apartment market cycle | Ashworth Partners

Some perspective on New Apartment Building Unit Starts: Census Bureau’s stats charted by the NAHB

The NAHB is out this morning with a chart that gives some perspective on apartment building investment starts. The Census Bureau reported 285,000 unit starts in October for 5+ unit buildings. At that rate it looks like we’re just returning to what was a sustainable level of starts in the ’97-’06 period.

Apartment Building Investment Starts Returning to Sustainable Level — Census Bureau data plotted by the NAHB

While developers tend to overshoot the sustainable level (which is where the apartment building investment cycle comes from) the hope is that Continue reading Some perspective on New Apartment Building Unit Starts: Census Bureau’s stats charted by the NAHB

Risks to Apartment Overbuilding Averted, For Now says ReisReports

In a piece just out today ReisReports says that new apartment starts have been postponed to 2014 by many developers.

The “bubble” now shows up in 2014, but if economic growth ramps up, then additional supply will most likely be absorbed relatively painlessly.

But not all Metros escape. The report mentions Washington DC and suburban Maryland as two of those who will still see large increases in supply next year.

Interestingly they name Seattle as a market that should be able to absorb the new supply coming because Continue reading Risks to Apartment Overbuilding Averted, For Now says ReisReports

The Seasonal Effects on Apartment Building Effective Rents, Occupancy and Revenue Growth. Plus much more…

Axiometrics’ monthly apartment building investment report has a great chart showing the seasonal effects on effective rent, occupancy rate and revenue growth. How do you model seasonality in your budgets? What do you think is the best way to do this?

Seasonal Effects on Apartment Building Investment Results — Source: Axiometrics Inc.

Their report this month also has a very Continue reading The Seasonal Effects on Apartment Building Effective Rents, Occupancy and Revenue Growth. Plus much more…

ULI: Seattle most attractive market for Apartment Building Investment but there are 36,000 units just completed, under way or in the pipeline.

Two quick links- you decide. From the Seattle Times: Urban Land Institute finds Seattle among most attractive real-estate markets and from Dupre + Scott ( The leading Seattle area apartment market research firm): Apartment development pipeline (video)

When I see this:

And then I see this: Continue reading ULI: Seattle most attractive market for Apartment Building Investment but there are 36,000 units just completed, under way or in the pipeline.

What’s not to like about the Seattle and Portland Apartment Building Investment Markets?

“Even compared to a healthy and expanding nationwide market, multifamily in the Pacific Northwest is seeing exceptionally strong gains. A growing renter population and accelerating job growth have helped solidify cities like Portland and Seattle as cornerstones of the apartment industry, and the positive trends show no sign of letting up.” So begins a glowing report in the latest digital edition of MHN Magazine (On page 22). What’s not to like about an article like that, especially one with a cover shot as beautiful as the one in this article? Below is just a portion of it and Photoshopped or not it is something to behold.

The glowing words and photos are accompanied with a pretty good looking chart too, showing the declining vacancy and rising rents in those two markets as well: Continue reading What’s not to like about the Seattle and Portland Apartment Building Investment Markets?

Portland OR one of top US cities for job growth- Good for apartment building investments

Portland’s recovery in jobs driven by the return of tech and the lure of its funky coolness (see Portlandia) is noted in Kiplinger’s slide show on the 8 Cities with Surprising Job Growth where they’re expecting 130,000 new jobs in the next five years:

Portland to add 130,000 jobs- good for apartment building investment

“After devastating job losses in the recession, Portland has made a spectacular recovery, fueled by the tech mini-boom and the area’s attractiveness to young people. Anchored by Intel and its 16,000 employees, Portland will maintain its moniker as the Silicon Forest for its more than 1,200 high-tech firms, most of them small to medium-size.

High tech will continue to be the fastest-growing sector, but Continue reading Portland OR one of top US cities for job growth- Good for apartment building investments

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:

The U.S. population is increasing by approximately 3 million people per year, plus the legal immigrants who enter the country, and 75 to 85 percent of whom rent rather than buy.
Secondly, the 18- to 35-year-old population totals approximately 65 million and will be Continue reading Is now a good time to make Apartment Building Investments?

Nice chart of top Apartment Building Investment markets for rent and employment growth.

Nice Axiometrics chart posted by MFE Mag showing the top apartment building investment markets for rent growth and employment growth. I understand the tech employment growth in SF San Jose and Seattle but the 2.8% job growth in Salt Lake City caught me by surprise. What do you think is driving job growth there?

Employment growth is one of the key drivers of a good apartment market but it can be overrun by Continue reading Nice chart of top Apartment Building Investment markets for rent and employment growth.

Updated CRE and Apartment Market Cycle Charts Now Posted by Glenn Mueller at Dividend Capital

Dr. Mueller is one of the leading researchers on the commercial and apartment building investment cycle but I have big questions about Seattle being placed at the bottom of the cycle in his latest Cycle Monitor report. According to MPF Research there currently are 6,000 new units under construction in Seattle (see here) and Essex Property Trust estimates that there will be 10,000 units coming on line in the next three years (see here). In fact the NMHC lists Seattle as one of three US markets in danger of overbuilding (see here).

Reis Reports is showing that while rents are up about 1% QoQ in Q1 2012, vacancy is starting Continue reading Updated CRE and Apartment Market Cycle Charts Now Posted by Glenn Mueller at Dividend Capital

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:

Continued 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