Multi-family continues to be the hottest property class with strong investor demand for the foreseeable future fueled by buyers outside Louisville. Downtown Louisville, southern Indiana, NuLu, Crescent Hill, Germantown and the area outside Loop 264 spanning from Interstate 65 to Interstate 64 remain popular locations for multifamily investors. For value-add seeking investors, Class C properties are becoming more scarce. Cap rates for Class C properties range from 6.5 percent to 9 percent.
Apartment demand has steadily increased with healthy job growth in various industries throughout Louisville. Aerospace engineering, manufacturing, transportation, e-commerce fulfillment, and leisure/hospitality are among the largest
contributors. Apartment vacancies have remained below 6% since 2009 compared to over 7% vacancy rates for much of the early 2000s. Louisville remains the target of developers, however new supply is not anticipated to keep pace with demand with vacancy rates expected to decline below 5% during 2019.
For this reason, it is imperative to work with a CRE specialist that understands all aspects of multifamily. Areas requiring a skilled professional for the highest representation include:
Financing knowledge – conventional, GSE and FHA lending options
Underwriting experience – review historical operating results to project future performance
Assessment – determine economic value of the property with proprietary proforma software
Due diligence – examining entity to address defects
Transactional – procure interest, qualify buyers, negotiate terms, manage timeframes