Market, interest rates drive high-density construction | Government | normantranscript.com
College students want to live near campus, but the proliferation of large-scale student housing in core Norman has city leaders concerned.
They recently enacted a six-month moratorium, and preliminary discussions to update the R-3 multi-family zoning ordinance began Thursday.
Since November 2015, the city has known Norman’s student housing market is becoming oversaturated, based on a report by RKG Associates Inc.
“The Norman apartment market has been going through the same 10-year cycle for decades now,” real estate broker Eric Fleske said. “It has repeated in this town for the last 50 years in the same way.”
Demand increases when there is not enough supply, he said. Outsiders come and build apartment projects, the market becomes a little overbuilt as more apartments come online, then the market slows until housing is absorbed and demand increases again.
“Other trends you’re seeing is students want to be close to the university,” Fleske said.
While most university communities have housing that abuts campus, University of Oklahoma students are often forced to live further away because that’s where land is available for apartments, he said.
Mike Buhl of Commercial Realty Resources Co. (CRRC) also sees a soft market ahead for Norman’s student housing as other factors continue to drive the building and the buying and selling of apartments.
“Strong investor demand, low interest rates and falling capitalization rates were once again the trends that made 2016 so busy in the multi-family sector,” Buhl said.
Buhl, a Norman resident, and Tulsa associate Darla Knight recently released CRRC’s 2016 Apartment Report. Buhl believes the low interest rate “has been the single biggest factor in helping to fuel apartment acquisitions.”
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