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Commercial Real Estate
Business Observer Friday, Apr. 20, 2018 5 months ago

Tampa is considered a secondary market no longer

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Lantower Residential says Tampa is now on the radar of the large institutions it competes against
by: Kevin McQuaid Commercial Real Estate Editor

"The cat’s out of the bag about Tampa, and Orlando. There’s just too much good news about Tampa now. It’s not considered a secondary market anymore by anyone we know." — Philippe Lapointe, Lantower Residential

 

Philippe Lapointe has long considered the Tampa multifamily rental market to be a kind of best-kept secret, from an investment perspective.

Many investors, he says, have long considered it a secondary location as compared to “sexier” locales like Miami and overlooked the city.

As a result, the chief operating officer of Dallas-based Lantower Residential managed to complete a trio of acquisitions in the Tampa area without arousing much notice nationally from the much larger institutions it typically competes against.

Those deals came despite steady job growth and other fundamental economic gains over the past four consecutive years.

Its three purchases — of the Seneca at Cypress Creek complex in Lutz, the Brandon Crossings community outside Tampa and apartments in Westshore — added more than 1,150 units at a cost in excess of $220 million.

But the ability to operate relatively clandestinely ended abruptly earlier this year, Lapointe says.

“The cat’s out of the bag about Tampa, and Orlando,” says Lapointe, whose company is a subsidiary of Toronto-based H&R REIT. “There’s just too much good news about Tampa now. It’s not considered a secondary market anymore by anyone we know.”

Instead, Lapointe now compares Tampa and Orlando to other hot multifamily destinations for investment.

“Tampa and Orlando are no different than Austin, or Dallas, or Raleigh, they share a lot of the same attributes and they really are no different as a competitive landscape, either,” he says.

As a company, Lantower focuses almost exclusively on markets that include Tampa and Orlando in Florida, Austin, Dallas and Houston in Texas, and cities in North Carolina.

Since its formation in 2014, Lantower has acquired more than a dozen properties in all containing nearly 4,600 units, according to its website.

To compete for the largely newly constructed apartments Lantower specializes in, Lapointe says the company’s reputation often gives it an edge.

“At the end of the day we just operate with a ton of integrity, and we think our reputation and ability to close deals when we say we will goes a long way,” he says.

Lantower’s analysis of deals also differentiates it from other investment firms, he says.

“We typically receive dozens of deals every day to look at, and I’d say that for every 500 or so potential transactions we consider, we probably do less than 1% of them,” Lapointe says.

“And that may be because of a property’s vintage just isn’t for us, or sometimes the price we just can’t reconcile, but in every case, we really drill down into a property, the competition, potential competition, and we want to know a lot about the community in general,” he adds. “We do a lot of analysis. It’s one of our hallmarks.”

Nor is Lapointe overly concerned that Lantower’s target markets are reaching saturation, from a supply perspective — despite the addition of thousands of new units in and around cities like Tampa and Orlando since the decade’s economic recovery began in earnest in 2013.

“Frankly most of the markets that we’ve chosen to be in, we today consider them to be, in our view, undersupplied with apartments,” Lapointe says. “And that’s largely because there’s a ton of net migration occurring and, at the same time, a lot of attrition of Class C properties that are coming offline.”

Lapointe notes, as well, that some areas that have been deemed oversupplied are actually underrepresented with new rentals when a full analysis is considered.

Lantower Residential's 300-unit Westshore community is one of three apartment projects it owns in Tampa

“Take a look at Dallas,” he says. “A lot of people, and reports in the media, say Dallas is oversupplied, and we understand why they on the surface might think that. But the reality is, Dallas and other cities are actually comprised of many submarkets. There are say 10 different submarkets in Dallas.

“Of those, maybe two have supply issues, while the other eight are actually quite healthy. But in the media, the conclusion based on those two is, oh, Dallas is oversupplied with apartments. That’s where our research and analysis comes in to play.”

Lantower’s view of the Tampa area remains firm. Lapointe describes it as a “solid acquisitions market.”

“It’s my hope and belief that we’ll continue to grow our position there,” he says. “We’ve purchased three properties in the Tampa area, and if we can find a fourth and a fifth and a sixth and a seventh that make sense for us and fit our criteria, we’ll definitely go for them.”

 

 

 

 

 

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