November 10, 2016
Avanath Capital Management is on a Seattle mission. Specifically, the Irvine, CA-based company’s goal is to ensure more affordable and workforce housing availability to the market. Connect Media caught up with John Williams, Avanath’s President and Chief Investment Officer, to find out the trends, and the company’s goals in the coming year.
Q. Why is Avanath targeting the Pacific Northwest for affordable and workforce housing investments? Can you tell us a little about your investment strategy?
A. We are bullish on Seattle, based on its rapid economic growth. Seattle has recently emerged as one of the fastest-growing metros in the nation, with strong employment gains and a demographic profile similar to that of the tech-centric Bay Area. A number of Fortune 500 tech companies are headquartered here, including Amazon and Microsoft, which employ thousands of workers throughout the region.
This rapid job creation is fueling considerable rent growth, with rental increases in this market rising at a faster rate than some of the most expensive regions in the nation. This, in turn, is driving demand for quality affordable housing throughout the region for a number of workers who are unable to afford the new luxury product or other expensive options.
Our investment strategy is to preserve and enhance existing affordable and workforce housing to meet this growing resident demand, and attract a larger demographic of middle-income workers and their families. By leveraging this demand, we are successfully able to maintain nearly full occupancy at each of our affordable communities, resulting in strong cash flow and risk-adjusted returns for our investors.
Q. Seattle has experienced a huge multifamily construction boom, with a large influx of new luxury apartment inventory flooding the market. How will this supply impact the multifamily market?
A. Most of these new luxury apartments are focused on catering to the top-tier millennial worker. As a result, this construction boom is fueling an even deeper need for quality affordable and workforce housing to accommodate middle-income workers and their families in this market.
We recognize the opportunity to capitalize on this demand by providing deeply-needed affordable housing throughout the region. By implementing strategic renovations at each of our communities, we improve the quality of our housing without compromising affordability.
Q. Looking ahead to 2017, which markets remain the most attractive for affordable housing investors?
A. When we look at new markets, we target areas where there is tremendous employment growth and a demand for quality affordable housing. Those areas include primary, supply-constrained coastal markets such as Los Angeles, the Bay Area, Seattle, and Brooklyn, among others. These expensive coastal regions will remain attractive to affordable housing investors, given the affordability challenges in these markets. That said, we are also targeting rapidly growing secondary markets such as Orlando, the Detroit metro, and Cary, North Carolina, among others. We are also actively seeking investment opportunities in southern Florida.
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