National institutional investor presence increase in the Southeastern U.S. Markets

[Joseph Tubbs]

National institutional investors have begun showing increased interest in Alabama markets, particularly Birmingham and Huntsville, following their saturation in larger Southeastern markets. Data indicates a 35% year-over-year increase in institutional acquisitions, though from a small base representing only 10% of total distressed property transactions. This expanding institutional presence is introducing more sophisticated acquisition criteria, data-driven valuation methodologies, and standardized rehabilitation practices that are gradually professionalizing the market. If current trends continue, institutional market share could reach 20-25% within three years, fundamentally altering competitive dynamics for local operators.

[Samuel Coronado]

Quote from @Chris Seveney:

Quote from @Joseph Tubbs:

National institutional investors have begun showing increased interest in Alabama markets, particularly Birmingham and Huntsville, following their saturation in larger Southeastern markets. Data indicates a 35% year-over-year increase in institutional acquisitions, though from a small base representing only 10% of total distressed property transactions. This expanding institutional presence is introducing more sophisticated acquisition criteria, data-driven valuation methodologies, and standardized rehabilitation practices that are gradually professionalizing the market. If current trends continue, institutional market share could reach 20-25% within three years, fundamentally altering competitive dynamics for local operators.

 What is the source?

 I don't have a good internet-searchable source for you, but I've talked to some of the property managers and acquisition managers for the bigger institutional buyers around Huntsville, AL. One of them holds an estimated $700 million in SFHs and the other $600 million in SFHs and intend in general to just sit on them. Many of them are not rented, but are just sitting there, artificially restricting the supply and propping up the values. It's an interesting dynamic that other markets have seen around the world throughout history. Many of our locals think it has to come down, but I always counterpoint them that it doesn't matter what the locals can afford. It matters what the people who are sitting on billions in private equity can afford, for better or worse. One of the managers' jobs is to drive all around Huntsville every day and do a weekly check in on the properties to make sure they haven't been broken into, vandalized, etc.