trends | Ashworth Partners

Research shows that Apartment Building and CRE cap rate spreads shouldn’t be modeled as constant

From Serguei Chervachidze, Capital Markets Economist at CBRE Econometrics: “What’s the long-term spread between cap rates and Treasurys?” This question, with a few variations, comes from all types of clients—from small investment shops to large hedge funds staffed with many quants.

This is the wrong question to be asking, however, in that it assumes Continue reading Research shows that Apartment Building and CRE cap rate spreads shouldn’t be modeled as constant

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.

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

Stealth concessions in large US cities = falling apartment building rents? See the list via MFE Magazine

This was an eyeopener for us in the apartment building investing business: Large US cities with falling rents. The table is from TransUnion, I wonder what their sampling methodology is- And I wonder how that breaks out by asset class.

Yes of course there are cities with rising rents but Denver rents down almost 9% in a year? In 2011? Even Chicago down almost 5%? And DC the apartment hotbed has falling rents? Supposedly their data comes from managers supplying info for tenant screening and if that’s the case it seems like there are some serious concessions being given.

Don’t blame Continue reading Stealth concessions in large US cities = falling apartment building rents? See the list via MFE Magazine

M&M Apartment Building Investment call: Opportunities exist in secondary mkts & value add, tertiary still lagging

Marcus & Millichap Q1 call on the apartment building investment climate this morning:

Year over year manufacturing jobs grew 238k. Manufacturing = 20% of GDP but gets no press, where as single family housing < 2% gets all the coverage.
There is a historic % of 18-34 Y/Os still living ‘with the parents’ but they are also getting a larger proportion of the new jobs. (See chart) Good for apartment building investors as these people typically become renters when they do move out.

A props in primary (coastal) markets seeing compressed cap rates; most on the call (including me) thought they were a little frothy.
Nadji feels that if operations and NOI growth keep up, cap rates will remain Continue reading M&M Apartment Building Investment call: Opportunities exist in secondary mkts & value add, tertiary still lagging

Portland Apartment Building Market: occupancy drops but rents still rising according to report

Apartments are a little easier to come by in the Portland area, but that’s not slowing down rent increases across much of the market.
According to the Metro Multifamily Housing Association which released its latest survey Wednesday:

Vacancy across the metro area grew to 3.72% from 3.34% late last year.
Rents climbed 3% in the same period, reaching $1 a square foot per month across the metro area.
Average two-bedroom unit now rents for $771, up $28 a month compared with six months earlier.

The Portland area has one of the lowest Continue reading Portland Apartment Building Market: occupancy drops but rents still rising according to report

Six lessons on the financial crisis that help explain why we’re still in one.

Six lessons on crisis that help explain why we’re still in one:

When you don’t reinvent institutions at a time of systemic failure, the problems they’re creating don’t just magically disappear.
When you prop up (read: bail out) the institutions causing the crisis, instead of reinventing them, the crisis will deepen.
When dysfunctional institutions prop one another up, prosperity’s a house of cards. Crisis becomes stagnation.
When propping up failed institutions has drained your resources, you’ve turned a crisis into a catastrophe.
The longer it takes you to see a crisis for what it truly is, the disproportionately worse it’s likely to get.
When people who are prisoners of the

Continue reading Six lessons on the financial crisis that help explain why we’re still in one.

Will REO-rentals Really Compete With Apartment Building Investments?

Greg Willett, VP of research over at Real Page wrote a nice piece on that which covers it nicely; take it away Greg:

Thanks to one sentence uttered by Warren Buffett and some major overplay by the media, single-family rentals are a hot investment choice now. Thus, the analysts at MPF Research are fielding a constant stream of inquiries about whether the bulk sale of bank-owned single-family homes to investors who will operate them as rentals will impact the apartment sector.

Our take is that Continue reading Will REO-rentals Really Compete With Apartment Building Investments?

Handy Apartment Building Investment Market Reports- interactive one-pagers from Reis Reports.

Reis puts out these really handy one page reports with all the major QoQ changes broken out by sub-market. Here’s the latest on Portland, OR:

Click on the image above to go to a list of markets then select Continue reading Handy Apartment Building Investment Market Reports- interactive one-pagers from Reis Reports.