"We're seeing real population shifts," William Spransy, CFO of Eller Capital in North Carolina, told GlobeSt.com. "I believe the demand in the Carolinas is still extremely high as the pandemic has only accelerated the trend of migration from the more densely populated areas to regions of lower cost and density in the southeast."
Spransy believes that as people move, capital flows will follow. However, that's not the only reason he's optimistic about investing in the sun belt.
"The [COVID migration] is obviously accelerating the flow of capital," Spransy says. "New York City has a number of regulatory issues and reduced growth prospects."
Spransy says new groups are coming to the area from the Northeast and California. He takes calls from people interested in buying real estate, and even more groups are interested in investing in his deals. "The interest in the sun belt is enormous," he says. "It's been a general trend for a while now. I feel like it has increased significantly and I think it will stay that way from an investment perspective for the foreseeable future due to structural demand and growth prospects here."
With this increased demand, new development agreements are being concluded despite rising construction costs. However, Spransy isn't sure if it's at the same pace as in previous years.
The sun belt is a large region and some areas will perform better than others. Spransy sees the Carolinas as a big winner right now.
"We are now seeing data that shows that population employment growth is shifting to our specific area," says Spransy. "Well, we're very happy about it."
Eller had to make some adjustments, including using technology, to welcome these residents during COVID. It has implemented virtual leasing rather than personal tours to show its apartments.
"We also did it with Zoom in a number of different ways and recorded videos on YouTube," says Spransy. "We just tried to get different aspects of it and it seems to be working well."
Eller closed its equipment areas where it was recommended by the states in which it operates. When it opened again, one of his on-site employees instructed COVID. As such, it has made every effort to ensure that the local staff take the necessary precautions to quarantine if necessary. "We will continue to try to optimize the way in which we address these problems in the future," says Spransy.
Eller has tried to keep track of what the best operators are doing on the operational side. "We make sure our tenants have clear guidelines and we try to set rules on how to best use our equipment rooms," says Spransy.