Brad Weiner and David Horwitch, managing principals of Chicago’s National Apartment Partners, have made a major investment in central Tennessee, purchasing nine multifamily properties in the region in the last three years.
Why has the Chicago-based firm invested so heavily in this slice of Tennessee? Two reasons: Nashville and its surrounding communities were all booming CRE markets at the start of 2020. And the multifamily sector remains, along with industrial, a CRE asset class that continues to boast high occupancy rates and strong demand.
And, yes, the COVID-19 pandemic has cast a pall on commercial real estate and the economy in general. But in a phone interview with Midwest Real Estate News, Weiner said that the multifamily sector and Central Tennessee are both positioned to withstand the economic fallout of the pandemic and rebound steadily once life returns to normal in the United States.
“The market in middle Tennessee, including both Chattanooga and Nashville, started out this year very strong,” Weiner said. “It’s been strong for a long time, especially for Class-B and Class-C apartments. There is strong job growth in Nashville and middle Tennessee. The population continues to grow. It’s why we’ve been focusing on this market so heavily in the last three years.”
Weiner’s confidence in middle Tennessee is borne out by the March rent report by Yardi Matrix. This report showed that apartment rents for all apartment asset classes in Nashville grew by more than 4 percent this March when compared to the same month a year earlier. Among major markets, that put Nashville behind only Phoenix, Seattle, the Inland Empire area of Los Angeles, Charlotte and Las Vegas.
Again, no one knows what the rest of the year will bring. But at least at the start of 2020, and throughout the entirety of 2019, Nashville ranked as one of the strongest multifamily markets in the country.
National Apartment Partners’ most recent purchase in middle Tennessee is Ashton Ridge, a 194-unit multifamily property in Clarksville, Tennessee, that the company acquired earlier this year.
Weiner said Clarksville is another of the desirable markets in middle Tennessee. The community is located about 50 minutes from Nashville, and is home to the Clarksville Regional Airport, Austin Peay State University and plenty of shopping and dining options. It is also a short drive from the Fort Campbell military base.
The property itself is a good example of the type of multifamily community National Apartment Partners targets. It’s in good condition and has a strong occupancy history, but there is room to add value to the property to help drive rents up even higher.
Phase 1 of Ashton Ridge was built in 2016. This phase has 154 two-story suburban townhome-style units. Phase II of Ashton Ridge features 40 two-story units. The complex’s amenities include a pool, clubhouse and dog parks. The development is also within walking distance of three lower schools.
David Stollenwerk of Marcus & Millichap represented the seller, Ashton Ridge LLC, in this transaction.
Weiner said that Ashton Ridge has remained near 98 percent occupancy since 2016, even as rents in the market have risen. That’s in keeping with the multifamily market as a whole in Clarksville. Weiner said that occupancy rates in this community hover near 95 percent.
“There is a lot to like about this property,” Weiner said. “We were able to purchase a property that was mostly newer construction with no deferred maintenance but still with a value-add component. We believe that the rents were below market-value, so there is room to push the rents a bit without having to spend a lot of capital to get there.”
Don’t expect Ashton Ridge to be the last multifamily property that National Apartment Partners purchases in the Nashville and middle Tennessee area. Weiner said that the company plans to continue its focus on this region.
“We focus on areas that have strong population growth and diverse economies,” Weiner said.
National Apartment Partners got its start in Chicago, with the first 20 of its properties in that market. Some of these properties were already stabilized while some were value-add opportunities. Others were significant redevelopments and some needed gut renovating.
About three years ago, though, Weiner and Horwitch decided to expand their company’s reach and focus on markets that featured both population and job growth. That’s why National Apartment Partners decided to grow its presence in the southeast region of the country.
This strategy remains in place even now as the country fights through the COVID-19 pandemic. Weiner said that he is confident in the markets that National Apartment Partners has targeted and is awaiting the day when commercial real estate is again booming in those parts of the country.