At the end of April, 2023, Harbor Group International LLC (HGI) announced the acquisition of a 378-unit Class A multifamily property in Aubrey, Texas, a suburb north of Dallas. Newmark both brokered the sale and arranged the debt financing.
The property, known as Mezzo, is a relatively new construction, having opened for tenants in February 2022. As of April 2023, the property is 84% leased with lease-up continuing at a steady pace. The North Dallas market has seen its population more than triple since 2000. Employers have taken notice too: local dads are sure to be attracted by PGA of America (PGA) opening their new headquarters approximately three miles from Mezzo. PGA is also building two mixed-use developments, further driving growth in the area.
Mezzo is located in a mixed use area with a number of restaurants within walking distance, a great benefit in a normally car-dependent area. The asset is across the street from a daycare center and adjacent to an HOA community with both elementary and middle schools, making it a viable option for families with young children.
Justifying its "Class A" credentials, Mezzo offers amenities abound. Individual units feature Whirlpool appliances, quartz countertops, personal washer/dryer sets, and balconies/patios. Community amenities include a fitness center, yoga studio, pool and spa, co-working spaces, a lounge, and an outdoor kitchen & dining area.
Unfortunately, Mezzo does not feature a pickleball court. HGI, value add propositions don't often present themselves so obviously: pickleball courts are 2023's must-have amenity.
Despite the lack of such a core amenity in Mezzo, Richard Litton, President at HGI, believes that suburban markets, specifically in the DFW area, are positioned for success:
The Mezzo acquisition is a testament to HGI's suburban investment approach and ability to identify opportunities in fundamentally strong markets across varying market conditions. The area has seen an influx of renters migrating from more expensive areas of Texas, and we expect Mezzo to see high occupancy rates in the coming years as the desirability of Aubrey, Texas continues to attract residents to the area.
As Dallas' urban sprawl continues to, for lack of a better word, sprawl, suburbs such as Aubrey will likely see continued interest from investors looking to bring a high quality, Class A product to market. Increased job growth in these markets, evidenced by PGA's headquarters among countless other examples, make the distance from the city center less of an obstacle. Decentralized job hubs combined with hybrid work arrangements will only make these suburbs more attractive as time goes on.