CA South is Expanding to St. Petersburg Florida

Similar to Tennessee, Florida has experienced exponential growth over the last few years and the expansion is not expected to slow down. Florida has gained more than 2.7 million new residents since 2010, making the state the 3rd most populous after California and Texas. Florida’s population grew by 14.6% compared to one decade earlier and is now home to over 21.5 million people.  Within the upcoming years, Florida is projected to gain an average of 845 new residents per day. 1

Florida and Tennessee have an equally strong rental market as well. In fact, some areas are seeing rents jump 24% in a few weeks and newcomers contribute to these record rents.  The Real Deal reported that the onslaught of in-migration is allowing landlords to raise rents to higher levels as people are lured from the Northeast and West Coast by Florida’s thriving job market, lack of state income tax, and sunshine. 2

There are also countless reasons why people choose to live and work in Florida. The state offers an almost ideal work-life balance with worthwhile job opportunities and near-perfect weather, diverse culture, and outdoor recreation.

St. Petersburg and Clearwater have consistently ranked as one of the top ten real estate markets over the past few years, making this rapidly expanding market a hot spot for commercial and residential real estate investors. And with so many similarities between the Sunshine and Volunteer states, CA South looks to kick off several projects within the region. 1

 

1 https://learn.roofstock.com/blog/florida-real-estate-market

2 https://therealdeal.com/

 Here is a reel from our Instagram when our CEO, Meg Epstein, toured St. Pete last month. St. Pete Reel

Meet our COO, Kevin Holst

CA South welcomes Chief Operating Officer, Kevin Holst.

He grew up in Minnesota but spent 20 years in Colorado and now calls Nashville his home. In this role, Kevin oversees core business functions such as HR, Sales, Legal, Acquisition, IT Operations, and Project Development and works to integrate the CA vision into every project.

Kevin developed a strong reputation for implementing companywide operational and process improvements through previous roles at Aspenware and Southern Land Company.

Before shifting his focus to operations, Kevin developed expertise on legal practice matters in real estate, lodging, construction, transactions, software, multi-family development, employee relations, property management, joint ventures, private equity, mergers and acquisitions, and land use through his work at McWhinney, Vail Resorts, Sherman & Howard, and Brownstein Hyatt Farber Schreck.

Kevin holds a B.A. in History and Political Science from the Saint Olaf College and a J.D. from the University of Denver Sturm College of Law. He’s also finished 11 marathons and is an avid Masters swimmer.

CA South in 2021

I wanted to share some important accomplishments for CA SOUTH in 2021- there is much more than what fits in an IG caption, but it’s been an incredible year. Click our link here from Instagram: https://www.instagram.com/p/CYkZg43FJX4/  Projects– We built and forward-sold an 175,000 sf industrial project named Myatt Drive for significantly more per foot than we had underwritten – Similar story for Callis Road, our 360,000 sq. ft. industrial JVWe successfully sold out:*EVE  for between $600 to $700 per foot to a 45% IRR*Alina despite the challenges of selling a building of exclusively one bedroom units during the 2020s *Mostly finished construction at Allston *started demolishing, and filed for a permit on our largest project to date; 900 8th Ave *Took on a new institutional OZ partner, Argosy Real Estate,  closed and broke-ground on Parachute- a 102 apt units with 5,000 sq. ft. of retail. – We broke-ground on Pie Town, 83 short term rental condo units (very large floor plans), after handling significant supply-chain and cost increase issues.Some additional milestones which are still under wraps – Our industrial platform is expanding into other markets. – Went under contract on another 100 unit multifamily dev on Charlotte Ave– We assembled 3 lots in Wedgwood Houston, the hottest neighborhood in Nashville right nowOur amazing team has beyond doubled and is continuing to expand. Additionally…. – We saw several deals come full cycle, which means we now have a positive track record! – We acquired a new 5,500 sf HQ for CA in Wedgewood Houston  This year has taught me;1) Hard work and persistence pay off2) There is nothing more important than the people on your team; there is no substitute for competence. I am thankful to have each and every member on the CA South team, and I appreciate the hard work and dedication that have positioned us for  another unprecedented year.

Callis Road Update

Located in Lebanon Tennessee is a 33-acre industrial site we reference as Callis Road. The development is an industrial project that CA South put under contract for third-party sale. The project was completed in partnership with Griffin Partners, based in Houston Texas, who saw our vision for the site.

The project is meant to serve and accommodate the near non-existent product for the smaller user requiring Class A, concrete tilt-up ​facility, while they service other industrial clients and larger corporate users. The site capitalized on the “gap in the market” by positioning the total 375,000 SF, 4-story development into rear load spaces serving the small to medium sized industrial tenant-base.

The majority of the equity for the project came from crowdstreet.com, which is a popular platform for veteran investors. The platform allows multiple investors to pool their money and collectively invest in larger real estate projects than they could otherwise do on their own. 

As an investor in a crowdfunding deal, you, along with dozens or even hundreds of other investors, purchase a portion of interest in a property or real estate project, similar to owning shares in a company. Capital that is raised goes to the real estate developer to invest in building, renovating or recapitalizing the property, which generates ROI for each investor. 

In short, Callis Road was a success story for our team. It produced the meaningful returns for our investors and allowed for us to diversify our portfolio. We believe in approaching our deals with a team. And this development was a collaborative effort ending with a huge win for all parties involved.  

1  https://www.crowdstreet.com/join/now-2/?utm_source=adwords&utm_term=crowdstreet&utm_medium=ppc&utm_campaign=CS-Investor-Acquisition-Branded&hsa_src=g&hsa_mt=e&hsa_ver=3&hsa_acc=5108706351&hsa_tgt=kwd-65781051743&hsa_kw=crowdstreet&hsa_cam=8154379678&hsa_net=adwords&hsa_ad=538261282533&hsa_grp=85994805324&gclid=CjwKCAiAz–OBhBIEiwAG1rIOki3q21FLwUgjWmKRQjIQPQcfysg-ZOAwyIJsGSC1p_8ItvaHJb37hoC-i0QAvD_BwE

Continued Growth for 2022

Nashville’s business and economic development landscape will only continue to grow in 2022, experts say.

For CA South, several projects will be delivered in 2022. Allston, for sale office condos, are currently pre-selling. One of 2 buildings at Allston will be available early this year. The condo suites are represented by Byran Fort with CBRE. Myatt and Callis Road are both industrial sites that will also be delivered 2022. Located at 1219 4th Ave South, will be CA South’s new home, which will be completed around March.

Regionally, Nashville’s soccer stadium will be completed by Summer 2022 and effectively names the largest soccer specific stadium in the United States. The 30,000 seat stadium will include a 360-degree canopy roof, 65 ft. wide shared concourse and 25 private suites. For the weekly construction update click here.

Standing at 40 stories high, Four Seasons Hotel and Private Residences is anticipated to open mid-2022. This five-star luxury property will feature 236 hotel rooms and 143 private residences. Their ground floor retail will feature The Rutledge, a modern American grille.

Amazon’s first of two downtown towers are complete. Urban Juicery and Eatery, Crisp & Green and Orangetheory Fitness are a few of these tenants who have confirmed space within the towers. Amazon’s second tower is expected to open in 2023.

Resources:

https://www.therutledge.co/fsnashville

https://www.businesswire.com/news/home/20211026005208/en/

https://www.casouthdevelopment.com/portfolio/allston/

https://www.nashvillesc.com/news/topics/weekly-stadium-update/

https://www.fourseasons.com/nashville/

 

 

Tennessee Opportunity Zones

Opportunity Zones have piqued the interest of many investors and real estate developers across the country. Created as part of the 2017 Tax Cuts and Jobs Act, Opportunity Zones are designated economically disadvantaged areas that look to attract investment capital. These zones offer tax incentives to investors willing to deploy capital to positively transform the region.

Although these designations have only been around since 2017, they have been designed to cover all 50 states, the District of Columbia, and 5 U.S. territories. Outside of providing tax benefits to investors, Opp Zones allow for job creation and economic growth for low income communities. 1

For CA South, Opportunity Zones are favored because of the ability to defer or reduce the amount owed through capital gains tax. More importantly, if the asset is held for 10 years, no tax is owed on the appreciation value of the property.

With 176 Census tracts designated as Opportunity Zones in the Greater Nashville area, CA South has been heavily invested in OZ starting with when they were first released in 2017.

Starting in the Edgehill neighborhood, CA South set-up its first OZ project at 1009 8th Avenue South. Subsequently, 910 8th Ave South was purchased and is an OZ project with a publicly traded REIT that allows for OZ investment. Jefferson Street project is another example of a CA South project in an OZ that is taking advantage of the OZ legislation to infuse investment capital into the historic part of Nashville. Most recently, CA South purchased their new headquarters in an OZ, and is preparing to break ground on a larger mixed project down the street within an OZ fund structure (1425 4th Ave S.).

The designation of opportunity zone remains in effect through the end of 2028. So, through advice of legal counsel and community guidance, CA South has plans to continue to build within opportunity zones throughout the region.

 

1 https://www.greaternashvilleqoz.org/main

CA South Projects Update

CA South has several developments underway in the Tennessee. CA South builds residential condominiums, flex office/industrial parks and multifamily rentals. The focus is on capital markets where traditional developers are not efficient at producing. Typically, the asset classes supply will be constrained but demand is still very high.

PARACHUTE broke ground in April 2021 and will consist of an 83,000 SF, 108-unit multi-family apartment building with 2,500 SF of ground-floor retail. CA South partnered with Argosy Capital and Bradley Development Group to construct the Property, which is situated in a Qualified Opportunity Zone between Nashville’s vibrant South Gulch and Edgehill neighborhoods and enjoys prominent street frontage on 8th Avenue South.

900 8th STREET is looking to have 300 residential apartments and retail space anchored by a restaurant use. The project fills a desperately needed void in the Nashville residential market; “affordable luxury,” apartments near trendy neighborhoods and restaurants with modern contemporary design.

EVE is a recently completed 28-unit luxury short-term rental condo community on the Cumberland River. The development views include downtown Nashville, Cumberland River and Nissan Stadium. With nearly $25 million contracted in only 1 month on the market, Eve has set record sales for Nashville. The development is one of many, CA South looks to replicate throughout the Southeast.

PIE TOWN CONDOS broke ground in April 2021 and will consist of a 104,000 sq. ft., 83-unit residential rental building with approximately 6,725 sq. ft. of retail space. Like Illume and Eve, Pie Town has Short-Term Rental zoning and will target investor buyers who plan to lease their units on Airbnb.

ALLSTON OFFICE CONDOS is an under-construction 79,662 sq. ft. Class A Office Condominium development on ~20 acres, located approximately 5 minutes from historic downtown Franklin, TN. This development is currently selling office spaces to businesses between 5,000 SF and 25,000 SF. With ample parking and proximity to Brentwood, Nashville and Franklin this site is likely to sell out ahead of schedule.

CALLIS ROAD INDUSTRIAL PARK is an office-industrial development on ~33 acres, located 20 miles east of Downtown Nashville. Callis Road Industrial Park is nearing completion on all 4 buildings and finalizing landscaping. The modern design, affordable price-point, and accessibility to freeways; creates an inviting space for small business owners.

Approximately 13 miles Northeast of Downtown Nashville, MYATT DRIVE, includes 2-buildings offering rear load, small bay industrial options on 171,000 SF. With most of the concrete and landscaping finalized; this site is set to delivery early Q1 2022.

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Interested in aerial views of our developments? Our Youtube channel has you what you need: YOUTUBE CHANNEL

 

Buying vs Leasing Commercial Real Estate

“Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth.”
-Theodore Roosevelt

Several factors go into choosing the right strategy for your business, including cash outflows, recurring costs, tax implications, property value, business equity and more. 1

When you buy a property, you can either pay cash upfront or finance it with a loan. With a lease, you rent the property for a set term, at which point you must renegotiate if you wish to continue using it.

Although the value of a business has little effect on the value of real estate, owning real estate as a business asset offers some positive financial advantages. Some of the pros of buying a commercial property include: equity in the property over time (appreciation), more control over your work space, and tax breaks, including depreciation.

Some of the cons of buying commercial property include: prepayment of penalties, liability insurance and upfront down payment. Further operations investment might produce greater returns than the real estate investment, thus creating an opportunity cost that accompanies real estate ownership.

In a current growth market like Nashville, the likelihood of the asset appreciating at an accelerated rate, along with inflation causing real asset value growth, more and more business owners are turning to purchase their office space versus lease. https://allstonoffices.com/ was a project devised with this in mind.

1 https://www.valuepenguin.com/small-business/buying-vs-leasing-commercial-real-estate

2 https://www.ccim.com/cire-magazine/articles/lease-versus-own-decision/

 

Financially Accessible Housing in Urban Areas

Tennessee continues to experience growth; rental rate increases and approval of bigger and bigger housing developments but is there a future for financially accessible housing?

Mayor John Cooper announced plans for more permanent supportive housing that will break ground in January 2022. More local developers are also looking to add financially accessible housing in urban areas and look for more ways to include affordable housing throughout downtown regions. 1

A redesign of the housing project that Cooper approved “include more and better units, including more one-bedroom units instead of efficiency units, more windows, and a closer orientation to the river with an adjacent park and green space.” 1

The middle class is a vital infrastructural element and is the engine of Nashville’s economy, but home prices are forcing more and more families to the suburbs. Like many growing cities, this migration increases traffic volume immensely, turning rush hour into rush hours, and reducing the foot traffic that supports all our shops, restaurants, and local retailers. 2

Several articles state that the Nashville Metro creates and preserves access to roughly 1,350 affordable housing units a year, although it would need 5,250 units per year to prevent a 50,000-unit housing shortage by 2030.

One of CA South’s main goals is to bridge the gap between luxury and affordable housing, by supplying a product type makes modern design living accessible to a broad range of household incomes.

1 https://fox17.com/news/local/nashville-mayor-promised-new-affordable-housing-project-that-has-yet-to-break-ground

2 https://www.multihousingnews.com/can-nashville-close-its-affordable-housing-gap/

National Multifamily Trend

Headed into 2020, it’s fair to say no prognosticators foresaw a global pandemic and the impact it would have on gateway markets. At the same time, headed into 2021, few if any market participants would have foreseen the rapid upswing in the multifamily demand – led by gateways. Multi-family absorption in the U.S totaled 475,000 units year-to-date through September, and absorption topped 100,000 units four quarters in a row. Both represent unprecedented performance. 1

The drivers of demand coming out of the pandemic – including robust economic growth, the decline of unemployment, pent-up demand coming out of the pandemic, and strong household savings – are by now well known. 

Recent signs that multifamily rent growth might slow down proved to be premature, as the average U.S. asking rent increased by $23 in October to a record high $1,572. In Nashville, the price-per unit rose 13.2%, while developers had 13,809 units underway through December. 2

The growth is driven by an ongoing surge in demand that started in spring and has yet to subside. The average U.S. occupancy rate of stabilized properties reached a record-high of 96.1% in September. 1

Music City Multifamily Trends:

  • Several organizations announced further expansion in Nashville in 2020-2021, including roadside-assistance company Agero (900 jobs), QTC Management (410 jobs over the next five years), Ramsey Solutions (600 jobs and a new office building underway). 
  • The metro’s population has been on a steady upward trend over the past decade, marking a 16.9% increase since 2010.

1 https://www.casouthdevelopment.com/wp-content/uploads/2021/11/Matrix-Multifamily-Nashville-Report-Winter-2021.pdf 

2 https://www.casouthdevelopment.com/wp-content/uploads/2021/11/Matrix-Multifamily-National-Report-October-2021.pdf