John Sebree is launching Watermark Residential as a partnership with the owners of Carmel-based Thompson Thrift, a development and construction firm best known for its retail strip center projects.
Thompson Thrift was eager to diversify its business, and apartments are as attractive as ever: The subprime mortgage meltdown has reduced the volume of new single-family homes, and the condo market also is hurting. Meanwhile, apartment occupancy rates are sky high in many markets, including Indianapolis, and the prospects for rent growth are solid. "I'm extremely bullish on the apartment market," said Sebree, 42. "I was ready for a change, and I've always been intrigued by the development side."
Sebree opened an Indianapolis office for Marcus & Millichap Real Estate Investment Services in 1997, about six years after he began working for the Encino, Calif.-based firm. He built the Sebree group into a local powerhouse with a staff of about 20.
Competitors such as George Tikijian of Tikijian Associates see Sebree's departure as an opportunity to grab market share in the brokerage business.
Tikijian has no plans to give up his lower-risk, feebased business. But he said he understands why Sebree would leave for the development side.
"I think the multifamily market is as strong as it's been in eight to 10 years," he said. "Certainly the business of owning apartments is looking very bright."
Some challenges include finding the right locations and demanding high enough rents to justify new construction, which is getting more expensive, Tikijian said. Still, renting has become the best option for a lot of people as home values drop.
Sebree expects investment sales of apartments to be sluggish the next few years, but that's not why he's bailing on the brokerage business. He was looking for a more predictable pace and a chance to build his own projects.
And Thompson Thrift was looking for a chance to diversify and return to its roots, said Paul Thrift, the company's president. Some of the 22-year-old firm's first ventures included student-housing projects on the campus of Indiana State University in Terre Haute.
"We felt the timing and market conditions were right to turn the focus to multifamily," Thrift said.
One of Sebree's focuses at Marcus & Millichap was on student housing, a specialty he does not plan to pursue with Watermark. He's pursuing sites all over the Midwest for complexes ranging from about 210 to 300 units. Sebree hopes to have deals for two sites by year's end. The goal is to develop, stabilize and sell the first few properties.
Watermark joins some formidable competitors based in central Indiana, including Sheehan Development, Flaherty & Collins Properties and Buckingham Cos.