Multifamily Design & Development | Ashworth Partners

The Yin/Yang of Apartment Building finance: Urban Equity v. Suburban Debt.

[Urban] TOD (Transit Oriented Development) has performed better and has a sexier image with many institutional investors. But while equity investors continue to favor urban TOD, developers are having a more difficult time finding construction debt at leverage levels that would make those deals pencil out.

Urban Apartment Building Investments

Meanwhile out in the ‘burbs: “On suburban sites, you see yields in the 7 to 8 percent range. On the core infill, you’re really building to a 5, 5.25 percent, maybe, and that’s getting dangerously close to acquisition cap rates.”

Suburban Apartment Building Investment

“We’re in an interesting situation now, where anytime you have a Continue reading The Yin/Yang of Apartment Building finance: Urban Equity v. Suburban Debt.

Now you can watch the Apartment Building Investing Cycle Unfold In Real Time- Much easier than deciphering technical stock charts!

Successful apartment building investing is about knowing where and when to buy and when to sell. The apartment building investment cycle sends very clear signals to those paying attention and one of the biggest and clearest is when existing properties begin to sell for more than the cost of building new apartments. As I mentioned here this line was crossed about a year ago in the Seattle market and now we can see how the peak is formed, when every developer and their brother starts building new apartments.

From Bloomberg:

The biggest surge of Seattle-area apartment construction in a quarter century is threatening to undercut the growth in rents. Seattle went from “dead last” in rent increases three years ago to 13th out of 88 markets last year. “We went from almost a desert to a big pipeline” in two years, said David Young, the Seattle-based managing director who oversees western U.S. apartments for commercial broker Jones Lang LaSalle Inc.

Apartment building investment in Seattle

Encouraged by hiring at local employers such as Amazon.com, Boeing and Nordstrom, developers are building almost 10,000 apartments in Washington state’s King and Snohomish counties, Three- quarters of the total are in Seattle, with 4,619 of those units in or near downtown.

Dupre + Scott Apartment Advisors Inc. said the building boom may last through 2016.

“If in fact we come to market when there’s excess supply, we’ll just have to be aggressive on rents,” said Continue reading Now you can watch the Apartment Building Investing Cycle Unfold In Real Time- Much easier than deciphering technical stock charts!

Apartment Building Investment In Seattle, here’s the good news- video

Seattle Apartment Building Investment update video Translation: We would never overbuild or get started too late in the apartment building investment cycle 😉

Seattle Multifamily Vacancy at 4.2% Says Dupre + Scott, average rents over $1,500 too.

For more on the Seattle area apartment building investment climate see the Seattle Times article here: Apartment rents likely to keep rising through 2012

Hat tip: Paul McFadden

Getting Inside the Head of Today’s Online Renter, multifamily report now available.

From my friend Heather over at Behind The Leasing Desk Consulting: “fact: I ♥ Satisfacts! Check out their new report on the mind of the online renter for some great insight into what your potential residents are thinking.”

From Satisfacts: “We asked, and now it’s ready for YOU. Getting Inside the Head of Today’s Online Renter is the most comprehensive analysis ever conducted in the industry on the impact of technology and social media on apartment marketing and operations.” Get the report here

30 story building built in 15 days- amazing video. 5x more energy efficient…

… 20x purer air, magnitude-9 earthquake resistant and only 1% construction waste. Pretty cool.

Canadian Multifamily Bubble? Sadly the US can watch from hindsight.

Interesting peek at multifamily in Toronto and Vancouver, worth a read to see how many rationalizations you recognize (or have uttered yourself). Nice quote: “If builders stopped building today, there’s five years worth of supply that is about to be delivered, relative to what normal population growth is.” Sound familiar? They’re even starting to do NINJA liar’s loans.

Toronto home and condo prices are amazingly high, the average price for a detached home C$543,993; for condos it’s ‘only’ C$343,835. In Vancouver the Continue reading Canadian Multifamily Bubble? Sadly the US can watch from hindsight.

Multifamily Marketing; What can you learn from the big players?

“Not all residents want the same thing,” Conway says. “Listening to what our consumers want and wrapping them in a brand is going to help us grow.” AvalonBay hopes to attract younger consumers to its metropolitan “AVA” buildings… designed to be more youthful than other high-end AvalonBay buildings because they’re targeted to Gen Y residents, many of whom live with roommates in smaller, urban-style apartments.

Are your properties targeting specific demographics? Could you attract more tenants by marketing to a specific lifestyle? See the whole MFE article here: AvalonBay Launches Brands for Gen Yers, Suburbanites

Multifamily Buildings to Lead U.S. Construction Gains-

Feb. 13 (Bloomberg) — Construction of multifamily units will lead the U.S. building industry again this year, allowing housing to contribute to growth for the first time in seven years, according to economists Michelle Meyer and Celia Chen.

Work will begin on about 260k apartment buildings and townhouse developments in 2012, up 45% from last year and the most since ’08, according to Meyer, a senior economist at Bank of America Corp. in New York. Chen, an economist at Moody’s projects a record 74% jump to 310k.

Homeownership rates, which have declined to the lowest levels since ’98, may keep dropping as the foreclosure crisis turns more Americans into renters. In addition, household formation will probably accelerate as an improving economy and growing employment embolden more people to stop sharing residences and strike out on their own.

“Given the ongoing shift from owning to renting, there is increasing demand for multifamily construction,” Meyer said in an interview. See the whole Bloomberg piece here: Foreclosures are transitioning people out of ownership

Supply Shortage Continues in Multifamily. Apartment vacacny lowest in 11 years.

From WSJ Developments-

Little new apartment construction and surging demand has created a shortfall of 2.5 million units, the largest the nation has seen in more than a half-century, according to research from Nareit, a trade group for real-estate investment trusts.

As we’ve reported, apartment landlords are seeing vacancy rates decline as more Americans rent by choice or necessity. In the fourth quarter, apartment vacancy fell to the lowest rate since late 2001, with the national rate dropping to 5.2% from 6.6% a year earlier, according to Reis Inc. The vacancy rate had risen as high as 8% in 2009.

Pent-up demand could pull that rate even lower. According to Nareit, the normal rate of household formation is about 1.2% annually. But, with the sour economy in the last four years, the rate plunged to about 0.5%, as people delayed moving out and opted to live with roommates and parents longer. This has created an unmet demand of about 2 million households, “about three times what it has been in previous business cycles,”… See the whole article here