Northwest Arkansas’ multifamily market is booming. A new venture is hoping to capitalize on that.
Cushman & Wakefield/Sage Partners in Rogers and Cushman & Wakefield/The Lund Co. of Omaha, Neb., are partnering to form Live Sage. The commercial property management company will exclusively focus on providing third-party property management services for multifamily communities.
Tanya Shapiro manages the venture. Shapiro is senior vice president of property management for The Lund Co., which manages a multifamily portfolio of approximately 12,000 units in Nebraska and Iowa.
Scott Audrain, executive vice president and chief financial officer at Sage Partners, said initial discussions for the joint venture began in the summer of 2019. When the Arkansas Razorbacks advanced to the College World Series in Omaha, Audrain attended and connected with The Lund Co. during a social occasion held during the tournament.
The common bond is that both firms are alliance members of New York-based Cushman & Wakefield, a publicly traded real estate services firm. The alliance program is a network of smaller independent brokerages the firm works with throughout the United States.
Sage Partners became a member in 2018. The Lund Co. — one of Omaha’s largest commercial real estate firms, marketing and managing over 8 million square feet of retail, office, industrial, agricultural, and multifamily property — affiliated with Cushman & Wakefield in 2013.
Audrain said Sage Partners had been exploring the idea of launching a multifamily third-party management division for a couple of years.
“They [Lund Co.] were already huge in multifamily management, and we started having conversations about doing something together in Northwest Arkansas,” Audrain said. “We didn’t have the technology or people with the skills or experience to jump into third-party management the way we wanted to. We were looking for a partner to do this with, and through our conversations, we realized these are the kinds of people we wanted to do business with.”
The two companies finalized the joint venture agreement on March 20, and the executive teams of both firms will share management decisions. With a decade of multifamily management experience in Northwest Arkansas, Sabrina Roper is the venture’s regional property manager.
OPPORTUNITY TO GROW
In Northwest Arkansas, one of the nation’s fastest-growing metros, demand for multifamily property management has never been greater. Recent data from commercial real estate information firm CoStar indicates that multifamily developers still view the region as a favorable environment despite the two-pronged economic shock of a pandemic and a recession.
Bill Kitchens, CoStar’s market analyst for Northwest Arkansas, said construction of about 3,500 new apartment units is underway as of the second quarter of 2020, or about 11.1% of inventory. That rate is the highest in nearly 15 years.
In the past five years, the area’s multifamily inventory has grown over 25%, Kitchens said. Central Benton County added about 4,600 apartment units since 2015, while Fayetteville added 1,275 units.
Multifamily investors have and will continue to take notice, Shapiro said.
“We’ve had some of our current [multifamily] clients that we’ve managed for more than 20 years in Omaha who’d already been looking in Northwest Arkansas before our agreement with Sage,” Shapiro said. “Now that we are building a team down there, we think we have a huge opportunity to grow very quickly.”
CoStar also reported earlier this year that Northwest Arkansas’ multifamily market grew at the fastest rate in the nation in 2019. The region added nearly 2,000 apartment units this past year, representing a roughly 7% increase in the current inventory share. No other metro surpassed 5%.
Audrain said Northwest Arkansas is a substantial market for launching the new venture, but Live Sage will look for regional growth opportunities.
“We’ll focus primarily on Northwest Arkansas, but we won’t turn down opportunities in Little Rock and other areas of the state if the opportunity arises,” he said.
Live Sage will begin its portfolio with three new construction developments in Benton County: Crystal Flats and The Aviator in Bentonville and Pinnacle Heights in Rogers.
Green Circle of Springfield, Mo., is the developer behind Crystal Flats, a mixed-use residential project between the Crystal Bridges Museum of American Art and Memorial Park.
Developers David Fender and Johnny Smith of Fayetteville own The Aviator, near the intersection of Arkansas Highways 12 and 279 near the Benton County Fairgrounds.
Pinnacle Heights is a mixed-use residential project at the northwest corner of the roundabout on Pauline Whitaker Parkway in Rogers, near the main gated entrance of Pinnacle Country Club. It’s a joint venture between Sage Partners and Hunt Ventures of Rogers and Urban5 Partners of Oklahoma.
The three properties have 884 units combined and will begin to welcome residents this fall. Pinnacle Heights will open all four of its multifamily buildings (295 units) in November. Crystal Flats (six buildings, 487 units) and The Aviator (nine buildings, 102 units) are each scheduled to open their initial building in November, then deliver the remaining buildings through the spring of 2021.
Roper said opening a multifamily community so late in the year is not ideal for leasing activity. All three projects were anticipated to open for residents earlier this year, but construction delays related to COVID-19 pushed them back. Despite the pandemic and its associated hurdles, Roper said the interest and number of tours haven’t diminished.
“We’ve been doing a ton of virtual leasing,” she said. “Multifamily has not stopped for one second, and the demand is still there. People are still renting.”