I’m Joe Stampone. I work at Atlas Real Estate Partners (‘AREP’), a private real estate investment firm focused on value-add and ground-up multifamily investments. ASotREG is a place where I share my thoughts on real estate, careers, technology, entrepreneurship, passive investing, and anything else that piques my interest.
Expecting Multifamily Distress in 2023? You’re Going to be Disappointed
I started my career in real estate in 2011 and have experienced a decade of low rates and increasing asset values. Success in multifamily investing was driven simply by being in the game. Well, the game has changed. Today’s environment is unprecedented. I’ve been spending an inordinate amount of time recently reading macro news, speaking with brokers, and underwriting deals. We’ve quickly shifted from over-exuberance to fear and everyone I speak to in the multifamily space is preparing for “distress” and lining up capital for buying opportunities. While there has been a much-needed...
Long-Term Trends Impacting Multifamily
As 2022 winds to a close, I’m sure you’re getting inundated with predictions for 2023. While I certainly enjoy making predictions (like I did in 2019), I struggle with forecasting short-term trends. In 2019, for example, I was talking about renter flexibility and the disruption of the STR business. While the predictions were directionally correct, real estate is a slow-moving business with trends emerging over decades, not in a single year. What’s more relevant and interesting to me are the longer-term trends impacting the multifamily industry. At Atlas, we buy/develop quality multifamily...
Reflecting on the Sale of a Winner
When I look back at my time at Atlas over the past 11 years, the mistakes we’ve made have primarily been selling multifamily assets too soon. Selling class B assets in Tampa or Salt Lake in 2016/17, for example. These mistakes inspired me to put a note on top of the deal plaque which says “never sell winners”. The more refined quote I remind myself of is to “hold winners as long as possible and sell losers as quickly as possible.” I look at it every day. A few weeks ago, we sold a winner. One of the first deals we acquired when I joined Atlas in 2011 was a property in Naples, FL. The...
Understanding the 2021 Multifamily Demand Surge
At Atlas, I oversee a portfolio of multifamily assets primarily located in the Southeast. What an easy job that was in 2021! Rents and occupancy boomed as we experienced record new lease demand and high resident retention. The chart below highlights the YoY lease trade-outs by month from Feb 22’ through September 22’. YoY Rent Growth - FL Portfolio This post is my desire to better understand the dynamics of 2020 and 2021 rent growth explosion. At first, it was a bit of a mystery to many housing economists, but looking back it’s obvious. From 2009 to 2015, I Iived in NYC with two buddies....
Multifamily Investors: Ignore the Shiny New Objects and Focus on what Matters Most
I’ve been on vacation the past few days, largely ignoring the deluge of headlines and incessant barrage of market news (what a week to be away!). It’s tough at first because tracking the latest news feels a bit like sport, but over a few days I’ve begun to realize that the news is largely irrelevant and often detracts from my long-term goals. While keeping your pulse on the general market is important, getting caught up in the “shiny new objects” as Peter Linneman calls them, is generally a waste. The daily movements of interest rates, when inflation recedes, speculation on Fed actions,...
Why Multifamily Values are Down 10%-20%
As I’ve noted many times before, I view this blog as a tool to clarify my thinking, vet ideas, and share my views at specific points in time. Given the volatility and uncertainty in the current market, I’ve spent more time reading, thinking and writing recently. The multifamily market today is particularly interesting. I wrote a general update back in June, where I provided an overview of inflation and rates, the single-family housing market, the strength of the consumer, and multifamily supply/demand fundamentals. TLDR: multifamily fundamentals remain strong, I expect rent growth to be...
Making Sense of the Multifamily Market Today – June 2022
The multifamily market today is the strangest in my relatively short career (12 years). The range of potential economic outcomes is wide, and I certainly lack the experience to assess the impact inflation, rates, and a recession may have on the multifamily market over the near-term. What’s great about having this outlet is that I get to write things down and think out loud, documenting my thoughts and doing my best to make sense of the market. While admittedly I’m not sure what’s going to happen, the over-used adage rings true – while history may not repeat itself, it does rhyme. ...
Building Multifamily in Today’s High-Cost Environment
It’s an interesting time in the multifamily development space. Although rents have surged, construction costs, labor, and land prices have increased significantly as well, making it difficult to build anything but luxury projects designed for the affluent renter. At Atlas, we’ve historically focused on value-add workforce housing. Core to our thesis is that it’s nearly impossible to build middle-income housing today given land costs, construction costs, and general NIMBYism. Over the past few years, we’ve launched a ground-up multifamily opportunity zone development platform which we’re...
My Observations of NIMBYism
After 12 years of living in cities, my family bought a house and moved to the suburbs in 2021. We settled in a classic North Jersey train line town, with idyllic tree-lined streets and vibrant downtown. It’s a great place to raise a family. For the most part, we’ve loved living here. It’s a family-oriented community, has a walkable downtown with shops & restaurants, and provides easy access to NYC, Philly, the Jersey Shore, and the Poconos. We couldn’t be happier with our decision. However, there is one observation which has frustrated me; the anti-housing opinion of the outspoken...
How to Buy Multifamily Deals in 2022
It’s no secret multifamily valuations are through the roof with cap rates at all-time lows as capital pours into multifamily real estate, especially in high-growth southeast markets. In addition to cap rate compression, we’re experiencing unprecedented rent growth, driving values up further. The combination of compressing cap rates and rent growth is leading to eye-popping valuations, most notable on a price per pound basis. In the Florida apartment market, where I’m most active, many 80’s vintage deals are trading for ~$350k+ per unit and new construction deals are eclipsing the $400k...
Proud Owner of Class C Apartments
I was talking with a colleague recently about the differences in our two primary investment strategies; class B/C value-add and ground-up development within Opportunity Zones. These are two opposite ends of the apartment spectrum. He made a comment that he loves the concept of building class A buildings that he’ll be proud to show his children one day. That comment stuck with me, and I’ve been thinking about it ever since. In one sense, I get it. Building sexy buildings in cool up-and-coming markets is fun. The high-end design aesthetic combined with modern amenities, great public spaces,...
The Institutionalization of Vacation Rentals
Some of the most interesting real estate deals today are vacation rentals, which is a subset of the more broadly known STR (short-term rental) space. These investments offer the potential for outsized returns and combine my passions for branding/marketing, creating unique experiences, and generating outsized passive cash flow. This post isn’t about the Sonders/Mint Houses of the world and the emergence of semi-professional STR operators who take units within traditional apartment communities (I’ve written about them before). The STR space I’m excited about today are vacation rentals....
When it’s right to Sell Real Estate…Almost Never
I used to be a religious reader of the Howard Marks memos, but at some point they started to get a bit repetitive…“move forward, but with caution...” However, his most recent, Selling Out, really resonated with me. I’ve always believed real estate is best held long-term (although easier said than done) as long as you structure deals in a fashion that enables you to do so, the asset/submarket has long-term upside potential, and there aren’t better opportunities to re-invest proceeds. At Atlas, our biggest investing mistakes came by selling multifamily assets too early. We sold three...
Southeast Multifamily: Institutionalization, Rent Growth, and Room to Run?
Happy new year! As we kick off 2022, I wanted to dig into one of the hottest real estate segments, multifamily in high-growth markets in the Southeast. At least once a week I hear about a new fund targeting value-add multifamily deals across the Southeast, an operator opening a Miami office, or an Opportunity Zone fund targeting sites in the Sunbelt. This isn’t just anecdotal, the Sunbelt has been gaining share of the total apartment sales consistently since 2007, growing from ~35% of total sales volume to nearly ~60% today (3Q2021 - RealPage). That growth has come primarily at the...
Viewing Apartments as a Consumer Product
Real estate is a massive and surprisingly complex business (just ask Zillow). Innovation is relatively slow and certain aspects of the business have been done a specific way forever. The challenge when attempting to innovate is deciphering whether things are done that way for a good reason, or just because no one’s attempted to disrupt the status quo. I believe multifamily properties should be viewed as a consumer product, designed with specific customers (residents) in mind. The unit mix, unit layouts, amenity set, branding and marketing, and operational approach should be tailored to...
Breaking Down the Historic Multifamily Rent Growth
2021 has been a crazy year and it’s difficult to comprehend what’s going on. Take the multifamily industry for example. When I speak with people outside commercial real estate, they’re shocked when I tell them about the historically high rent growth and occupancies we’re experiencing today. With COVID issues lingering, relatively high unemployment, and “everyone they know buying homes”, most people assume the multifamily market is struggling. As we all know, that’s not the case. In fact, the opposite is true; apartments are experiencing unprecedented levels of demand leading to...
What I’ve Learned Working on $200M of Ground-Up Multifamily Developments
Since joining Atlas in 2011, we’ve been primarily focused on value-add multifamily investments. We’ve acquired ~7,500 units and have executed light value-add strategies (~$5,000/unit) to extensive repositioning’s (~$40,000/unit). Over the past several years, following the introduction of qualified Opportunity Zones and run up in multifamily asset values, we launched a development arm focused exclusively on ground-up multi deals within select OZ’s. This fits our thesis of buying and owning real estate for the long-term in high-growth markets throughout the southeast. Ground-up...
The Future of Work and the Emergence of the “Neighborhood Clubhouse”
I’m beyond tired of hearing about the future of work. Every podcast, email newsletter, and blog has covered it ad nauseum for the past 18 months. The barrage of headlines, either in support of or against remote work, is adding fuel to the “debate” and forcing people to choose sides. Having said that, I’ve been so frustrated by the narrative, that I wanted to put my thoughts on the subject on the record. What’s great about this format is that it’s my bar and I’m the bartender. I can write about anything that piques my interest and have a record of my thinking. I can look back in 10 years...
What I Learned in 10 Years Working for a Real Estate Owner/Operator
I recently celebrated my 10-year anniversary with Atlas, where I joined as the first hire in May 2011. When I started with the firm, I was single and living with two friends in NYC. I’m now married with two kids and a dog and live in the Jersey suburbs. A lot has changed, both for me personally and for the firm. It’s been a wild ride over the past decade; we bought 50+ deals with a market value over $1.3B, our investment strategies evolved, the team has grown, shrunk, and grown again. We’ve made many mistakes, and I’ve learned a ton. I took some time to reflect on my experience over the...
Crypto – Changing how we work and live
Atlas is under construction on a 310-unit multifamily community in Nashville. Over the past few weeks, we’ve redesigned the common areas, eliminating vanity amenities like game rooms and adding more private office space. The pandemic combined with new technologies has accelerated the flexible work model and is giving rise to a whole new creative class of entrepreneurs. With this in mind, we believe there will be more residents working outside a traditional office so it’s critical to include functional and fully equipped private workspaces within new multifamily communities. The shift to...