Market Overview This report covers the multifamily markets in four Ohio cities, Cincinnati, Cleveland, Columbus and Dayton. As of the end of the first quarter of 2015, the overall occupancy rate was 95.0 percent, ranging from a high of 96.1 percent in Cleveland to Cincinnati and Dayton both posting occupancy levels at 94.3 percent. Quarterly demand was weak at 209 units, while 1,952 units were added to the inventory. This created a 50 point drop in occupancy since the end of 2014, but is up from 94.5 percent at the end of 2013. Demand generators for multifamily have been growing steadily in the state of Ohio. Since the low point for employment during the Great Recession in February, 2010, employment in Ohio has increased by 10 percent, adding 420,100 private-sector jobs. The largest gains were in the mining/logging sector, which was up 34.2 percent due to the oil and gas boom in Northeast Ohio, and in professional and business services at 16.2 percent, contributing to the steady improvement in the office markets across the state. Demand for industrial space, along with limited speculative construction, has reduced vacancies to historic levels due to a resurgence in manufacturing activity and growth in the logistics/supply chain sector. Unemployment (U3), which peaked at 11.0 percent in 2010, was 5.2 percent in May 2015, a 70 point decline from April 2014. Population growth in these four markets increased by one-half of one percent according Census Bureau data between 2012 and 2013. The increase over five years was 1.8 percent, with Columbus leading the way adding over 100,000 residents, an increase of 5.7 percent over that time period. Household formation outpaced population growth, increasing 2.2 percent over the five year period. Ohio Apartment Markets Expected to Post Steady, Modest Growth Research & Forecast Report OHIO | MULTIFAMILY 1H 2015 91.0% 92.0% 93.0% 94.0% 95.0% 96.0% 97.0% 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 Cincinnati Cleveland Columbus Dayton $640 $660 $680 $700 $720 $740 $760 $780 $800 $820 $840 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 Cincinnati Cleveland Columbus Dayton Historical Occupancy Historical Average Monthly Rent Market Indicators Relative to prior period 1H 2015 2H 2015* VACANCY NET ABSORPTION CONSTRUCTION RENTAL RATE * Projected, relative to prior period Source: MPF Research Source: MPF Research
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Market OverviewThis report covers the multifamily markets in four Ohio cities, Cincinnati, Cleveland, Columbus and Dayton. As of the end of the first quarter of 2015, the overall occupancy rate was 95.0 percent, ranging from a high of 96.1 percent in Cleveland to Cincinnati and Dayton both posting occupancy levels at 94.3 percent. Quarterly demand was weak at 209 units, while 1,952 units were added to the inventory. This created a 50 point drop in occupancy since the end of 2014, but is up from 94.5 percent at the end of 2013.
Demand generators for multifamily have been growing steadily in the state of Ohio. Since the low point for employment during the Great Recession in February, 2010, employment in Ohio has increased by 10 percent, adding 420,100 private-sector jobs. The largest gains were in the mining/logging sector, which was up 34.2 percent due to the oil and gas boom in Northeast Ohio, and in professional and business services at 16.2 percent, contributing to the steady improvement in the office markets across the state. Demand for industrial space, along with limited speculative construction, has reduced vacancies to historic levels due to a resurgence in manufacturing activity and growth in the logistics/supply chain sector. Unemployment (U3), which peaked at 11.0 percent in 2010, was 5.2 percent in May 2015, a 70 point decline from April 2014.
Population growth in these four markets increased by one-half of one percent according Census Bureau data between 2012 and 2013. The increase over five years was 1.8 percent, with Columbus leading the way adding over 100,000 residents, an increase of 5.7 percent over that time period. Household formation outpaced population growth, increasing 2.2 percent over the five year period.
Ohio Apartment Markets Expected to Post Steady, Modest Growth
Research & Forecast Report
OHIO | MULTIFAMILY 1H 2015
91.0%
92.0%
93.0%
94.0%
95.0%
96.0%
97.0%
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
Cincinnati
Cleveland
ColumbusDayton
$640
$660
$680
$700
$720
$740
$760
$780
$800
$820
$840
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
CincinnatiClevelandColumbusDayton
Historical Average Monthly Rent
Historical Occupancy
91.0%
92.0%
93.0%
94.0%
95.0%
96.0%
97.0%
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
Cincinnati
Cleveland
ColumbusDayton
$640
$660
$680
$700
$720
$740
$760
$780
$800
$820
$840
2013Q1
2013Q2
2013Q3
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
CincinnatiClevelandColumbusDayton
Historical Average Monthly Rent
Historical Occupancy
Historical Occupancy
Historical Average Monthly Rent
Market IndicatorsRelative to prior period
1H 2015
2H 2015*
VACANCY
NET ABSORPTION
CONSTRUCTION
RENTAL RATE
* Projected, relative to prior period
Source: MPF Research
Source: MPF Research
2 Ohio Research & Forecast Report | 1H 2015 | Multifamily Market Outlook | Colliers International2
COLUMNS ON WETHERINGTON1620 Corinthian DrFlorence, KY 41042
Sale Date Feb 2015
Year Built 2002
Sale Price $25,000,000
RSF 239,640
$/SF $104.32
$/Unit $130,208
CAP Rate 5.64%
Unit Type Units SF Asking Rent Rent/SF
2B/2B 70 1,034 $945 $0.91
2B/2B 85 1,379 $1,107 $0.80
3B/3B 32 1,362 $1,226 $0.90
3B/3B 5 1,562 $1,236 $0.79
TOTAL/AVG 192 1,334 $1,129 $0.85
2> COLLIERS TAKE | The property was purchased by Steadfast Apartment REIT of Irvine, California from The Ackermann Group of Cincinnati, Ohio. Steadfast Apartment REIT financed the deal using a Fannie Mae CMBS (FREMF 2011-K16) note originated on March 1st, 2015 by Berkadia on their behalf. As of July 9th, 2015, the property held a note of $17,500,000, 70% loan-to-value, term of 120 months, debt service coverage ratio of 4.34x, and set to mature on March 1st, 2025. The single-parcel transfer occurred on February 26, 2015. The transaction is considered arm’s length.
Key TransactionsGARDENS AT EASTON3701 Governor’s Club BlvdColumbus, OH 43219
Sale Date Feb 2015
Year Built 2000
Sale Price $60,000,000
RSF 1,171,048
$/SF $51.24
$/Unit $56,391
CAP Rate --
Unit Type Units SF Asking Rent Rent/SF
1B/1B 427 763 $750 $0.98
2B/1B 425 835 -- $0.00
2B/2B 212 980 $764 $0.88
TOTAL/AVG 1064 859 $757 $0.64 1> COLLIERS TAKE | The property was purchased by Champion Real Estate Services of Westerville, Ohio from Triangle Real Estate Services of Westerville, Ohio. Champion Real Estate Services financed the deal using an open-end note of $52,975,000 (88% LTV) from KeyBank National Association. The note was originated on February 18th, 2015. the buyer plans to invest $10M for renovations and rename the apartment as Gardens at Easton.
MAD RIVER APARTMENTS7477 Shady Water LnDayton, OH 45459
Sale Date Jan 2015
Year Built 1988
Sale Price $16,671,306
RSF 318,024
$/SF $54.42
$/Unit $55,203
CAP Rate --
Unit Type Units SF Asking Rent Rent/SF
1B/1B 48 505 $595 $1.18
2B/2B 126 680 $635 $0.93
2B/2B 80 807 $670 $0.83
3B/2B 48 944 $875 $0.91
TOTAL/AVG 302 734 $689 $0.94
3> COLLIERS TAKE | The property was purchased by The Connor Group of Dayton, Ohio from JVM Realty Corporation of Oak Brook, Illinois. Mad River Apartments Dayton LLC conveyed Mad River Apartments to Mad River Apartments Dayton Orchard LLC (66.81 %) for $11,138,111. The multi-parcel transfer was done via Limited Warranty Deed and occurred on April 22, 2015. The transaction is considered not arm’s length because Chris Mullins is the vice president of The Connor Group (true buyer). Apartments Dayton Orchard LLC assumed the $14,712,000 loan of Mad River Apartments Dayton LLC through Wesbanco Bank Inc.
3 Ohio Research & Forecast Report | 1H 2015 | Multifamily Market Outlook | Colliers International
Key Transactions
WESBURY PARK6667 Wesbury Park AveColumbus, OH 43235
CENTURY LAKE APARTMENTS51 Bishopsgate DriveCincinnati, OH 45246
Sale Date Apr 2015
Year Built 2013
Sale Price $14,300,000
RSF 128,922
$/SF $110.92
$/Unit $113,492
CAP Rate 7.00%
Sale Date April 2015
Year Built 1989
Sale Price $15,550,000
RSF 183,456
$/SF $84.76
$/Unit $69,420
CAP Rate 6.10%
Unit Type Units SF Asking Rent Rent/SF
1B/1B 20 749 $964 $1.29
2B/2B 60 1,053 $1,159 $1.10
TOTAL/AVG 80 901 $1,062 $1.18
Unit Type Units SF Asking Rent Rent/SF
1B/1B 40 618 $650 $1.05
1B/1B 64 730 $720 $0.99
1B/1B 32 818 $770 $0.94
2B/2B 40 911 $870 $0.95
2B/2B 32 1,010 $870 $0.86
2B/2B 16 1,072 $925 $0.86
TOTAL/AVG 224 860 $753 $0.88
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> COLLIERS TAKE | The property was purchased by a Joint-Venture comprised of Oakmont Real Estate Management and Coy Capital Management (Pittsburgh, Pennsylvania) from Preferred Living of Westerville, Ohio. The Buyer’s financed the acquisition using an assumed Fannie Mae CMBS (FREMF 2014-K41) note originated on August 8th, 2014 by KeyBank National Association of Overland Park, Kansas. As of July 10th, 2015, the property held a note of $11,400,000, fixed interest rate of 4.41%, 83% LTV, original term of 120 months, 48 interest only periods remaining, and set to mature on September 25th, 2024.
> COLLIERS TAKE | The property was purchased by Harbor Group International of Norfolk, Virginia from Brack Capital Real Estate Group of Amsterdam, Noord-Holland (Netherlands). Brack Capital financed the deal using a Fannie Mae CMBS (GS 2015-GC30) note originated on April 7th, 2015 by Citigroup on their behalf. As of July 9th, 2015 the property held a note of $11,200,000, 72% loan-to-value, term of 121 months, 60 interest-only periods, 4.07% fixed interest rate, debt service coverage ratio of 1.39x, debt yield of 8.5%, and set to mature on May 6th, 2025.
MARINER’S WATCH100 Mariner’s CircleSheffield Lake, OH 44054
Sale Date April 2015
Year Built 2001
Sale Price $15,500,000
RSF 240,000
$/SF $64.58
$/Unit $66,810
CAP Rate 7.00%
Unit Type Units SF Asking Rent Rent/SF
2B/1B 60 1,208 $768 $0.64
2B/1B 30 1,255 $780 $0.62
2B/1B 30 1,260 $797 $0.63
2B/2B 56 1,235 $816 $0.66
2B/2B 56 1,287 $835 $0.65
TOTAL/AVG 232 1,246 $801 $0.64 5> COLLIERS TAKE | The property was purchased by Banyan Capital Partners LLC of Garden City, New York from Oakmont Real Estate Management LLC of Pittsburgh, Pennsylvania. Banyan Capital Partners LLC purchased the property using funds allocated from a 1031 Exchange, resulting in the assumption of a 2011 note originated by Bellwether Real Estate Capital of Cleveland, Ohio. As of June 2nd, 2015, the assumed CMBS note (FREMF 2012-K18) held an 82% LTV, current balance of $9,604,448, fixed interest rate of 4.4%, 79 of 129 terms and 12 interest-only periods remaining. The current master servicer is KeyBank National Association and the loan special servicer is Wells Fargo.
4 Ohio Research & Forecast Report | 1H 2015 | Multifamily Market Outlook | Colliers International
Ohio Multifamily | 1H 2015 Notable Sales
PROPERTY NAME SALE DATE SALE PRICE NUMBER OF UNITS
PRICE /UNIT BUYER SELLER MARKET
Orchard of Landen 2/9/2015 $30,900,000 312 $99,038 Orchard of Landen Apartments LLC Orchards Apartments LLC Cincinnati
Columns on Wetherington 2/26/2015 $25,000,000 192 $130,208 Steadfast Apartment REIT Inc Ackermann Group Cincinnati
Century Lake Apartments 4/7/2015 $15,650,000 224 $69,866 Brack Capital Real Estate Harbor Group Management Cincinnati
710-714 Greer St 2/2/2015 $2,728,000 33 $82,667 Main Strasse Holding LLC Dudley Properties LLC Cincinnati
Portside at Mariner's Watch Apartments
4/2/2015 $15,500,000 232 $66,810 Banyan Capital Partners LLC Oakmont Real Estate Management LLC Cleveland
Trenton Place 3/20/2015 $6,700,000 144 $46,528Brightstone Trenton LLC and BCG
Sales LLCVeard Willoughby LP and Exchange Property
LLCCleveland
Holland Gardens Apartments 2/5/2015 $3,300,000 136 $24,265 GFG Capital Sheriff of Cuyahoga County Cleveland
Grand Total 520,230 23,626 -1,066 95.3% 797 9,397 $783.25 $0.87
Investment Sales For the 12 month period ending in May, nearly 26,000 units have traded in the four Ohio markets covered in this report according to Real Capital Analytics. The average per unit price was $56,000 per unit and the total transaction volume was $1.44 billion. The Columbus market continues to lead the way, accounting for two-thirds of the total with $960 million in transactions and also recording the highest per unit average at $62,366. This per unit price represents a 53 percent increase over the prior year. Cincinnati follows with $221 million in sales volume and Cleveland reports $189 million. Price per unit rose in Cincinnati by six percent, but fell by five percent in Cleveland.
The average cap rate over the 12 month period ranged from 7.2 percent in Columbus and Cleveland to 8.5 percent in Cincinnati. During the year, the average cap rate increased by 71 basis points in the Cincinnati market, continuing an upward trend that began in Q2 2013 when the average was a full two percentage points lower than current. In Columbus the year over year change was a decrease of 25 basis points, while Cleveland reported a decrease of 42 basis points.
Market Takeaways• Columbus, even with the large number of units under construction, is expected to perform well with demand outpacing supply. Job growth is forecast to
remain above historical levels. With new supply, though, comes pressure on rental rate growth, which is predicted to remain moderate into early 2016.
• In Cincinnati, rising levels of new supply could further impact occupancy as the single-family market continues to recover. Rent growth is forecast to remain in the two to three percent annual range. One bright spot is the center city where occupancy stands at 97.2 percent and demand levels remain strong.
• Cleveland’s modest job growth is predicted to be adequate to maintain stable market conditions for multifamily assets. Occupancy levels in the center city are currently 97.8 percent, offering additional opportunities for conversion of existing structures and new construction in the downtown area.
• Dayton, with virtually no new supply in the pipeline, is expected to see a moderate increase in the occupancy rate from its current level of 94.3 percent. Modest rent growth of roughly two percent per year is forecast based on historical averages.
