The Mahoning Valley remains an attractive market for out-of-town commercial real estate investors, with relatively affordable properties and strong demand for apartments continuing to generate interest, according to local real estate agents.
Alan Friedkin, associate broker with Burgan Friedkin Commercial Group, says people continue looking for investment properties in this area, especially triple net properties, which give them more revenue with less upkeep.
“It’s still contingent on interest rates and pricing, but people out of town see that our area is a bargain compared to outside areas and some bigger markets,” Friedkin says.
Don Thomas, managing partner at Platz Realty Group in Canfield, says that a few years ago, investors on the west and east coasts viewed Valley’s cap rate on investment – return for money versus risk – as a positive. Additionally, tax rates were favorable to investors, allowing them to defer capital gains.
Overall it spurred local investment, especially the purchase of apartments and improvements to the properties, which along with a lack of inventory, also meant an increase in rent.
Both Friedkin and Thomas say the commercial market, especially apartments and multifamily housing, is extremely active.
“There’s not a lot out there, but we had a really good July and August is shaping up to be equal to or better,” Thomas says. “There’s just a lot of activity across all segments, but those two [apartments and flex space warehouse and manufacturing] are primarily the ones that are bringing the most inquiries.”
Friedkin says he knows of only a few apartment complexes for sale and apartment investment is popular when someone can find them. He has been receiving a lot of inquiries for apartments.
Platz primarily serves the corridor from Ashtabula through Columbiana counties and Thomas says that region has a shortage of 22,000 apartment units. A slight population uptick in the same region, as well as the demolition of many blighted homes in Warren and Youngstown, are some of the reasons, says Thomas.
“So now we’ve got a demographic, the 20 to 40 somethings, who doesn’t really want to own a house and all of that demand is pushing on multifamily,” Thomas says, adding about five years ago there were 300 to 400 apartment units for sale.
In mid-August, Platz was listing a 12-unit apartment in Boardman and a 48-unit complex in Cortland, and Thomas did not expect either of them to still be available in a week.
Thomas knows of only a few developments under construction right now and believes the area could use eight to 10 more.
Thomas says he owns 50 apartment units in the Canfield and Boardman area and there is a waiting list of over 20 people for units.
“Nobody moves, once they’re in,” Thomas says. “They typically don’t go anywhere.”
The problem with building additional units, says Friedkin, is the high cost of construction. While there is always a market for luxury rentals, he notes new construction can be very expensive to rent.
Instead, investors may look at existing rental complexes. They can determine whether renovating the buildings will enable them to generate profit through rent, Friedkin adds.
Read the full story in the September issue of The Business Journal.