National real estate investment groups continue to buy in the Chattanooga rental market and increase the prices paid for local apartments and the rental rates charged to tenants.

More than $ 600 million in Hamilton County apartment buildings were sold in 2021, a record that is triple the level of activity four years earlier.

“Apartments are cheaper in Chattanooga than in many other markets, even with increases in rental rates,” said Robert Fisher, a commercial real estate agent for Keller Williams Realty who tracks the local market. “Our rents are going up, but they’re still below national rent levels, and Chattanooga has been found to be an attractive market for people and for investors. What we’ve seen in the last two or three years is unlike anything we’ve seen in the past 15 years. “

Apartment sales throughout 2021 included the highest-valued apartment sale in Chattanooga history and three of the four highest-valued real estate deals of all time in Hamilton County, according to the Deeds Register Hamilton County.

“There are a lot of sophisticated inventors who have analyzed the Chattanooga market and recognized that we are renting apartments below market value and that there is a lot of room for upward movement, both in terms of of rents and real estate values, “said Henry Glascock, a true real estate appraiser and owner of an auction company who has worked in the local real estate industry for the past 48 years. “I can’t explain where all the tenants come from, but they come here and help fill these rental units and increase their value. The Chattanooga market is catching up with other Southeast markets. “

The 280 One Riverside apartments that opened near Erlanger Hospital’s main campus last month sold for $ 84.2 million, or more than $ 300,000 for each of the downtown complex’s units. The all-time high, both in overall sale and average price per unit, valued each apartment above the median Chattanooga home selling price of $ 280,000 in November, according to the Greater Chattanooga Realtors Association.

A real estate company founded by Capital Square Acquisitions LLC in Glen Allen, Va., Purchased One Riverside Apartments as the fifth major apartment complex in Hamilton County in 14 months. Collectively, Capital Square has invested over $ 200 million to purchase and modernize apartments in Chattanooga since October 2020, including the purchase of $ 59.75 million of the Lullwater Apartments in Big Ridge in June and the purchase of 57 , $ 2 million from the Integra Vista apartments in Hixson in May.

“Chattanooga is a gem of a city that looks like Austin or Nashville before they take off,” said Louis Rogers, Founder and CEO of Capital Square.

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Record sales of apartments in Chattanooga as rental rates rise

Seth Harris, executive vice president of investments for Capital Square, said the company has identified Chattanooga as a growing market in the Sun Belt with relatively attractive prices compared to more expensive cities like Atlanta and Nashville.

“We have seen occupancy rates remain stable, and that is due to the migration of people to Chattanooga over the past few years,” said Harris. “It only seems to have accelerated during the pandemic, and many of these new residents are looking for apartments to rent.”

Apartment complexes in Ooltewah, Hixson and downtown have sold in the past month for almost $ 150 million.

The Village of Apison Pike, a 280-unit apartment complex built in 2015 in Collegedale, was acquired by Olympus Village LLC, established by Olympus Properties, for $ 59.25 million. Also in December, the Northtowne Village apartments at 1011 Gadd Road sold for just over $ 30 million to Northtown Village Holdings LLC.

With lower interest rates and a greater share of the population renting rather than buying or owning homes today than in the past, rents and property values ​​continue to rise across the country.

Chattanooga’s rental rates topped the country in the first year of the pandemic, but increased at a slower rate in late 2021 than the United States as a whole, according to online real estate company Zumper.

In the 12 months ended July, the average rental rate for Chattanooga apartments increased 16%, more than double the US average.

“Rents have risen at an alarming rate across the country,” Zumper’s Jeff Andrews said. “It’s hard to overstate how spectacular the growth in rents has been in 2021. Over 11 months of the year, the Zumper National Rent Index shows that the median rent for a bedroom has increased by 12.1%, while that of the two rooms increased even more to 13.2%. For the context, the median rent of a room only increased by 0.3% over the whole of 2019, and it only increased 0.6% in 2020. “

Contact Dave Flessner at [email protected] or 423-757-6340.

> The biggest real estate sales of 2021

The biggest real estate sales of 2021 “align =” left “>

1. Capital Square 1031, a real estate investment company in Glen Allen, Va., Purchased the 280 One Riverside apartments for $ 84.2 million.

2. Capital Square purchased the 250 Lullwater at Big Ridge Apartments at 6038 Hixson Pike for $ 59.75 million.

3. Olympus Property, a Fort Worth, Texas-based real estate investment company, purchased the 280-unit village from Apison Pike for $ 59.25 million.

4. Capital Square 1031 acquired the 280 Integra Vistas units from Hixson for $ 57.2 million.

5. The Dominion Group of Knoxville purchased the 269-unit Riverview Grande apartment complex in North Chattanooga for $ 41.7 million.

Source: Hamilton County Deeds Register