Before the pandemic, the weather, low cost of living, and lower tax rates attracted people and businesses to the Southeast.
Then, when COVID-19 hit, things just accelerated.
“The Southeast has been a beneficiary to some degree, of what’s happened over the past year and a half,” says Mark Cohen, Managing Director, Southeast Region for CGI+ Strategies.
There isn’t just one factor driving people south. Several things are converging to make the region more attractive for people in the Northeast, West and Midwest, according to Cohen.
“People realize that they don’t want to be in more restrictive localities or higher density areas. People want more space and a better quality of life,” Cohen says. “They want to be in the sun or in a more moderate climate, depending on which part of the Southeast.”
Taxes also play a huge role. Lower rates are attracting both corporations and people into the region, according to Cohen. Many companies in the area, like Microsoft, are on a hiring spree, according to Cohen.
With that sort of growth, it is easy to see why CGI+ secured the 712-unit Brookhaven portfolio in Atlanta. The only problem? Other apartment investors have also seen the appeal of Atlanta and the rest of the Southeast through the pandemic.
“Almost anyone that has tried to buy apartments is looking at the Southeast to be part of their portfolio,” Cohen says.
To secure the Brookhaven portfolio, CGI+ was able to bypass that competition. It secured the deal in an off-market transaction. In the process, it received a discount.
“The marketed deals are consistently going over what pricing guidance is these days because there is just so much capital out there that is looking to invest in these areas,” Cohen says.
While this premium for marketed deals is a nationwide trend, it’s especially apparent in the Southeast, according to Cohen. Regardless of how Brookhaven was acquired, Cohen sees it as a game-changer for CGI+ in the Southeast.
“Even though we’ve been in the Southeast for a number of years, it will obviously generate a lot of press and give us a lot of scale to be able to build off of in the Southeast region,” Cohen says. “I think it speaks to our ability to have access to capital to take down a deal this size. Not a lot of groups can do that.”