The multifamily market has been pretty slow this year. By this time last year, 2023 had raked in at least two deals that were near or over the $75 million mark. This year, the two biggest deals, in terms of overall price tag, were two $53 million apartment buildings.
This would, for some, be cause for nerves. But throughout much of this tumultuous year, Josh Talberg has maintained the belief that multifamily assets in the Twin Cities are among the strongest asset classes in real estate today.
In the Twin Cities, Talberg said in an interview conducted last Thursday, rent levels are not starting to stretch as they have in other regions, and that is appealing to investors.
“There is a slow and steadiness to our market that really resonates with capital, especially at times of high volatility that certainly the entire real estate market just experienced in the last 18 months or so,” he said. “And that sets up very well for transaction activity.”
Talberg sat down to talk about his role at JLL, why he is reserving some of his nerves for the market a few years down the line and what needs to be done to incentivize building.
This interview has been edited for length and clarity.
Q: I want to start off with a quick question I think some people are familiar with your work at JLL. But a couple weeks back, I interviewed Mox Gunderson and he had moved over to Colliers from JLL, with Adam Haydon and Dan Linnell. You were a part of that team and I think you had a weeklong stint at Colliers. But now you’re at JLL. Just tell us briefly what ended up happening with that move?
A: Well, it was an eventful week, as you can imagine. I’ve been at JLL now going on six plus years. And it’s a platform that caters very well to my business, which is institutional covering both the Twin Cities as well as upper Midwest. And what makes JLL unique is that not only is it very localized, and based here in Minneapolis, but we can cover a lot of ground from a national standpoint, bringing capital from across the country and from across the globe, into a market like Minneapolis.
So when a big team moves, like what happened with Colliers, there’s always going to be a week there where no barriers conversations are had. For me, it was a clear path to leadership, ultimately at JLL, to take the reins of this platform that is absolutely the top tier in the marketplace and drive it in the direction moving forward. I couldn’t be more excited. My entire team has, outside of the producers, stayed with me, we’re continuing to grow.
Q: Sure, and just so I’m clear, your what was your position back in early March of this year?
A: I was a managing director, and I was co-heading the multifamily team here in Twin Cities, whereas today I am now leading those efforts.
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Q: You’ve then transitioned into kind of more of a solo role, then. Could you talk to me a little bit about what that is like now? A: It is a sole role to some extent, right. So, where I more or less have taken the reins and with my team and the talent that I have here helping me on a day-to-day basis which again, was retained, it remains exactly the same as it was back in March to today but it’s not a sole effort. Because within JLL. It’s open borders, its collaboration, because capital doesn’t have borders.
I sit in Minneapolis. I’m in charge of owning this market, if you will, establishing number one market share from a multifamily investment sales equity standpoint. But that’s not necessarily done just with owners based within the Twin Cities. Of course, we are local, and we want to work with great entrepreneurs, developers and the owners of many assets across the market. But we’re also collaborating with clients that own multiple assets across multiple markets across multiple countries and across the globe.
That’s with my colleagues in various offices across the country. Whether it’s Chicago, whether it’s New York, or whether it’s one that’s overseas. Think of it more from the standpoint of, you know, we have our home base here in Minneapolis, what we’re really doing is we’re at the frontlines of capital coming in and hopefully helping attract capital into the Twin Cities marketplace.
Q: I was curious if you had any thoughts on the proposed Converted Use Building Tax Credit, and how that might end up affecting the multifamily market here in Minneapolis if something like that does end up happening? A: The reality is, whether it’s an office to multifamily conversion, whether it’s historic rehab, whether it’s a ground up equity, multifamily deal in a second or third tier suburban location, they’re all difficult to pencil. It’s hard to make the math work. For the obvious reasons, right, labor’s up, construction costs are high, land costs are high, there’s various zoning constraints on a lot of these locations.
Any support, whether it be a federal, state credits, whether it’s via new initiatives, brought from the brought from the state or the city, or TIF grants, etc., are not only help, but in most cases, I would say are probably needed today, to move various projects along, create more housing. That isn’t so much a want, it’s a need for many for many of these cities.
I would say the supply pipeline is extremely constrained. Right now, I can count on one hand the number of products, for example, in Minneapolis, that are set to move forward anytime soon. That’s not being fully experienced yet, because we’re still working through a supply wave over the past few years. Fast forward to 2025, 2026, 2027, I would put the Twin Cities up against any market in terms of constraints when you look at steady growing demand with very limited housing coming through the pipeline.
Q: When you first get into the office in the morning, you know, what, what is the first thing that you typically like to do? A: By the time I’m in the office, the phones are ringing, the emails are coming through. And it’s a dead sprint from 8 o’clock to well into the evening.
You use the early morning when you first get up, what you really want to try to do is not check the email immediately. To have, at least, that moment, whether it’s working out, I’m a big fan of Alchemy (365), a local fitness concept here in the Twin Cities, in Denver. You get to the gym, you try to start out with, yes, a cup of coffee, but something that’s a little more steady, because this is a high, high pace industry that we’re in and once you get to the office, it’s off and running. And every day is different.
RELATED: Q&A: Planning the next steps for downtown Minneapolis with JLL’s Erin Fitzgerald Q&A: Gunderson on making a move from JLL to Colliers Copyright © 2024 BridgeTower Media. All Rights Reserved.
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