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Recent Study Shows Renting Is Getting Glamorous
Industry News
Multifamily Boom Cultivates Retail/Office Development in Twin Cities
Time to Ramp up Apartment Construction in Albuquerque
U.S. Commercial-Real Estate CDO Delinquencies Fell in Nov.
Aimco Obtains New Credit Facility
S.D. Apartment Association to Get Its House in Order in 2012
Related Switches Condos to Rentals
Freddie Mac Economist's 2012 Housing Forecast
Skyrocketing Student Loan Debt Delays Homeownership
Three of Four Big Investor Groups Increased Commercial/Multifamily Mortgage Investments
Legislative/Legal News
Lehman Sues Barclays, Bank of America Over Archstone Purchase
10 Strategies for LEED Platinum
Disabled Woman Sues L.A. Redevelopment Agency
New Commissioners Appointed to Improve U.S. Housing Policy
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Recent Study Shows Renting Is Getting Glamorous
Digested From "Real Estate Trends: Renting Gets Glamorous"
Daily Beast (12/16/11) by Nancy Hass
The Center for Behavioral Economics at the Federal Reserve of Boston recently released a study, which showed that fewer young people think homeownership is preferable to renting. Young professionals are embracing renting and the new "dream" is a simple apartment in a destination-living community with multiple amenities. While some of the factors behind the change are economic, the report indicated that a cultural shift is also playing a part. Many young people are putting off marriage, favoring travel, and seeing their assets not as the material things like homes and cars, but as being clothes and Facebook platforms. Young professionals are gravitating towards renting in part for a more relaxed, mortgage-free lifestyle and for the ability to follow job opportunities without having to worry about trying to sell a house. The shift has sparked new businesses, like those that rent furniture for apartments, to allow individuals to live lighter. Single-family homeownership has shifted to primarily include families with children who are seeking stability and good school districts, and some developers are buying these houses and offering them for rent as a way to make a smoother transition.
Industry News
Multifamily Boom Cultivates Retail/Office Development in Twin Cities
Digested From "Multifamily Boom Cultivates Retail/Office Development"
Minneapolis Finance & Commerce (12/19/11)
Single-family housing construction has slowed considerably in Minnesota's Twin Cities suburbs. However, there is a vast amount of multifamily development occurring, most notably in such sought-after, trendy urban areas as downtown Minneapolis and the city's Uptown area. In some cases, these new apartment communities are serving as a catalyst for commercial/retail development in the core markets. After all, residents who move to urban areas crave convenience and expect to live near places that offer them shopping, dining, and entertainment options. Historically, as a way to shorten company executives' commuting time, office space often "follows rooftops." Record-low apartment vacancy rates are driving multifamily housing development locally. The vacancy rate is a scant 1 percent in downtown Minneapolis and 2.3 percent for the Twin Cities as a whole, notes Marquette Advisors. A Finance & Commerce analysis shows that almost 10,000 new rental units have either been proposed or are now under construction in the Twin Cities metro area, most of them in Minneapolis. John Gelderman, senior vice president of national retail development for Opus Development Corp., concludes, "I truly believe the apartment stuff is going to continue to spur retail, especially urban retail. But it isn't just because of the bodies. When you start going vertical, you can afford to do redevelopment."
Time to Ramp up Apartment Construction in Albuquerque
Digested From "Time to Ramp up Apartment Construction?"
Albuquerque Journal (12/19/11) by Richard Metcalf
The Albuquerque metro area is poised for a round of robust apartment construction after a lull this past year. The shake-up in housing is bound to swell the ranks of those who rent as opposed to own their living quarters. In fact, renters currently comprise nearly 30 percent of the city's population. Still, it will take a while to ramp up development activity as apartment construction within the city limits of Albuquerque is currently running at the second-lowest level in 19 years. Nearly 15 years have passed since the last apartment construction boom locally. From 1995 through 2010, 21 percent of all housing units permitted within Albuquerque's limits were for multifamily or attached housing, which range from apartment communities to condominium developments to duplexes. This past year's low level of construction comes at a time when Albuquerque's multifamily housing market appears healthy. The occupancy rate for apartments was about 95 percent as of Sept. 30. At the same time, average monthly rents continued to edge up during the recession years, which went against a national trend of dropping apartment rental rates around the country. According to research by the multi-housing team of David and Billy Eagle at CBRE's Albuquerque office, the average apartment rent rose 6.2 percent from $688 a month in September 2008 to $731 a month as the end of this year's third quarter. The findings are based largely on apartment communities with 100 rental units or more.
U.S. Commercial-Real Estate CDO Delinquencies Fell in Nov.
Digested From "Fitch: US Commercial-Real Estate CDO Delinquencies Fell In Nov"
Wall Street Journal (12/16/11) by Tess Stynes
Fitch Ratings reports that delinquencies on U.S. commercial real estate collateralized debt obligations eased 0.1 percentage point in November, a shift after two months of increases in a row. The rate declined to 12.4 percent as four newly delinquent assets were added to the Fitch index. In the last year, the delinquency rate has hovered mostly between 11 percent and 13 percent. Fitch analysts note that demand for space in apartment communities, office buildings, and shopping malls has remained soft amid the weakened economy.
Aimco Obtains New Credit Facility
Digested From "Aimco Obtains New Credit Facility"
Zacks Equity Research (12/15/11)
As part of its ongoing effort to strengthen liquidity and reduce refinancing risk, Apartment Investment and Management Company (Aimco) has obtained a new, three-year revolving credit facility worth $500 million. It replaces the existing $300 million credit facility that was set to mature in May 2013. The renewed credit facility, which will mature in December 2014, has an accordion feature that would enable the apartment REIT to extend the maturity by a couple of one-year periods subject to the fulfillment of certain conditions. Aimco continues to rank as one of the nation's biggest owners and manages of apartment communities and student housing. The company has a solid portfolio of both Class B and Class C properties, most of which cater to the middle-income market.
S.D. Apartment Association to Get Its House in Order in 2012
Digested From "Three Rental Trends to Watch for in 2012"
Sign-on San Diego (12/15/11) by Lily Leung
According to the new head of the San Diego County Apartment Association, uncertainty in the U.S. housing market has contributed to a stronger rental apartment industry, which will likely be a "focal point" in the new year. Alan Pentico reports that the association will ramp up its social media presence in the new year. He added that the group's online platform will likely play a bigger role in owner-manager-resident relations. Finally, Pentico said that more of its apartment owner-members are expected to begin maintenance work that they had previously delayed due to the struggling economy.
Related Switches Condos to Rentals
Digested From "Related Switches Condos to Rentals"
Wall Street Journal (12/15/11) by Eliot Brown
For three years or longer, Related Cos. had been planning for the 151 apartments on the top floors of its new apartment development in Midtown Manhattan to be condominiums, sitting atop 663 rental units in the building's bottom 50 stories. Now, with construction wrapping up on the final apartments in the 63-story MiMA building on 42nd Street and 10th Avenue, the developer is going in a different direction. Related is placing all of the formerly for-sale units up for rent, going for the high-end with rents of more than $20,000 a month for a three-bedroom unit. "We really built through the downturn, and it opened up our rentals into a very, very strong rental market," Related President Jeff Blau said in a Dec. 14 interview. "There was more value creation by renting this up and holding it than selling the units." The move away from condos comes as the rental housing sector has taken property managers by surprise with its growth. Rents in many communities are at record levels, while condo prices have dragged. At the same time, tight credit in the home lending market has made it more difficult to get a mortgage. "Most of the improvement in the rental market has nothing to do with the economy -- it's more that lenders are making it tough," according to Miller Samuel CEO Jonathan Miller.
Freddie Mac Economist's 2012 Housing Forecast
Digested From "Freddie Mac Economist's 2012 Housing Forecast"
Minneapolis Star Tribune (MN) (12/14/11) by Jim Buchta
Frank Nothaft, vice president and chief economist at Freddie Mac, has offered his predictions for the 2012 housing market. He expects mortgage rates to remain near record lows at least through the first half of the year, home sales to pick up at a modest pace, and housing prices to rise only in areas where foreclosures are few and vacancies low. Commenting on the mortgage industry, Nothaft forecasts that most of the lending will be for rental apartments rather than single-family homes.
Skyrocketing Student Loan Debt Delays Homeownership
Digested From "Skyrocketing Student Loan Debt Delays Homeownership"
Central Valley Business Times (CA) (12/09/11)
Student loan debt will begin to hurt home sales, warns Rick Palacios of John Burns Real Estate Consulting, noting that college graduates owe an average of $25,000 and debts are climbing for students at for-profit college and trade schools. Default rates are up as young adults face mounting student loan debt, poor job prospects, and stagnant wages, Palacios says. Nearly 6 million 25- to 34-year-olds already live at home with their parents, and credit dings from unpaid student debt will make it tougher for them to qualify for mortgages.
Three of Four Big Investor Groups Increased Commercial/Multifamily Mortgage Investments
Digested From "Three of Four Big Investor Groups Increased Commercial/Multifamily Mortgage Investments"
LoanSafe.org (12/15/2011) by Alex Ferreras
The Mortgage Bankers Association reports that the volume of commercial/multifamily mortgage debt outstanding was flat in the third quarter as life insurers, banks, and Fannie Mae/Freddie Mac/FHA upped their holdings during those three months. The $2.4 trillion in debt outstanding was just $533 million lower than in the second quarter. According to MBA, multifamily mortgage debt outstanding climbed to $806 billion -- up 0.5 percent, or $4.1 billion, from the second quarter.
Legislative/Legal News
Lehman Sues Barclays, Bank of America Over Archstone Purchase
Digested From "Lehman Sues Barclays, Bank of America Over Archstone Purchase"
Business Week (12/16/11) by Linda Sandler
Lehman Brothers Holdings Inc. last week sued Bank of America Corp. and Barclays for breach of contract after they agreed to sell a stake in Archstone to Equity Residential. Lehman has informed the banks it would purchase 50 percent of their stake in Archstone for $1.33 billion, meeting a deadline to exercise its right to make the acquisition. The suit seeks to clarify the terms of Lehman's right to purchase the stake and to make the banks carry out their obligations under agreements in place. The former securities firm has the right to match Equity Residential founder Sam Zell's offer. Lehman said in the suit: "In violation of several significant contractual provisions, defendants have conspired to sell their combined approximately 53 percent interests in Archstone to Archstone's largest competitor -- Equity Residential."
10 Strategies for LEED Platinum
Digested From "10 Strategies for LEED Platinum"
GreenBuildingPro.com (12/15/11) by Christina Rombouts
West 27th Place, a University of Southern California (USC) student housing community, was recently awarded a LEED Platinum rating -- the highest level of sustainability possible from the U.S. Green Building Council (USGBC). The mixed-use community, which contains 161 rental apartments, is one of a small number of Platinum-certified developments in Los Angeles. Project developers employed a number of strategies to obtain LEED Platinum. First, the building includes a permanent on-site recycling program. Second, all apartments have low-flow water fixtures and their appliances are Energy Star-rated. Third, West 27th Place is situated close to several forms of public transportation, including the bus, a light rail line, and USC's tram system. Furthermore, the community utilizes motion sensor lighting in its common areas, while all walls, windows, and roofs feature the highest levels of insulation. Finally, West 27th Place has teamed up with "Plant a Billion" and has a donation bucket in the leasing office. For every $1 donated, the group plants a tree.
Disabled Woman Sues L.A. Redevelopment Agency
Digested From "North Hollywood Disabled Woman Sues L.A. Redevelopment Agency"
Los Angeles Times (12/12/11)
According to a North Hollywood disabled woman, the city of Los Angeles helped finance public housing units without providing sufficient accommodations for those with disabilities. Mei Ling contends that officials with the Community Redevelopment Agency violated the Americans With Disabilities Act by not providing their multifamily housing in North Hollywood with "any guaranteed number of wheelchair-accessible units." Ling said she tried to obtain a wheelchair-accessible unit at three different public apartment buildings, but with no success. She claims that she cannot fully use the bathroom in her current apartment at NoHo 14 because there is no ramp. Simultaneously, a federal fraud investigation into whether city agencies are complying with the law has recently been launched.
New Commissioners Appointed to Improve U.S. Housing Policy
Digested From "Bipartisan Policy Center Appoints Commission Members for New Effort to Improve U.S. Housing Policy"
Bipartisan Policy Center (12/13/11)
The Bipartisan Policy Center (BPC) announced the full membership of its Housing Commission, which includes 17 business and civic leaders, key housing stakeholders, academics, and former senior political figures from both parties. The new members include one apartment professional: J. Ronald Terwilliger, Chairman Emeritus, Trammell Crow Residential. The commission is expected to develop a set of policy recommendations to address future housing needs, to be issued in 2013. Their recommendations will be informed by a series of regional forums beginning in 2012. The first forum will be in San Antonio on March 6, 2012; followed by Orlando on April 17, 2012; St. Louis on June 5, 2012; and Bangor on July 25, 2012.
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