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Expect Multi-Family Investment Growth in Augusta
With the cyber wave beginning to grow, Augusta’s apartment market is primed for growth, making our market attractive for investment. Buoyed by two stable industries, Military and Healthcare, Augusta has seen steady, albeit low rent growth for the past decade or so, but with conservative estimates showing Fort Gordon bringing an additional 14,000 employees and dependents to Augusta by 2023, rent growth should exceed the national average for the next few years. Also aiding rent growth is the lack of new development over the past decade, specifically in the luxury market.
There are a few reasons for limited development. First, land prices in the area have been low, keeping new home prices down, thereby making home ownership attractive relative to renting. Second, to reduce pressure on school systems, local municipalities have been limiting high-density developments. Third, because of the increase in construction costs (driven by labor shortages and tariffs), new developments are hard to justify economically; developers cannot make the deals work without high rents, which we have not had. The solution: Population Growth.
Population growth from the growth at Fort Gordon and Augusta University will increase rental rates, and promote new developments. At some point, these developments will occur Downtown, and Augusta will get a new grocery store there. Citizens will just need to be patient as revitalization continues to happen.
For investors, population growth means rental growth. The prospects of rental growth have pushed up our investment prices, with 12-month sales volumes reaching $126 million, topping $100 million for the fourth consecutive year. Our metro offers attractive returns and cap rates above the national average (7.9% versus 6.2%). Average prices per unit have been approximately $80,000 over the past two years, but current ‘Class A’ deals on the market range in pricing from $105,000 to $200,000 per unit.
Augusta’s steady economy and low prices relative to national averages make Augusta a great place to investment in multi-family. The prospects of population growth will lead to rent growth, furthering the attractiveness of this sector. The team at Blanchard and Calhoun Commercial have been investing in the growth of Augusta for over a Century, and we are dedicated to helping you make the most educated decision on your Real Estate Investment. If the idea of investing in multi family sounds appealing to you, contact us today to get started.
Alex Griffin is the Investment Associate at Blanchard and Calhoun Commercial Real Estate, His specialties include Underwriting, Deal Sourcing, Valuation, & Asset Management.