From their latest National Monthly Trends report: Class C properties took the lead for annual effective rent growth in August. Class A properties had been the leader in that category as the apartment market improved over the past few years, but the Class A annual growth rate slowed from 4.73% in May to 3.70% in August. Why has the growth rate slowed so much in just the past few months? Is it tied to job growth, which weakened in May? Is the first wave of new supply starting to impact performance as we show new apartment deliveries nationally jumping from about 13,000 in the first quarter to over 17,000 in the second quarter and 25,000 in the third quarter? Or is it simply because a $75 increase this year is not as big of a relative change as it was a year ago since the denominator in the rent growth equation keeps getting larger? The answer is likely due partially to all three situations, but the weighting of each factor can vary by market. However, new supply could play an even larger role next year than it will this year.
See the whole report with more charts and data here Continue reading Class C Apartment Building Investments takes the lead in rent growth nationally says Axiometrics.
Saw a very interesting piece by Daniel Cunningham, President of Leonard Property Management on how revenue management for apartment building investments might already have seen its best days of growing revenues. Dan compares it to what’s happening to other industries such as airline travel and hotels where consumers can quickly see all the pricing for all the competitors in the market or product they’re searching. With Craigslist and some patience renters can do that now Dan says. See the short to the point article here.
No real new news but good reinforcement on Gen Y prospects and renters:
- They search using their phones, tablets and laptops so your marketing sites have to be readable by all three.
- They use social media to check the vibe of your property.
- They want a good location.
- More than tanning beds, pools or other amenities they demand reliable wireless connection, cat5 wiring in the walls and cell reception in the unit. If you’ve ever lived somewhere that had bad cell reception you can relate.
If you are acquiring property these last two items should be high on your list. Making sure that your existing property has a consistent web presence is becoming more and more important to attract this growing demographic. Finally, making the wireless connection throughout your property is worth the effort.
See the whole MFE article for the results from two different research studies published this year.
Good presentation on the current national apartment building investment sector from Marcus & Millichap. New supply remains constricted except for a few cities, they didn’t mention any names *cough Seattle cough* but if you’re in one of them and tracking the pipeline it’s easy to read between the lines.
Another interesting trend is that Continue reading Good News and News: Apartment Q3 update web conference replay now posted from Marcus & Millichap
From MFE Magazine: “For years, online review sites have been the bane of apartment pros, a place where the haters could post nasty missives about a community, whether true or not. But while there are still plenty of negative nellies online, like it or not, review sites have become the go-to source for renters who want to check out a community before deciding to live there. Join us for this in-depth Webinar on how to get the most out of online reviews, while keeping the haters at bay”.
Time: Tuesday, September 18th, 2:00pm EST Register here: No Haters Here: How to Love Online Reviews
Continue reading Webinar: How to Love Online Apartment Reviews 9/18 by MFE Mag & Apartments.com
Good charts on long term returns in this piece from Glenn R Mueller, PhD.:
I recently met with my financial advisor to “rebalance” my … retirement portfolio. Based on my “age and stage of life” his allocation model showed a 50% bond allocation. I laughed and asked him if the company allocation model assumed interest rates would rise over the next 10 years? His answer was “yes- of course.” I showed him the graph below which shows lower than average TOTAL returns in a rising interest rate environment and he checked his long-term data and found that bond holders between 1953 and 1980 had actually lost money. We all know that as interest rates rise, bond values decline and thus the total return can be small or negative. Not to mention that a 10-year treasury at 1.5% is below expected inflation and thus a NEGATIVE REAL RETURN. He agreed that a bond allocation did not make much sense, but since my investor profile was conservative what was the alternative?
Dr. Mueller is Continue reading What do I do with my retirement money, one investor’s answer (with charts). Think apartment building investment-
Dividend Capital’s latest Market Cycle Charts have been posted for the four commercial real estate sectors they follow, office, industrial, apartments and retail. These are published quarterly and back in June I expressed serious reservations about where they had placed the Seattle apartment market in the cycle on their last report. This quarter they still have Seattle at the bottom which is striking because of all the reasons mentioned in my June post but also because occupancy has fallen below 5% (see here).
I really don’t think that this market is at the bottom of the cycle and it leads me to wonder if Seattle apartments are the only market out of sync with reality in their reports or if there are others too. Is it bad data on one market or is it more widespread? Is it bad methodology?
Please have a look at their chart for your market and let us know if you think it’s accurately placed in the cycle. Thanks in advance, I really appreciate your help on this.