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What Makes Mariner Grove and Savannah a Solid Investment?

Almost a year ago, I wrote an article titled “Emerging Markets” for this newsletter. I spoke a little about Savannah Georgia, and what was attractive about that market. Here is some of what I wrote in that article: “Savannah, Georgia, is located along the Savannah River, about 20 minutes from the Atlantic Ocean and three and a half hours by car from Atlanta. Originally founded as a British colony in the early 1700s, the city was a key port during the American Revolution and Civil War. The city of Savannah is home to more than 145,000 people and nearly 400,000 in the Savannah metro area. Savannah is the fifth-largest city in Georgia and the third-largest MSA (metropolitan statistical area) in the state. Over the past 10 years, the Savannah metropolitan area has added nearly 100,000 new residents. In the next five years, Savannah is forecasted to gain about 6,000 new residents and about 12,000 new residents by 2030. The GDP (gross domestic product) of the Savannah MSA is more than $22 billion, according to the Federal Reserve Bank of St. Louis, and has grown by over 59% during the last ten years. The largest manufacturing employers in the Savannah area include Gulfstream Aerospace Corporation, chemical company SNF, Georgia-Pacific Savannah River Mill, and International Paper.”  

Since this article was written, we have been targeting Savannah as a desirable market for multifamily. Because Savannah is a competitive market, it has taken us a while to find the right property to present to you, our investor. While we have been searching for the right asset, things in Savannah have become even better. 

Here is an excerpt from a Savannah, GA, market report put out by CBRE: “Savannah is experiencing unprecedented growth in both the economy and the rental market. As the port continues to expand, the industrial sector across the MSA has seen exponential growth. Most recently, the Hyundai Motor Group just announced a new $5.5B electric vehicle and battery manufacturing facility that will create 8,100 new jobs. The project will be located on the 2,284-acre megasite in Bryan County that was purchased last year by the State of Georgia and the JDA [Joint Development Authority] to attract further economic development in the area. Construction of the facility is slated to begin in January 2023, with full production expected in the first half of 2025. Additionally, several other new industrial parks are underway, including Rockingham Farms on Veterans Parkway and Savannah Chatham Manufacturing Center off Interstate 16.

An uptick in population growth coupled with slowing supply and the delivery of several Class AA projects downtown has resulted in significant rent growth – 18.3% Y-O-Y in 2021 and 7% growth just since last December – with average effective rent now standing at $1,488. The average sale price per unit has also increased to $184k, and there were more than $1.3B in multifamily sales over the last 12 months.”

Hopefully, you are as excited about Savannah as we have been for a while now. However, picking the right market is just half of the battle. Finding the right asset in the right market is the next step in presenting a great multifamily investment property. In another article I wrote in October of last year, I talked about the benefits of Class A assets over Class B and C assets, especially as it pertains to rent-to-income ratios. Take a look at the graph that I shared in that article demonstrating how Class A residents have a higher percentage of income left after paying rent. 

I also mentioned in that article that collections on Class A apartment communities outperform Classes B through C, especially during an economic downturn. This is largely due to the median rent to income as shown in the graph in figure 3, but it’s also because of the diversified cross-section of highly qualified residents that are present in most Class A properties. 

Figure 3

As an example of what I am talking about, check out the pie chart in figure 4 from our demographic study on Mariner Grove Luxury Apartments that we are about to acquire in the Savannah market. These metrics as they pertain to both the market and the asset class are things that we have been talking about for a while now. We are constantly seeking the best assets in the best markets. Mariner Grove is one of those exceptional assets. We are excited for those of you who are investing alongside us in this amazing investment opportunity.

Figure 4