Category: Multifamily Design & Development

The Danger of Averages: Seattle Apartment Rents by Unit Type 2002-2012

A piece on Seattle apartment building rents over the last ten years by Matt Goyer  in his Urbnlivn blog really caught my eye. Matt looked at data from seattlerentals.com for four popular sub-markets and charted them out here. Naturally I wanted to see what that meant percentage-wise so I built a spreadsheet and added a percent change column. Here’s what that looks like:

Seattle Area Average Apartment Rents by Unit Type 2002-2012

 All within a stone’s throw of 45% growth in 10 years, not bad at about 3.8% annual compound rent growth. But let’s slice the data another way and look at the rent growth by sub-market:

Now we start to see some divergence with Queen Ann at 61% (4.86% compound) and Belltown with 57% (4.59%). Where the ‘average’ rent growth really looks good is when it’s compared to Capitol Hill with only 34% (3.01%) and in Bellevue with only 30% (2.42%). Mind you that is just the ‘average’ 10 year rent growth for these markets so it’s only an indication of what any particular property may have achieved. But here’s where the numbers get really interesting: Continue reading The Danger of Averages: Seattle Apartment Rents by Unit Type 2002-2012

Is Bellevue’s Spring District The Next South Lake Union? Apartment developers are saying yes-

A piece in the Seattle Real Estate BisNow is talking about the new mixed use development that will be starting up around the planned light rail station in the Bel-Red area. The area has now got a fancy new name too: The Spring District. Kevin Wallace, Pres. of Wallace properties compares it to South Lake Union (only with better, ok, less worse traffic if you ask me).

Mixed Use Development in Bellevue's Spring District

Also mentioned that downtown Bellevue’s office space is just a couple big tenants short of being full, full of tech tenants including game developers that is.

Return of the Phoenix Apartment Building Bubble?

Is Phoenix apartment building investment overheating already?

Phoenix apartment building investment bubble rising again?

My exec sum from the Apartment Finance Today* article Apartments Rising in Phoenix Again

Phoenix, Seattle and Washington, DC apartment markets at risk of overbuilding says NMHC panel

Report on the state of apartment building investment markets from the good folks at Joseph Bernard Investment Real Estate in Portland:

there is a wall of private equity wanting to buy apartment building investmentsContinued positive multifamily demand fundamentals and ready access to capital at attractive rates is fueling a surge in new apartment development, according to industry executives.

Several hundred senior-level apartment executives gathered in Scottsdale, AZ, last week for National Multi Housing Council’s (NMHC) Apartment Strategies/Finance Conference and Spring Board of Directors Meeting. The following is the NMHC’s summary of what was discussed.

Continued low levels of new supply have led to a big bounce-back in rents as demand outpaces new construction. According to one panel of apartment executives, the new supply shortfall may be larger than once thought — as many as 700,000 to 1 million units — because many of the apartments built in recent years have been in the affordable, rather than market-rate, section of the market. Moreover, much of the current apartment stock dates back to the 1970s and is becoming obsolete, creating additional demand for new supply.

Select areas have seen such large upticks in the number of planned and under construction units that could turn into hot spots for potential overbuilding. In particular, certain submarkets of Phoenix, Seattle and Washington, D.C., appear somewhat at risk.

But, overall, new completions are still a very low percentage of total inventory.

Money Flowing for Multifamily

There is a wall of private capital that wants into the multifamily space. More than 250 private equity funds currently are Continue reading Phoenix, Seattle and Washington, DC apartment markets at risk of overbuilding says NMHC panel

Seattle Apartment Market has 6k units under construction says MPF Research video

2/3rds of those are located in downtown, Capital Hill and Ballard. Owners of existing properties in those areas are about to have a bunch of new competition. With rent growth slowing to just about the national average what does that say about where we are in the apartment building investment cycle?

Seattle Apartment Building Investment Cycle 6k new units on the way

Click on the image to see the MPF Research video

This recovery is “basically normal if not a bit better than expected” historically speaking says Hassam Nadji in GlobeSt.com

“History reminds us that a recovery from the simultaneous shocks of a financial crisis and a major recession require significantly more time and stimulus than a cyclical contraction, a process that could extend five to eight years compared to the more typical two- to three-year span following a cyclical recession. The pattern observed thus far since the recovery began is basically normal if not a bit better than expected.”

Remember that 2.5 million of the jobs lost were in construction and financial services (including mortgage origination mills and RMBS/CDO/CDS manufacture) so that returning to the same level of employment in those sectors would imply another bubble formation.

Now on the other handif job creation continues to fall off… See the whole GlobeSt. piece here: Weak Jobs Report Another Bump in Road to Recovery

Top 10 US Cities for new apartment building permits.

Coming soon to these big MSAs, lots of new apartments:

  1. New York-Northern New Jersey-Long Island
  2. Dallas-Fort Worth-Arlington
  3. Washington, D.C.-Arlington, Alexandria
  4. Los Angeles, Long Beach-Santa Ana
  5. Houston-Sugar Land-Baytown
  6. Seattle-Tacoma-Bellevue
  7. Austin-Round Rock-San Marcos
  8. San Francisco-Oakland-Fremont
  9. Chicago-Joliet-Naperville
  10. Miami-Fort Lauderdale-Pompano Beach

For details see: MFE Mag online

Will they be able to fill them all? How will older properties in these markets fare? Let us know what you’re seeing-

Q2 Local Metro Apartment Building Investment Reports Now Posted.

M&M tracks 40 metro apartment investment markets and delivers quarterly reports on occupancy, rents, absorption, new construction and permits (See list below). You may have to register with them to access the reports.

Apartment Building Construction Trends in Phoenix Q2 2012
Apartment Construction Trends for Phoenix Q2 2012

If you have questions about a specific market Continue reading Q2 Local Metro Apartment Building Investment Reports Now Posted.

Are we overbuilding multifamily already? Or just the wrong kind? Research from CBRE Econometrics

At a Seattle apartment building investment conference recently one of the main speakers was saying that everyone who’d ever held a hammer, and their brother, was trying to build apartments in that market. That really struck a nerve in my market cycle conscious brain and was looking to get some perspective on that when a CBRE piece crossed my desk with this chart on it:

apartment building unit new construction starts 1959 to 2012

So while new unit construction starts are up significantly from the 2009 lows they are still well below the 89-08 average of about 250k. More importantly in relation to demographics we will be seeing increasing demand from growth in two of the prime renter groups, my exec sum from the piece below: Continue reading Are we overbuilding multifamily already? Or just the wrong kind? Research from CBRE Econometrics

Do you know the Walk Score for your Multifamily property? Should you check before your next acquisition?

How do apartment building residents actually want to live? Do they want sidewalks in front of their apartments and actual places to walk to—“Leave the car in the garage!” is a common refrain on real estate sites—or are Americans happy, as transportation analyst Alan Pisarski puts it, to “drive to where they can walk?”  The truth is there are relatively few places in America that today would pass what architect Hal Box has dubbed the “Popsicle Rule”—“a child must be able to walk safely from home to buy a Popsicle within five minutes.”

How ‘walkable’ is your property? Your next apartment building investment? How do you figure that out?

Walk Score is a website that takes a physical address—enter yours here—and computes, using proprietary algorithms and various data streams, a measure of its walkability. More recently it’s started tracking how transit-friendly neighborhoods are too. What drives the score is choice and proximity—the more amenities (restaurants, movie theaters, schools) you have around you, and the closer they are, the higher your Walk Score.

How walkable is your apartment building investment?

“In most metropolitan areas, only 5 to 10 percent of the housing stock is located Continue reading Do you know the Walk Score for your Multifamily property? Should you check before your next acquisition?