High Multifamily Supply Isn't Sinking The Beach Company

High supply is an issue in the multifamily market – but The Beach Company isn’t necessarily sinking in it.

Dan Doyle, senior vice president, and chief operating officer of the firm, said that he’s seen multifamily turn into a “concession-driven market” in recent months.

The oversupply is leading to longer leasing periods and hesitancy in relocating after the term ends, according to Doyle, who will speak at GlobeSt’s multifamily conference in LA in October.

However, the Beach Company, which operates mostly in the Southeast, particularly in the Carolinas and Richmond, Virginia, hasn’t seen a slowdown in demand. In fact, the real estate firm is actually seeing higher renewal rates.

“ Everything seems to be leasing as projected,” Doyle told GlobeSt.

“There may be a couple of soft submarkets where things are taking a little bit longer, but nothing like you may see in other parts of the country.”

Furthermore, Doyle noted that the company has seen strong occupancies and quick lease-ups, most notably in Charleston and Richmond.

“It’s why it’s a great place to call home, a great place to focus,” he said.

“We feel like we always positioned a little bit better than some of the other markets.”

For example, Kamran Paydar, first president of CBRE, recently revealed the struggles in the Los Angeles region when it pertains to multifamily. High construction loans are scaring companies away from purchasing land, and the ones who are active are looking for favorable price points, which may cause objection from the seller. Plus, the ULA tax, which was first implemented in April 2023, is another factor in LA demand.

Right now, The Beach Company is focused on its existing properties – particularly projects that haven’t been started yet and have been held onto after acquisition. Mostly, the focus is on mixed-use multi-phase development.

“Mixed-use also means a mixture of multi-family product types,” Doyle said.

“So townhomes, flats, you could have some duplex buildings, units. You could have more traditional, four to five-story wrap around a parking structure. All of that is, is something that we look to really help differentiate our product from a competing developer.”

While Doyle admitted that the process is a little more costly and difficult to execute, he feels this type of development will be more attractive to the buyer in hopes it is something they will pay a premium for.

While supply is quite high now, Doyle believes that over the 12 to 24 months it will be “extremely curtailed,” and that the multifamily market will return to more favorable fundamentals.

“I’m very bullish on in terms of where multifamily is as an asset class,” he said.

“It’s something that we’re going to need to continue to focus on, and how we can deliver units to meet the demand. Because we haven’t delivered supply over 24 months. I think that bodes well for the industry.”

Plus, there’s the growing expectation that the Federal Reserve will start cutting interest rates next month. That is something that could help the industry in the short term.

“Clearly that will result in an overall improvement in the sector,” stated Doyle.

“We market where it’s difficult for capital to move one way or another. We need something that gives reason to go ahead and do that. If we’re able to experience a rate cut, that provides some confidence, and it provides some impetus for groups to come off the sidelines and be able to reinvest back into real estate.”