metrics for renters. With a cost of living that’s 2% lower than the national average, it also boasts a booming job market. In December 2023, the Charleston metro led RealPage’s top 150 markets in 12-month percent change in employment with 6% annual growth, while its growing tech sector has earned it the nickname “Silicon Harbor.”

☀️ The Sun Belt Shines: After Charleston, the Sun Belt dominated the top five. Atlanta took the No. 2 spot, followed by Sarasota, FL, McKinney, TX, and Scottsdale, AZ. Overall, the South claimed 38 out of the top 50 spots, the majority in the Southeast.

🏆 Best of the Rest: San Marcos, TX, topped the nation in cost of living at nearly 10% lower than the national average, but came in last on the list in quality of life. Meanwhile, Miami, FL, emerged as the leader in local economy with its 5% unemployment rate and 2.3% job growth, while Washington, D.C., scored highest in quality of life, ranking high in school quality and social score.

WHAT IT ALL MEANS

No city has everything, but one common thread on this list is that renters are looking for markets that offer high potential for job growth and low cost of living. As low deal flow has pushed some investors outside of their traditional markets — and in a world where Boomers are giving way to Millennials and Gen Zers and their divergent renter profiles — understanding shifting renter priorities and sensibilities can help you choose the right market with confidence.

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_{🎙️ BEST EVER PODCAST}
WHY MULTIFAMILY WILL REBOUND IN 2025

Max Sharkansky, managing partner of Trion Properties, is a value-add multifamily investor with a portfolio of 6,500 units. A former broker at Marcus & Millichap, Sharkansky joined host Ash Patel on the Best Ever Show this week to discuss the state of multifamily, explaining why he, like many others, believes 2025 will be a better year for multifamily.

🧘‍♂️ Less Distress: With a number of multifamily properties underwater and a lot of cash calls happening, it’s clear that some will survive and some won’t. Sharkansky believes most will, as lenders are working with borrowers, giving them more time to increase occupancy and NOI, stabilize the assets, and get to the other side of this cycle.

✂️ Interest Rates: “I do think we’re gonna be into a rate-cut cycle,” he said. “The economy already seems to be faltering a little bit. All of the inflation metrics are growing substantially, and I think that will give the Fed the cue to start cutting, probably as early as September. So we might get two cuts this year, at least one. And then I think we’ll be in a full-blown rate-cut cycle next year or we might get four-to-six cuts.”

💪 Strong Fundamentals: “A lot of the supply is going to be absorbed,” Sharkansky said. “Rents are already starting to grow again — yes, we’re in leasing season right now, but the fundamentals right now feel a lot better than they were six, nine, or 12 months ago.”

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240-UNIT PROPERTY PROJECTS A 23% AAR

Viking Capital is now raising funds for this gorgeous 240-unit Class A property in Atlanta with a 23% projected AAR for investors. Here’s how they’re doing it 👇

🏢 Property Details: This 240-unit Class A multifamily property is located in the Atlanta, GA, MSA with an occupancy rate of 91%. It has a projected close date of closing date of August 30.

💸 Finances: Purchased for $58.5 million, Viking Capital is currently raising $14.6 million in capital for this open investment opportunity. The team secured a $38.7 million fixed-rate loan at 5.9% interest.

💼 Business Plan: Viking Capital is planning a three-year hold while they introduce their Atlanta-based property management company and implement ESG additions such as thermostats and air conditioners. They also plan to increase rents by over $200 to stay competitive with the market.

🍾 Results: Viking Capital estimates this property will generate $4 million in NOI, producing up to 23% AAR for investors.

⭐ Track Record: Viking Capital has acquired $870 million of commercial real estate property, including 10 other properties in the Atlanta MSA. The team currently has 5,736 assets under management with an average LP AAR of 24%.

Learn more about this open investment opportunity at Viking Capital, and click the button below for a tour.

_{🎓 BEST EVER CONFERENCE}
MID-YEAR ECONOMIC UPDATE

Join Best Ever and a stellar line-up of Economic CRE experts on July 9 for a 90-minute candid, insight-filled discussion about everything from interest rates and consumer sentiment to labor trends and AI. 

Can’t make it to the live event? Register anyway and we’ll send you the recording to watch on-demand.

🙏 Thanks for reading!

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Have a Best Ever Fourth! 🇺🇸

—Joe Fairless