Skate to where the apartment building investment puck is going: Top US markets for future population and job growth.

A lot of the usual suspects when it comes to multifamily markets have moved pretty far into their cycles and if your home area is like ours ti’s getting pretty fully priced. With our value investor mindset that means we’re looking for the next markets to do well over the coming 10-20 years. As apartment building investors we say:

Show Me The Apartment Building Investment Markets

Fortunately two different sources provided data and maps to answer Jerry’s demand. The first is from the NAHB (the National Association of Home Builders) in an Eye On Housing piece called Uneven Aging. The report actually has two maps, the first showing the 2000 to 2010 growth in the Read more

More important than unemployment for apartment building investors?

We all know that jobs are a critical driver of the apartment building investment cycle and so we dutifully follow along with the talking heads when the unemployment number is estimated, released and then its potent debated.  But Mike Scott over at Dupre+Scott points out in a piece posted Friday that apartment building investors should be following employment, not unemployment. Specifically he recommends measuring how many jobs it takes to create demand for one apartment unit. Currently in King County (where Seattle is the county seat and where Dupre+Scott is located) it takes about 8 jobs to do that:

jobs required to fill one multifamily unit

Source: http://www.duprescott.com Note that we compressed Mike’s four charts into one for brevity.

The formula is simple: Net new jobs / apartment units absorbed. And if you’re an multifamily investor in the tri-county area (King, Pierce and Snohomish in WA State) that Dupre+Scott provides apartment investment research for, they’d be happy to supply you this information http://www.duprescott.com.

Looking at the chart we can see that while currently it takes about eight jobs to fill one unit it wasn’t always so and in fact the twenty year average is closer to nine. Mike explains Read more

Job growth vs. revenue growth chart of top apartment building investment markets in the US- updated.

Back in February we posted an Axiometrics chart plotting the revenue growth vs. job growth in leading apartment investment markets in the US. They were out last week with an updated chart but not just in the way we might think since the numbers are Axiometrics’ 2013 forecasts for revenue and job growth updated through May this year. To me the real ‘update’ is that they reversed the axises on the chart and I think it makes more sense laid out this way:

Job Growth and Rent Growth for Apartment Building Investment

Click for full size image. Source: Axiometrics

Before I get sidetracked onto a long discussion on the importance of understanding just Read more

The ‘Twin Peaks’ of Seattle Apartment Building Investment Plus MPF Research says rent growth holding strong there.

Friday twofer on Seattle. First is Dupre+Scott’s  entertaining and enlightening video on apartment building construction and property sales:

Mike has two nice charts showing apartment development numbers back to 1988 and sales volume back to 1981. Note that on the sales volume chart 2013 numbers are Read more

Who is buying all those properties and what does it mean for the apartment building investment cycle?

Mark Hickey of CoStar put out a piece looking at who was responsible for the near record $65.8B of apartment building investment in 2012. CoStar’s numbers show that private owners/developers did just about half of all acquisitions last year and institutions were in for 12%, both near their recent trends. REITs on the other hand increased their share by a third, responsible for 12% of sales volume last year.

Interestingly the sellers were pretty much the same groups, except REITs who were the largest net buyers last year.

Apartment Building Investment by REITs 2004 to 2012

Last year REITs raised 15x the equity they did in 2008 (and 20x the total capital). Up against pockets that deep Read more

Local Apartment Building Investment Research Reports For 37 US Cities Now Posted by Marcus & Millichap

Requires (free) registration: M&M Research

Here’s a peek at their Phoenix Charts:

Phoenix Apartment Building Rent Trends Q2 2013

Phoenix Apartment Building Vacancy Q2 2013

Phoenix Apartment Building Construction Q2 2013 Read more

Apartment Building Replacement Costs Rising: lumber back to housing boom highs, growing labor shortages.

The NAHB has a piece out called Producer Prices in March – Building Materials Prices Approaching Housing Boom Highs talking about how far gypsum (main ingredient in drywall +18%), softwood lumber (2x4s, 2x6s, etc. +30%) and chipboard (oriented strand board and waferboard which have replaced plywood, joists and beams in many applications +68%) prices have risen in the last year, the chart tells the story:

Apartment Building Material Prices 2012 to Mar 2013

Click on chart for full size image.

Bill McBride over at Calculated Risk has a piece showing the longer term price history for Random Length Lumber (2x4s only, both cash and futures) and a link to a pretty depressing Vancouver Sun article on pine beetle devastation in BC (Spoiler alert: the Read more

ULI Biz Barometer: Apartment building invesment sales vaulted last month, bouyed otherwise sagging #CRE sector.

The Urban Land Institute’s April Real Estate Business Barometer reports that apartment building investment sales were strong enough to pull the entire sector up from last month’s slump while CRE prices are at four year highs.  Condominium sales are also at a 5-1/2 year high with strongly increasing prices.

Apartment Building Investment and Commercial Property Sales April 2013

“Overall, 65 percent of the key Read more

CBRE Research: Since 2010 population shifting towards urban but apartment building construction is outpacing growth in

… A number of major metros

CBRE Econometrics is out with a new report showing population growth trends in major US metros has shifted towards urban centers since 2010 but apartment building investors have been keeping pace (or exceeding it) with new construction.  Author Gleb Nechayev, Senior Managing Economist lays it out nicely in a series of charts:

First Population Growth Average Change 2000- 2010

Population Growth in major Apartment Markets 2000 t0 2010

source: CBRE Econometrics

Raleigh is the only metro with significant urban vs. suburban population growth. Note that one-county metros such as Read more

Latest Commercial RE and Apartment Building Investment Cycle Charts Posted by Glenn Mueller PhD.

…. “Only six markets advanced their position on the [Dividend Capital Apartment Market] cycle chart.” Once again with the notable exception of Seattle who has left in the basement of the cycle despite overwhelming evidence that it has moved well up in the cycle by his own definition. See my post from last quarter detailing the definitions and why Seattle’s apartment building investment cycle location according to Dr. Mueller is incorrect here. For other cities have a look and let me know if your markets are accurately placed:

Apartment Building Investmet Cycle Chart Q4 2012

Is it a Seattle thing? Is he the Brent Musburger of commercial real estate? Read more

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