Tag: apartment demand

Is now a good time to make Apartment Building Investments?

MHN Online has an interview with Dean Henry, president of Legacy Partners Residential, one of the big apartment building investment trusts (REITs). What I like is that he speaks in bullet points, just the way I think! Here’s my exec sum (in bullet points) of his bullet points:

Now is the time for Apartment Building Investment

“There are several important reasons why now is a great time to acquire existing multifamily assets. Let’s start with demand and supply:

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

Apartment building owners benefit from prime renter group ‘unbundling’, driving rents and occupancy.

The recovery from the ‘Great Recession’ has been anything but slow for apartment building investment. During the recession many of the prime renters (age 20 t0 34) were hit hard by unemployment and m0ved back in with their parents. Others ‘bundled up’ by moving in with their friends.

“Sometime between 2010 and 2011 the number of doubled-up households started to decrease. This reversal released a great deal of pent-up demand for apartments. A greater number of people sharing multi-bedroom apartment units, as well as a greater number of young adults living at home, were able to move out and rent their own units. Moreover, these young adults largely did not purchase homes.”

After being hit hard by the recession, younger workers have benefited more than others from the recovery in hiring. Since the bottom  in late 2009/10,  the prime age cohort for rental apartments (ages of 20 and 34) has a net gain of more than 1.5 million jobs. This has enabled many of these young workers to move into their own apartments.

But will it continue?

“The 2010 decennial census estimates that roughly Continue reading Apartment building owners benefit from prime renter group ‘unbundling’, driving rents and occupancy.

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

Two Key Factors for Apartment Building Investment Growth.

1) The availability of attractive financing. Plus, the spread between fixed-rate financing and actual year one cap rates is certainly the widest that it’s been in recent history, perhaps ever. (There’s rumor that there was a bigger spread during the Roman Empire, but that may just be an old wives’ tale.)

availability of attractive financing drives multifamily business

From a macro perspective, the spreads between the treasury indexes and the premium on multifamily interest rates will almost certainly widen in the near term, but cap rates should remain stable in Class-C properties. They will probably continue to compress to a certain degree for Class-B assets.

2) Job growth Continue reading Two Key Factors for Apartment Building Investment Growth.

Apartment Building Investment: People aren’t buying homes anymore but still need shelter.

In the aftermath of the worst housing crisis in a generation, more people are eschewing the American dream of homeownership and embracing apartment rentals in the still-fragile economy.

Apartment Rents Rising as as people in droves stay away from home buying

Surging demand for apartments, particularly by younger consumers, has given a boost to the nation’s apartment landlords. Multifamily properties represent one of the few corners in the commercial real-estate industry where rents are rising rapidly. As such, lenders are giving the green light to multifamily construction projects even as development grinds to a halt in other property sectors.

“People weren’t buying homes anymore, but they still needed shelter, Continue reading Apartment Building Investment: People aren’t buying homes anymore but still need shelter.

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.

Portland Apartment Market to add 31,000 jobs this year, vacancy to fall below 3%.

As the next building cycle for the Portland area is still another year out, vacancy rates are expected to fall to historic lows across the metro. The overall vacancy rate will match the lowest on record at 2.7 percent, while the area’s lower-tier vacancy will fall to as low as 2 percent.

Marcus & Millichap notes that a lack of multifamily construction and the expansion of jobs in the region will be the prime factors behind the extraordinarily high rates of occupancy. Job growth is expected to rise 3.1 percent—from 20,500 positions created in 2011 to 31,000 positions created in 2012. Of particular significance will be the development of a new Intel facility, which is expected to create thousands of construction jobs and spur large demand for Class B and C apartments.

Portland Apartment Building Investment, less than 3% vacancy

Cap rates for trophy buildings are likely to average in the high 4-percent range, with Class A and B assets in Continue reading Portland Apartment Market to add 31,000 jobs this year, vacancy to fall below 3%.

Essex Prop. Trust on Seattle Apartment Building Investment: rents up 6.5%, NOI +11% but 10k new units coming

My Exec Sum: Seattle apartment building investment results from Essex Property Trust Q1 call:

  • Seattle demonstrated exceptional same-store NOI and revenue growth of 11.2% driven by very limited supplies of housing and job growth that exceeds national averages
  • On operating expenses we expect a 2.3% increase for the second quarter ’12 over the second quarter in ’11
  • Seattle rents were up 6.5% compared to the first quarter of 2011. So depending on the submarket, we are now 4% below to even with our prior rent peaks.
  • renewal offers for June and July averaged +6% to 8% in Seattle
  • As of April 30, its occupancy was 96.1% with a net availability of 5.1%.
  • We view this turnover activity (50-55% YoY) as healthy because it provides us with more opportunity to grow rents. Additionally, we only saw a nominal increase in move-outs due to home purchases and affordability.
  • Cap rates continue Continue reading Essex Prop. Trust on Seattle Apartment Building Investment: rents up 6.5%, NOI +11% but 10k new units coming