Song of the south

As the multifamily picture in Charlotte and Releigh grows ever brighter, developers are looking to cash in on the strong economic outlook for North Carolina's biggest city and its state capital.


Atlanta-based Lane Company, which opened an office in the Queen City six months ago, is hoping to start around 1,000 rental units in five communities next year in and around Charlotte and the Triangle area that includes Raleigh, Durham and Chapel Hill.

“We are fortunate that we have not been hit with the housing problems that have happened in other markets,” said Wyatt Dixon, who joined Lane Company as Carolinas development partner last April. Instead, he said in November, he’s seeing a healthy slowdown in the development pipeline for both single-family and condominium projects.

And, added Erica Henning, who was named development manager in the multifamily real estate firm’s Carolinas division in August and is responsible for the firm’s day-to-day development activities in the area, the single-condo overhang is not much of a threat in Charlotte. “Most of the home sales have been for primary ownership, as opposed to investors. Charlotte is a pretty stable housing market, and it didn’t experience the run-up in housing prices, the double-digit price appreciation that you saw in parts of the Northeast, California and Florida since 2000,” she said.

“I moved here last June because of the strong employment growth and the fact that Charlotte has many of the attributes you’d want to see in a larger city. Charlotte has performing arts, a symphony, museums, two professional sports teams and great restaurants. And, if you like NASCAR racing, Charlotte’s a good place to be because the NASCAR Hall of Fame is coming here. It’s a growing, dynamic place,” said Henning, a key member of the team that is charged with the task of expanding Lane’s presence throughout the Carolinas, Richmond, Va., and the Norfolk/Tidewater regions. Before leaving Pennsylvania to move south, Henning was vice president of land operations for Heritage Building Group, Inc., a regional developer and home builder based outside Philadelphia.

Dixon, who is responsible for sourcing and developing deals in those markets, expects to be underway on close to $200 million of ground-up apartment projects next year, although some of those may bleed into 2009. “We’ve got a suburban opportunity that we’re working towards getting done in the Triangle and we’re working on an urban opportunity there, as well. We have a couple of suburban opportunities that we’re actively underwriting and working on getting closed here in Charlotte, as well as a very major urban deal,” said Dixon, who came to Lane Company from Charlotte-based privately owned diversified real estate development and investment company Faison Enterprises, Inc., where he was managing director of development. Before that, he was vice president of development for Summit Properties and its successor, Camden Property Trust, and was responsible for the companies’ development activities in the Carolinas and South Florida.

The subprime debacle has had some impact on the residential market in Charlotte and Raleigh, Dixon said, but to a lesser extent than many other markets in the country. “That impact has spread into the apartment sector because, from a capital standpoint, it requires very prudent underwriting. Equity is still actively interested in doing multifamily development, but, at the same time, given their exposure elsewhere, they’re looking to make safer development bets,” he said.

And, because the apartment pipeline in both the Triangle and Charlotte is near all-time highs, his team is taking a very prudent approach to the deals that they do pursue, said Dixon, adding that Lane currently is looking to partner up with commercial and retail developers in the area for mixed-use opportunities, which is one of Lane’s specialties. “We work very well in the lead, as master developer, or equally as well as the multifamily participant in a larger-scale deal,” he said.

A vertically integrated, full-service multifamily real estate business, Lane Company and its subsidiaries have been active in the apartment and condominium sector for roughly 30 years. The firm has built more than 100 multifamily communities, and that number is rising. It currently has almost 1,400 units under construction or under contract, totaling $2.5 billion in deals. The company expects $800 million in new deals in 2008, growing to $1.5 billion in 2011. In addition, its property management division has more than $1 billion under management.

In recent years, the company has opened a number of new regional development offices outside of its home base, ridding itself of its Atlanta-centric identity by launching development divisions in North Carolina, Florida, New Jersey, Texas, the Gulf Coast, Arizona and metro Washington D.C.