Steve Berneman

📈 The Rise and Stumble of Office-to-Multifamily Conversions: A Cautionary Tale from Atlanta 📉 The world of real estate is always evolving, but not every change is a seamless transition. Here’s a quick dive into the complexities of converting office spaces to multifamily units, highlighted by the recent foreclosure in downtown Atlanta: 👇 🏬 The Project: The 41 Marietta St. office tower, planned to transform into a 120-unit apartment building, is now facing foreclosure, with a looming auction date set for May 7. 🔢 The Numbers: Originally purchased for $11.5 million in 2018, the project involved a hefty $20 million loan taken in 2021 to fund renovations. The Challenge: Despite the potential, converting office buildings to residential use is fraught with challenges. Structural issues and design incompatibilities can drive up costs, making such projects financially risky. 🤔 Why It Matters: ▶ Market Trends: The U.S. saw a jump from 77,000 units in adaptive reuse projects in 2022 to a record 122,000 in 2023. Atlanta is ripe with such opportunities, but they are not without risks. ▶Investment Insight: Only about 10% to 15% of office buildings are suitable for conversions. The failure at 41 Marietta St. serves as a reminder of the critical need for expertise and appropriate financial planning in such ventures. ▶Location Challenges: Lack of dedicated parking and other amenities often essential for residential properties can be a significant barrier, as seen with the Marietta Street project. For investors eyeing multifamily real estate opportunities, especially in adaptive reuse, the story of 41 Marietta St. underscores the importance of thorough due diligence and realistic cost assessments. At 7fold Realty Advisors, we leverage our expertise to navigate these complexities, ensuring our projects are not just visionary but also viable. #RealEstateInvestment #MultifamilyRealEstate #CommercialRealEstate #AdaptiveReuse #AtlantaRealEstate #7foldRealtyAdvisors

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Unlocking Development Potential in Nashville: A Guide to Land Entitlement and Rezoning for CRE Investors Navigating land entitlement and rezoning in Nashville can be a game-changer for investors aiming to capitalize on the city's evolving landscape. With Nashville’s push for transit-oriented developments, affordable housing, and mixed-use spaces, understanding the entitlement process is crucial to making informed and successful investments. What You’ll Learn: Land Entitlement Basics: Discover how to align a property’s zoning with its optimal development potential. This process can unlock value by transforming underutilized areas into high-demand spaces that fit both investor goals and community needs. Rezoning in Nashville: From pre-application meetings to council approvals, the Nashville rezoning process has distinct steps that each investor should understand. Initiating conversations with local council members and engaging with the community early can streamline your path to success. Key Considerations for Success: Consider infrastructure, community needs, and location to maximize project value. When combined with a deep understanding of market conditions, these factors can ensure your development aligns with Nashville’s growth and demand. Emerging Market Trends: Opportunities abound in Nashville, from the high-potential Bordeaux area to the 51st Avenue corridor. Transit-oriented development, missing middle housing, and mixed-income projects are hot trends, meeting community needs and delivering stable, long-term investment returns. Strategic Risk Management: Managing risk in entitlement and rezoning means timing your due diligence, building community support, and assembling the right team of professionals. This approach not only mitigates delays but also enhances the viability and profitability of your project. 💼 Final Thoughts: Successful development in Nashville goes beyond just following technical steps—it’s about understanding the community, aligning with local goals, and approaching each project as a value-add opportunity for both investors and residents. 📲 Ready to Dive Deeper? Connect with The Cauble Group or Associate Broker Emily Benedict to explore how we can assist in bringing your development vision to life. Whether you’re new to CRE or looking to expand, we’re here to help navigate Nashville’s dynamic real estate landscape. 📧 Contact Us at office@thecaublegroup.com | 📞 615-854-7188 #CommercialRealEstate #NashvilleDevelopment #LandEntitlement #CREInvesting #CommunityDevelopment

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95% of CRE Brokers Do Not Understand Leverage... Almost all of them think they do, but in my opinion - most are missing out on the most important type of Leverage. "But I work with Bankers every day and there's debt on almost every deal I do!?" This is not the type of Leverage I'm talking about. There's 4 types of Leverage that can be broken down into 4 C's: Capital, Code, Content, and Collaboration. The Collaboration part has probably been the number 1 growth factor for my business. Collaboration allows Leverage on your Time. In my opinion, the key to the "game" of business is to continually trade up for more Leverage on Your Time. At first, you have to do the $10/hr tasks. But once you're making $50/hr, you can hire someone for $10/hr. And then when you're making $200/hr, you can hire someone for $50/hr to do the tasks you shouldn't be doing. After that, you continue to gain more leverage on your time, and execute the tasks that are the most influential to your business, and that you genuinely enjoy doing. So, if you're a CRE Broker and are not using Leverage in your business... I would recommend you start thinking about it. And if you want to know how I structured this Leverage to scale to $1.4M in Gross Commissions in a Single Year - Just reply to this post or DM me. No sales pitch - just happy to help however I can.

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After record-high multifamily deliveries in 2023-2024, we are now anticipating a steep decline in new supply over the next two years. Some of the high-growth markets that saw the most substantial supply additions are expected to experience the largest drop-offs. For instance, Nashville and Raleigh, which have been at the forefront of new developments, are projected to see significant declines in new supply. This suggests two main things: •       Improved Rent Growth Outlook: With considerably fewer units expected to be delivered in the next two years, the oversupply issues should ease, leading to a stronger rent growth trajectory in the mid-term. This is good news for investors who have been waiting out the recent supply glut. •       Strategic Opportunities: The projected supply drop-off provides a unique chance to acquire assets at a discount in markets that have experienced outsized deliveries. Investors who acquire assts in markets where the absorption of existing supply may keep rent growth subdued in the short term can benefit from future rent increases in the mid-term as markets stabilize. What do you think? Are the investment prospects improving in some of these markets furthest to the right of the chart, or will today’s supply overhang weigh on fundamentals beyond the construction cliff? Read more about our outlook for property markets in our Midyear House View. https://lnkd.in/epidXDmV #multifamilyinvestors #CommercialRealEstate #multifamilysupply

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We are researching multifamily podcasts for a client and stumbled upon Tyler Christiansen's interview with Jerry Davis, former COO at UDR, whom Tyler nicknamed "The Godfather of Centralization." No matter where you are in your centralization journey, stop and listen to this. I have four favorite quotes in this interview from Jerry. 📊 Share data "So people can see what can be done." ✔ Make decisions that are "Good for the resident, good for UDR." 💪 Change management is tough. "Don't fold at the first sign of resistance." 💰 Bottom-line mindset. "For managers, if you took the mundane off their plate, they could manage more properties. Instead of running a 300 unit property they can run three 300 unit properties. Those are the dollars that tended to fall to the bottom line." Listening to this interview reminded me of how much my mindset around operations and asset management was shaped by my time at UDR, and the leadership of Suzie Miller, Michael Lacy, Tiffanie Byrd, Harry Alcock, Jerry Davis and...of course the late great Don McKenzie. I have a tremendous amount of gratitude for you all, and what you all taught me. Thank you. And thank you, Tyler, for this fabulous interview, sharp insights, and a fun trip down memory lane for me. https://lnkd.in/gbMhpk-e

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Here's 1 reason why most CRE Brokers will never hit $1M in Gross Commissions.... To be where you've never been, you must do what you've never done. I'm not telling you to get crazy complex in your strategy or pivot directions. In most circumstances, it's simply doing more of what you're already doing. However, most of the time - brokers are already working at least 45-55 hour weeks, they don't want to sacrifice family time, and I totally get that. So how do you scale? When I was stuck around $600k and wanted to hit $1M in GCI, I had to become a CRE scientist. What I mean by this is that I constantly had to experiment on what was going to get me to the next level. New Technology, a New Hire, Outsourcing Marketing, etc. I had to test probably 5-6 different things (and only 2-3 of them ended up working) in order to go to the next level. The reason why most brokers will never get to that "next level" is because they don't overcome the fear or uncertainty of failure. I probably invested $150k over 18 months in these "experiments". It also helped that I didn't scale my expenses after I initially scaled my income to $500k. I had the freedom & flexibility with my finances, but also the relentless spirit to bet on myself. And also, it's a lot of fun doing what you've never done. You learn more about yourself than you ever would by playing it safe. So it might not be for everybody, but it certainly helped me. DM me if you have any questions - or check the link under my name and register for our next event. 

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Edward Cohen and I had a blast talking to Connie Lee on the Tangent 💚 Proptech podcast. Connie has a great backstory and she's building Reffie, an AI-driven company geared to help multifamily operators lease units faster. We had a great time talking about the state of the multifamily market, rental trends and more. Link in comments to listen. #proptech #venturecapital #multifamily #realestate #podcast

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According to Yardi’s newly developed software tool, the Conversion Feasibility Index, which measures the suitability of office-to-residential conversions, Denver alone has over 1.4 million square feet classified as “Tier 1” - meaning they’re top conversion candidates. https://lnkd.in/eGdcWbaw A few standout insights from the report: - More than 1.2 billion square feet of office space nationwide is viable for conversion. Top metros have over 20% of their stock as potential candidates. - Office prices continue to plummet , with some properties being sold at up to 90% less than previous prices. - More cities are starting to actively encouraging conversions through tax breaks and accelerated zoning processes, with New York and D.C. leading the way. Interested in learning more or taking advantage of this generational opportunity? Click the link below to see a live opportunity: https://lnkd.in/eJJ2rjBr

Large transactions are continuing to return to Atlanta’s #office market in greater numbers; seven of the deals signed this quarter were 75,000 square feet and greater, the second consecutive quarter this has happened since before the pandemic’s onset. Learn more in JLL’s Q3 2024 Atlanta Office Market Dynamics report: https://lnkd.in/dZ__pJJu

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The table below shows a few soft agency financing quotes that we received today Seven Karat Strategy Advisors. This is for a multifamily acquisition loan for a newer vintage property in a tertiary market. The takeaway is that the 5-7 year fixed rates are now in the high 4's in comparison to them being in the low to mid 5's prior to the Fed's 50bps decrease in rates.

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This graph lies.... It shows properties with pools having higher returns than properties without any amenities in the Blue Ridge, GA short-term rental market. And this is accurate. However, when I performed a multivariate analysis that factored in the influence bedroom count alongside individual amenities, I found the following results: - Hot tubs increase revenue by $852 per month. ✅ - Pools decrease revenue by $301 per month. 🤯 - EV chargers increase revenue by $957 per month. 🚀 - Pool tables increase revenue by $133 per month. 🎱 To read my full analysis click the link below! https://lnkd.in/ggNscwuX #RealData #ShortTermRentals #Airbnb

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📊 The Top 10 CRE Stories That Shaped Atlanta in 2024 📊 2024 was a transformative year for Atlanta's commercial real estate market. From record-breaking data center growth to major office shakeups, these stories tell the tale of a city balancing rapid innovation with mounting challenges.   Here’s a quick snapshot of the Top 10 Atlanta CRE Stories of 2024:   1️⃣ Data Center Surge Hits Resistance: Atlanta became the #2 data center market, but local bans and paused tax breaks signaled growing municipal pushback. 2️⃣ Rivian Revival: A $6.6B federal loan reignited Rivian’s $5B EV plant project, promising major economic growth. 3️⃣ Apartment Market Shifts: Increased supply and higher borrowing costs softened rent growth and raised vacancy rates, offering renters more options and incentives. 4️⃣ Office Sales at Steep Discounts: Properties like Proscenium sold at 25-30% discounts as high interest rates reshaped valuations. 5️⃣ Retail Dominance: Record-low vacancies and rising rents defined Atlanta’s retail market, but rent pressures may ease in 2025. 6️⃣ Y’allywood Slump: Film industry spending dropped 37%, leaving an oversupply of studio spaces. 7️⃣ Office Bright Spots: Deals from companies like Cargill and AIG showcased corporate confidence in Atlanta. 8️⃣ Partners Real Estate Disrupts Market: Houston-based Partners shook up the brokerage scene by recruiting top talent. 9️⃣ Elie Schwartz Fraud Scandal: Misuse of $54M in crowdfunded real estate investments highlighted investor risks. 🔟 Morris, Manning & Martin Move: The firm’s 100K SF lease at Two Alliance Center made headlines but had limited broader impact. These stories reflect a key theme: Atlanta is at the crossroads of growth, innovation, and recalibration.     👉 Credit to Bisnow for sharing this great article that I've summarized. https://bit.ly/3BPXI2z

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𝗝𝗨𝗦𝗧 𝗥𝗘𝗟𝗘𝗔𝗦𝗘𝗗: 𝗤𝟮 𝟮𝟬𝟮𝟰 𝗦𝗢𝗨𝗧𝗛 𝗦𝗢𝗨𝗡𝗗 𝗢𝗙𝗙𝗜𝗖𝗘 𝗜𝗡𝗦𝗜𝗚𝗛𝗧𝗦 The appetite for suburban product continues to grow as companies adapt to their employees' priorities. Here is a look at Q2 2024: · We are seeing rent increases across all classes with a focus on Class A and renovated Class B product. · There has been a rise in demand for "Turnkey" deals, elevating the previous market standard of a 5-year lease term to 7-10 years. · The path to getting a signed lease is far different now than what it was at our peak, however, we see Net Effective Rent trending towards our previous highs seen in 2018 – 2022. · Majority of today’s sales transactions are Owner/User with pricing exceeding our previous peak numbers seen in 2018 – 2022. 𝗙𝗼𝗿 𝗮 𝗱𝗲𝗲𝗽𝗲𝗿 𝗱𝗶𝘃𝗲 𝗶𝗻𝘁𝗼 𝘁𝗵𝗲 𝗻𝘂𝗺𝗯𝗲𝗿𝘀, 𝗱𝗼𝘄𝗻𝗹𝗼𝗮𝗱 𝗼𝘂𝗿 𝗤𝟮 𝟮𝟬𝟮𝟰 𝗥𝗲𝗽𝗼𝗿𝘁 𝗵𝗲𝗿𝗲: https://lnkd.in/gKfb6rmw Drew Frame Kathleen Afichuk 𝗵𝘁𝘁𝗽𝘀://𝗸𝗺𝘁𝗲𝗮𝗺𝗳𝗿𝗮𝗺𝗲.𝗰𝗼𝗺/

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Today's lessons were on the 5 Rules of the Visionary/Integrator relationship. I've shared those in the screenshot here, but I really enjoyed the model shared for Issues Solving. Wickman named the model, "Issues Solving Track." There are 3 steps to the model: 1) Identify, 2) Discuss, and 3) Solve. Rarely is the issue brought to the table the real problem. In the identify step, the group will work hard to settle on what the real issue is and name it. The goal is to name the issue in one concise sentence. Next, all thoughts need to be shared. No thought should be discussed more than once. Wickman calls that politicking. The goal is the share all thoughts, but not be redundant. Third, we solve the problem. It's less important "what" you decide than it is that you all make a decision on next steps. A consensus is great, but the Integrator is the tie breaker. Once the decision is made, everyone should team back up and get on the same page. This seems simple, and is, but most leadership teams struggle to execute on solving their problems. Can you use the model above to solve problems more effectively in your company? Who do you have that can be a good moderator of such a meeting? Who is your tie breaker? I'm reading, "Rocket Fuel."

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Last week, I had the pleasure of hearing Jalal John Azar, founder of Peak 15 Capital, share his expertise at a compelling panel discussion during the Information Management Network (IMN) Southeast Middle-Market Multifamily Forum. After the panel, John and I had a short conversation about current market dynamics and strategies for multifamily investors and operators as we head into 2024. Here are some key points from our dialog: ✅ Market Realities: The biggest challenge foreseen for 2024 is the gap between pricing expectations and market realities. Bridging this gap may require some market adjustments that could be painful but necessary for alignment. ✅ Conservative Underwriting: Peak 15 Capital maintains a conservative approach to underwriting, focusing on pragmatic and forward-looking assessments to ensure that investments make sense not just today but in the years to come. ✅ Diversification and Adaptation: The firm has expanded its focus beyond multifamily value-adds to include core plus, built-to-rent (BTR), single-family rentals (SFR), and new constructions to capture where the Alpha is, showing adaptability to shifting market conditions. ✅ John's insights highlight the importance of staying adaptable and conservative in underwriting practices to navigate through uncertain market phases effectively. For anyone involved in multifamily investments, John's perspective is a must-consider as we prepare for the evolving landscape of 2024. https://lnkd.in/g475mYcv

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Newmark's Raleigh/Durham Q1 Office Market Report just released - full report below. Most interesting to me: (i) return of larger leases being signed in Q1 and (ii) several either remained in similar sized footprints or expanded...bucking the trend of downsizing/upgrading. Is this a real trend setting up? Time will tell. But parking areas are more full in Q1 and multiple RTO initiatives being announced/expanded. Key Points: - Employment remains strong, but growth decelerated (Fed's actions working) - Office-using jobs at all time high in the Triangle (Growth of 19% in 5 Yrs & 42% over 10 Yrs) - Rents remain high, but increases have leveled off --> posted decreases on horizon? I'm betting so for aging suburban assets. Effective rents already much lower, but can owners afford lower rents and still provide required TI's for today's upfit costs? - Vacancy also at recent highs as subleases convert to direct vacancy Issac Brown Ching-Ting Wang Andrew Cook

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Newmark Atlanta has released our Q3 2024 Atlanta Office Market Overview. The full report is attached. Key Takeaways: - Rents Reach New Historical High - Annual full-service asking rental rates increased to a historical high of $32.28/SF, a 2.9% increase year over year. The annual pace of rent growth as generally been declining since 2017. - Vacancy Increases - Overall vacancy rates increased by 70 basis points year over year to 25.8%, as year-to-date supply still outpaced occupancies. - Under Construction Activity Declines - The under-construction pipeline declined 33.8% year over year to 1.4 MSF and has generally been slowing, bringing supply more in balance with demand. - Leasing Activity Dips - Total leasing activity closed the quarter at 2.2 MSF, decreasing 22.6% quarter over quarter. Leases signed averaged 5,983 SF per deal, reflecting a 1,084 SF quarter-over-quarter decrease. Brad Kirschner Stewart Thrash Craig Kalinowski Morgan Cumby Lindsay Kalski

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While at first glance, Dennis Schaal's Skift article paints a really exciting chart for Short Term Rentals (#STR). But I think the data would tell an even more impressive story when cut by professional managers. While there is still discussion on what "professional" means, even a short list filter will present a telling story. Currently this graph compares Professional Hotels with Professional/Amateur/Opportunists/Fakelistings STRs. From what I have seen review data paint a very telling difference based on professional vs homeowner and portfolio size. Always exciting to see STRs compared more to hotels, and maybe that is bait for more hotel companies to enter the space. Who wants to make a bet as to first hotel to brand their own STR Property Management brand? Looking to scale and set your STR business apart or are a travel company looking to learn more about the space, we can help at RabCap. Just shoot me a note! https://lnkd.in/gKWX_P5R

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