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Oct 26, 2023Liked by Sean D. Sweeney

I commented on the other post, and now wondering if I'm still on track with SW.

Again, haven't looked at zoning, so maybe this just isn't allowed.

But my thought was again that there probably isn't enough supply of higher-end apartments in SW - apartments that are attainable to people who want to live in the nicer neighborhood, but where those same persons can't afford the very high home values of SW.

Given how low the average rents in that neighborhood are from your analysis, I'm not sure whether this helps validate my thesis from the last post (i.e. all the apartments that are there are very old, driving down rents) or if it invalidates my thesis (there are numerous higher-end apartments, but it seems people aren't willing to fork over what it takes to buy them, so it's a bad spot to build).

In fact, given the high rents of Northeast, I find myself wondering if it's already "peaking" - a lot of supply is about to come online there, and will be online before a new 50-unit could be built, breaking pro-forma estimations of rents and rent growth.

On the other hand, NE has lower land values, making it easier to build in to begin with, and also easier to demonstrate value to a bank financer (e.g. rents are high, land cost is low). for the SW bet to pay off, you'd have to convince a bank that although rents are currently low and land cost is high, YOUR building will be different - and that seems like a real uphill battle.

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founding

Static data is one component but isn't momentum just as important a factor? I would want to look at longer term trends, (like other mixed-use developments in the approval pipeline, federal or state grants for infrastructure, etc?) I'm assuming you'll get to this but in my city, Rochester NY, theres a 10 year plan to spend a couple hundred million dollars (state and fed $) to fill in an old highway that bisected some great neighborhoods and I've got a keen eye on how that level of government investment will hopefully be the tide that rises in that area. I'm also a sucker for rehabbing old industrial buildings into apartments so if you're gonna help improve the value of those neighborhoods my vote is North Loop!

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My thought is that SW has the most opportunity for growth here and is as yet (relatively) unexplored. I strongly agree with Jonathan here. I kept my vote for SW.

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