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Jerry Webster Sees Nothing Flat for Apartment Market

3 min read

Jerry Webster, a native of Holly Grove, has been a commercial real estate broker since 1980, specializing in the brokerage of apartment properties. After earning a master’s degree in psychology at the University of Central Arkansas, he worked as an assistant to the Arkansas secretary of state until he chose real estate as his career. After serving two years as the executive director of a nonprofit housing corporation that helped provide affordable housing throughout Arkansas, he became the first deputy director of the state housing finance agency and served in that job two years before forming his own real estate firm in 1980.

In 2017, the Webster Corp. sold 24 apartment properties with sales volume of over $180 million, totaling 3,788 apartment units in four states.

Did the housing crisis of 2008 make any permanent changes in the apartment market?
Absolutely. The problems in the single-family industry after the housing crisis of 2008 made people recognize that single-family housing should be bought as a place to live instead of simply as an investment to create net worth. More and more potential first-time homebuyers opted to continue to rent an apartment instead of buying that first house, making the apartment market stronger.

Millennials are an example of prime renters who are less likely to buy a house because of issues like student loan debt. Rental demand from this demographic is expected to remain robust. In addition, demographics have meant a boom in apartment living with a whole new renter pool, including empty nesters, divorced people, the elderly and downsizers.

What is the current state of the Arkansas multifamily market?
Solid and stable. The apartment market was the first property type to recover from the last recession, so now it is in the maturity stage of this cycle. The best part is that all classes of apartment are doing well, from newly constructed luxury ones to “workforce” housing to affordable housing.

The only new construction units are for luxury apartments or for some type of government subsidy housing program. There are no new construction units for the middle class. So on one side you have luxury apartments, on the other side you have subsidized affordable apartments, and in the middle you have nothing. Therefore, there is a huge market for investors who buy existing properties and upgrade the units for the middle income. The keys to some potential market shifts are inventory increase, changes to tax law and interest rate movements.

What are the must-haves for renters, and what amenities are less important?
The No. 1 consideration for any potential renter is safety and security. Security gates are a must, if possible. All new luxury units will have them and lots of acquisition rehab properties are trying to install them.

As far as amenities, the luxury new construction properties are trying to create a resort feel, which means resort-style pools, impressive clubhouses, large community rooms, fitness centers and, of course, dog parks.

What proportion of the Arkansas multifamily market is owned by out-of-state companies and how does that affect the rental market?
It’s hard to give an exact percentage, but commercial real estate is a global business in today’s world, even in smaller markets like Arkansas. The days of investors staying close to home are gone. The more buyers or developers there are from out of state the better for the overall market. There is a perception among buyers that superior yields on apartment properties can be achieved in relatively small markets compared with larger urban and suburban markets. Plus income stability, rent growth and strong renter demand make Arkansas attractive to out-of-state buyers and developers.

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