Real estate market launches comeback in 2012
January 9, 2013By J. Elias O'Neal
After experiencing a long lull in leasing and building activity for the past four years, a surge in multifamily development and onslaught of new retail leasing activity has brokers and Realtors optimistic about 2013.
“Things are going well,” Steve Hall, a broker with Wilmington-based Maus, Warwick, Matthews & Co., said recently. “Usually on a Friday in December, I’m at the office until 3 p.m. Now, I find myself staying later in the evening.”
From housing and retail to office and industrial flex space, Realtors and brokers reported much more increased activity in 2012 than in previous years, signaling what many are anticipating as a major comeback in 2013 for the region across all sectors of real estate.
Multitude of multifamily
Immediately signaling signs of life from the region’s economic recession doldrums was the announcement of several large-scale apartment communities during 2012 to the area.
And there were many.
More than 1,500 units were proposed for New Hanover County in 2012 – with more than 500 units coming on board this year in Wilmington. Other permits for multifamily developments are pending in Brunswick County.
Much of the demand continues to be market driven by more students enrolling at the University of North Carolina Wilmington and Cape Fear Community College, young professionals and retired empty nesters flocking to the region.
In a recent report released by Charlotte-based Apartment Index, which tracks leasing activity across the Southeast, the Port City’s average occupancy rate remains at 93.8 percent.
Rents are also healthy.
Metro Wilmington’s average rents increased from $715 per month in July 2011 to $760 per month in July 2012. That’s up $90 from $670 per month in 2009, according to the report.
And area brokers don’t expect this trend to slow down.
“Multifamily is the hottest deal going right now,” said Hansen Matthews, principal owner and broker of Maus, Warwick, Matthews & Co. “I guarantee that multifamily will be the biggest commercial transaction in the area for the next three years.”
Resurgent retail, office
Soon after the year started, it appeared that greater Wilmington’s retail and office leasing activity came back to life.
At the end of 2012, area commercial brokers filled more than 240,000 square feet of existing commercial space across the region.
Much of the leasing activity occurred in Wilmington and Leland – the area’s two primary population centers. But one of the largest new retail construction projects in the region is occurring in the Pender County town of Hampstead.
Called Hampstead Town Center, the 14.12 acres, $14 million, 81,970 square foot development is under construction at the intersection of U.S. Highway 17 and Ravenswood Road. The project will be anchored by a 44,170-square-foot Lowe’s Food, while the remaining retail units and three outparcels are currently being marketed for future leases and development.
The increased leasing activity has also brought of wave of new retailers and eateries to the market including Hobby Lobby, Whole Foods, Trader Joe’s, Chipotle and Jason’s Deli.
Meanwhile, office leasing continued to gain momentum in the region.
But results are mixed.
While much of the leasing activity was for office space between 1,000 and 5,000 square feet, space greater than 10,000 square feet is beginning to see some activity – albeit very slowly, which is expected to continue into 2013.
A number of bank-owned, zombie developments began showing signs of life after investors started taking note of the region’s shrinking single-family housing inventory.
Low lot prices continued to entice builders to many distressed properties across the area and could lead to new housing development at more affordable pricing.
That’s good news, according to regional housing experts who estimate that within the next four months 40-45 percent of the Wilmington market might have no new-construction homes available to purchase.
But local developers and builders could buck the estimate, thanks to a surge in investors purchasing bank-owned subdivisions in the area.
In November, National homebuilder D.R. Horton purchased the formally defunct Villages at Hawkeswater subdivision in Leland for $5.6 million from First Bank.
Tampa-based Landeavor LLC and Chicago-based Walton Street Capital LLC acquired Anchors Bend, located along Middle Sound Loop Road, in the summer.
Wilmington-based developers Richard Donaldson and Samm Jernigan also purchased the
Andrews Reach subdivision from BB&T in July for an undisclosed amount.
And Wilmington-based Cape Fear Commercial, which represents a number of banks looking to sell off their portfolio of failed subdivisions, continued to unload a number of abandoned single-family lots, including Stone’s Edge in Wilmington, Southwynde in Southport, Diamond Point in Surf City and Trenny Lea in Hampstead.
Brian Eckel, cofounder and principal broker of Cape Fear Commercial, said the firm has four other subdivisions – Ridgefield, Laurenbridge and River Oaks in Wilmington and Seabrooke in Leland – under contract by unnamed buyers, which could keep local builders and Realtors busy into 2013.