Commercial Investment Real Estate July/August 2016 | Page 19

environment off ers signifi cant refi nancing opportunities. Protecting Investments With the possibility of a rate increase on the horizon, disciplined investors set them- selves up for long-term success, by increas- ing the equity they hold in projects. In this way, owners and managers are better pre- pared to absorb the impact of rate changes and fl uctuations in vacancy rates. An added benefi t of holding greater equity in individual projects can be greater control over the decision making process. Investors want to look at the depth of each market and the total supply coming in. A question for investors to ask: • Should the project be delivered at the same time as everyone else in any given mar- ket? Probably not. By keeping an eye on development trends locally, investors can maximize their return on investment on a project-by-project basis. Searching for Market Demand While many developers have focused on the luxury market, which according to RedFin rebounded in the fourth quar- ter of 2015, investors will fi nd abundant opportunities in aff ordable and workforce housing. Particularly as gentrifi cation has aff ected local communities and displaced some residents, the need for low and mid- dle income developments is rising. As the future for luxury housing becomes less cer- tain and some regional markets appear to have overbuilt, aff ordable housing consti- tutes a bright spot for real estate investors. In general, looking for geographies that have or are anticipating population or job growth are where investors will want to focus their eff orts. In the Southeast, cities such as Charlotte, N.C., and Charleston, S.C., combine good economic policies at the state level with a relatively aff ordable cost of living. Th ese areas are attractive for both companies and their prospec- tive employees, and contribute to the need for affordable and middle income multifamily development. Attracting Millennial Renters Lastly, investors should consider gauging the long-term potential of certain cities based on their walkability. A 2015 report from the National Association of Realtors, found that millennials, more than earlier generations, place a premium on their abil- ity to walk rather than drive to work, to shop, and to entertainment. Investing in developments in communities near trans- portation hubs off ers a good opportunity to tap into early-stage growth markets. Gregg Gerken is the executive vice president and head of Commercial Real Estate at TD Bank Group in New York City. He can be reached at [email protected]. Have you updated your profile yet? THE NEW FindaCCIM.com Easy to use on any device. Visit your outdated profile before 50,000 potential clients do. Log in to CCIM.com to update your profile. CCIM.com July | August | 2016 