Multifamily rentals in downtown Chattanooga on selling spree

Multifamily rentals in downtown Chattanooga on selling spree

December 6th, 2012 by Mike Pare in Business Around the Region

Walden Apartments at 528 E. 8th St. is one of about a dozen complexes that has changed hands in downtown Chattanooga.

Photo by Allison Love /Times Free Press.

Illustration by Laura McNutt /Times Free Press.

About a dozen downtown Chattanooga apartment buildings have changed hands over the last several months as added evidence that the local multi-family unit market is heating up.

Five apartment structures sold this spring by their longtime owners have sold again, said Marcus Lyons of Lyons Group.

Also, a South Carolina company that specializes in offering housing near college campuses has bought six apartment buildings near UTC.

"Chattanooga has the perfect storm," said Lyons, a multifamily broker in the city, citing lack of product, a growing university and a thriving downtown.

The five apartment buildings sold this spring and then recently resold were bought by Lindsay Street Partners of Nashville, said Lyons, who was a broker in the deal.

He said the buildings, holding 72 units, were bought for $4.5 million only a few months after the seller, RCB LLC, a Chattanooga investment group, paid $3.9 million earlier this year.

The units had been owned for many years by Chattanooga businessman Jack McDonald and Thomas Van Cleave, formerly of Chattanooga.

Meanwhile, Walk2Campus Properties, headquartered in Rock Hill, S.C., has purchased six other small- to medium-size apartment buildings near the UTC campus.

Roe Elam, market manager for the company, said the company has a contract on another apartment building near UTC and has bought a house it plans to rent out as well.

He said the company spent more than $1 million for properties.

"We really like Chattanooga," Elam said. "We think the city is going like gangbusters. There's a need for more affordable housing near UTC."

The company currently is operating in about six college cities in the East and South, he said.

Lyons said he has handled the sale of another Vine Street apartment building in recent months. In addition, he said he has bought a 32-unit structure on Tennessee Avenue at the foot of Lookout Mountain.

Adding to the interest in apartments is that the single-family housing market is down from historic levels, Lyons said.

A recent study by real estate services firm Rock Apartment Advisors in Birmingham, Ala., said Chattanooga's overall apartment market is one of the strongest in the Southeast.

The study cited the city's growing employment base, saying occupancy at the 53 properties surveyed by the company was 96.9 percent this summer. Of the city's 10 newest properties, occupancy was 97.4 percent. That's up 6.2 percent in a year, the study said.

"Chattanooga is one of the hottest markets," said David Wilson, primary analyst for Rock Apartment Advisors. "It's outperforming a lot of markets."