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Apartments a Big Hit at REITWeek
Industry News
Early Signs of a Bubble in D.C.'s Sizzling Apartment Market
NAAEI Survey Shows Managers' Support for Continuing Ed.
Alberta Has Canada's Highest Average Apartment Rent
EQR Announces Common and Preferred Dividends
Booming Growth to Come in Top Apt Markets
Firm Buys $31 Million Worth of N.C. Triad Apartments
Downtown Omaha Apartment Plans Speed Up
Boomers and 20-Somethings to Carry Housing Recovery?
No End in Sight to Construction's Woes
Census Shows Increase in Vacant Homes in Illinois
Legislative/Legal News
Debt Limits Keep More From Becoming Homeowners
Recycling Up at Santa Cruz Apartments Thanks to Initiative
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Apartments a Big Hit at REITWeek
Digested From "At REIT Confab, Buzz Is Multifamily"
Wall Street Journal (06/08/11) by Dawn Wotapka
Apartments were the big hit at the recent REITWeek industry gathering that drew executives, investors, and analysts associated with real estate investment trusts to the Waldorf Astoria hotel in Manhattan. In the wake of the financial crisis, REITs have shown signs of improvement this year. The biggest turnaround has indeed come in the apartment sector, which was forced to cut rents and offer a wide range of incentives to residents during the downturn. Today's apartment owners and managers are benefiting from more and more people opting to -- or being forced to -- rent apartments as opposed to owning their own home. Rental and occupancy rates are climbing throughout the country as a result. "This is the first time in modern history" that renting is not something to be ashamed of, reports Associated Estates CEO Jeffrey Friedman. His REIT operates more than 50 apartment communities in eight states, including Michigan and Ohio, and has seen its stock jump almost 30 percent in the past 12 months. Concerns remain, of course. Job creation remains essential to the multifamily housing sector's health. And if monthly rents climb too high, the pendulum may swing back to homeownership. At the same time, developers are racing to meet the increased apartment demand. That, in turn, could result in oversupply and consequently rent reductions in certain markets.
Industry News
Early Signs of a Bubble in D.C.'s Sizzling Apartment Market
Digested From "Inside the Rush to Build Washington Apartments, Early Signs of a Bubble"
Washington Post (06/12/11) by Jonathan O'Connell
Seen as the strongest in the country, Washington, D.C.'s apartment sector is attracting developers both locally and from out of town, developers with other specialties, and developers who previously had very different plans. After a period when very few new rental units were built because of the down economy, developers are now erecting dozens of apartment communities. Others are scrambling to finalize financial agreements and approvals from local governments so they can join in the frenzy. Builders broke ground on 4,400 new apartments in last year's third and fourth quarters, states Delta Associates. That is more than five times the total in 2009's second half. Work on another 4,200 apartments started in the first three months of this year. However, while many developers, researchers, and analysts say the apartment communities now underway are likely to quickly find residents and attract high rents, the market has become so hot so quickly that some are questioning when the area will go from having not enough rental housing to having too much. Among the most aggressive at the moment is Houston-based Camden Property Trust, which does more business in the Washington area than in any other market. The REIT began excavation work in 2007 on a 276-unit apartment development directly across the street from the Washington Nationals Park, then postponed the project as the recession hit. Work restarted earlier this month and now plans are underway for another, slightly larger apartment community in Northeast Washington for later this year.
NAAEI Survey Shows Managers' Support for Continuing Ed.
Digested From "Apartment Managers Say Continuing Education Key to Higher Pay, Promotions, NAAEI Survey Reports "
Business Wire (06/09/11)
According to a recent survey by the National Apartment Association Education Institute (NAAEI), apartment managers say professional designation programs and continuing education courses are worth the time and expense in that they give employees the necessary tools to better perform their jobs. NAAEI researchers conducted the poll earlier in the year among 724 supervisors of employees who earned one of NAAEI's four designations: Certified Apartment Manager (CAM), Certified Apartment Maintenance Technician (CAMT), Certified Apartment Portfolio Supervisor (CAPS), and National Apartment Leasing Professional (NALP). The research found that 98 percent of all respondents either agreed or strongly agreed that the designation courses were a good use of company time and money. Furthermore, 76 percent said it was not an issue to have their employee out of the office to take the designation course and 86 percent saw an improvement in their employee's work performance following the completion of their respective NAAEI designation. Most impressively, 100 percent of those polled said they would enroll employees in designations in the future. NAAEI President Jeff Lowry comments, "The results from our survey . . . indicate the significant role our designation programs are playing in helping people further their careers and in obtaining new skills and knowledge that benefit employers."
Alberta Has Canada's Highest Average Apartment Rent
Digested From "Alberta Has Highest Average Monthly Rental Rate"
Calgary Herald (Canada) (06/09/11) by Mario Toneguzzi
A newly released survey by Canada Mortgage and Housing Corp. (CMHC) ranked Alberta as having the highest average monthly rental rate in the nation. On a provincial basis, the agency's Rental Market Survey noted that the highest average monthly rent for a two-bedroom apartment in April was Alberta's C$1,029, followed by British Columbia and Ontario. Alberta's average was up slightly from the C$1,023 measured one year earlier. The research further found that the average rent for a two-bedroom Canadian apartment was C$864 in April versus C$848 in April 2010. The highest average monthly rent among Canada's major populations centers was measured in Vancouver (C$1,181), followed by Toronto. Alberta had the highest apartment vacancy rate on a provincial basis at 4.7 percent, a decrease from 6.0 percent last April. Meanwhile, Calgary's April vacancy was 3.4 percent, a decline from 5.3 percent over that same time span. Sam Kolias, chief executive of Calgary-based property manager Boardwalk Real Estate Investment Trust, states, "The peak season is summer, and summer is approaching. There's still a lot of choice, there's still a lot of value, and there's still a lot of competition." Finally, the average rental apartment vacancy rate in Canada's 35 major population centers fell slightly to 2.5 percent during April from 2.9 percent a year ago.
EQR Announces Common and Preferred Dividends
Digested From "Equity Residential Announces Common and Preferred Stock Dividends"
TMCnet.com (06/13/11)
Equity Residential has declared a second quarter dividend of $0.3375 per common share for the second quarter, which will be payable on July 8 to shareholders of record as of June 20. The apartment owner and operator also declared a regular quarterly dividend of $1.03625 per share on its Series K preferred/depositary shares and $0.405 per share on its Series N preferred/depositary shares. The former will be payable on June 30 to shareholders of record as of June 20, while the latter will be paid on July 15 also to shareholders of record on June 20.
Booming Growth to Come in Top Apt Markets
Digested From "John Burns Says Top Rental Markets About to 'Explode'"
Housing Wire (06/07/11) by Christine Ricciardi
Some U.S. cities will soon see an explosion in the rental market, according to John Burns Real Estate Consulting. Renting has been on the rise for some time, but the firm sees a 25 percent growth in the next three years for top rental markets. Young adults who have been living with their parents or with roommates will be the main source of the pent-up demand that is about to be released, the firm says, though there will also be demand from older adults who now consider renting a "safer" option as unemployment remains high. Furthermore, the government’s cooling of its aggressive promotion of homeownership will also benefit the rental housing market. "We see 2011 as a very uncertain year for housing, primarily because the powers that be in Washington, D.C., continue to influence the dynamics of the industry," said Lisa Marquis Jackson, senior vice president of John Burns. However, she expects rental rates to eventually hit a cap and that may tip things toward owning again. "Several of our apartment clients feel that they are already near the limit of what their tenants can afford," Leslie Deutch, a John Burns' vice president, said.
Firm Buys $31 Million Worth of N.C. Triad Apartments
Digested From "Firm Buys $31M Worth of Triad Apartments"
Business Journal of the Greater Triad Area (06/10/11) by Katie Arcieri
Hamilton Point Investments of Old Lyme, Conn., has completed its acquisition of four apartment communities in North Carolina's Triad market. The identity of the seller(s) was not disclosed. Together, the four Triad apartment communities cost approximately $31 million and contain almost 1,000 rental units. The move adds to a string of similar acquisitions made by firms seeking to capitalize on a regional apartment sector that has seen vacancy rates fall to 9 percent as of the end of this year's first quarter.
Downtown Omaha Apartment Plans Speed Up
Digested From "Downtown Apartment Plans Speed Up"
Omaha World-Herald (NE) (06/08/11) by Jeffrey Robb
A half-dozen new apartment communities represent a shift in downtown Omaha's housing market. After focusing on for-sale condominiums for years, developers are indeed placing more emphasis on rental apartments to address a shortage of housing for younger residents who like downtown but are not in a position or simply do now want to become homeowners. With central downtown and the Old Market well-established, developers are moving their focus outside that core. The six new apartment communities are located on the Old Market's western fringe, the western reaches of downtown Omaha, and south of downtown. In total, nearly $50 million worth of apartments are in various stages of planning and development to bring a combined 476 market-rate units onto the market. Three of the apartment communities are already under construction, including a major renovation of the Farm Credit Building at 19th and Douglas Streets. Since a number of apartments were converted to condos in recent years, there is currently a shortage of rental units -- especially new ones -- in the downtown market.
Boomers and 20-Somethings to Carry Housing Recovery?
Digested From "Will Boomers and 20-Somethings Carry Housing Recovery?"
Sign-on San Diego (06/06/11) by Lily Leung
A recovery in the U.S. housing market will be driven by baby boomers buying smaller homes and young adults who can now afford to leave their parents' homes, according to a housing report from Harvard University. "The state of the nation's housing is sobering," the report states, written by Eric S. Belsky, managing director of Harvard's Joint Center for Housing Studies. "Total housing construction over the previous decade now barely exceeds the lowest level of any ten-year period in records dating back to 1974." Boomers and twentysomethings are the market's only source of hope, as the report forecasts 3.8 million boomers will move to smaller homes in "preferred retirement destinations," while so-called "echo-boomers" will be moving to apartments of their own, assuming enough jobs are created. Real home equity has plummeted to $6.3 trillion in 2010 from its peak of $14.9 trillion in 2006. Even though home prices have come down, many people still cannot afford higher down payments and cannot meet income and credit requirements. The rental market, however, has done well, with apartment vacancy rates falling and monthly rents rising. This, in turn, will spur greater demand for rental housing and boost multifamily construction, the Harvard report forecasts. Gary Painter, director of research at University of Southern California's Lusk Center for Real Estate, said it will likely take about two years before home-buying picks up.
No End in Sight to Construction's Woes
Digested From "No End in Sight to Construction's Woes"
USA Today (06/06/11) P. 1B; by Paul Davidson
Ken Simonson, chief economist for Associated General Contractors of America, expects that the construction industry will continue to suffer double-digit unemployment rates "for a long time." He expects housing starts to remain weak because of tight lending standards coupled with foreclosures. At the same time, public construction that previously buoyed the industry when commercial development dried up during the recession is ending as federal stimulus dollars evaporate and states move forward with budget cuts.
Census Shows Increase in Vacant Homes in Illinois
Digested From "Census Shows Increase in Vacant Homes"
News-Gazette (06/05/11) by Michael Howie
The three biggest cities in East Central Illinois have hundreds more vacant homes and apartments than they did a decade ago. But the reasons -- and the ramifications -- are different for each. Danville has hundreds of structures that are essentially abandoned, by far the highest number in the area, census statistics reveal. The city has implemented programs to demolish many of the homes and has a program to register vacant rental housing to keep track of their renovation. Urbana, with the largest increase in vacancies in the area, is feeling the impacts of a building surge and now is overbuilt with apartments, a city official says. Champaign has the largest inventory of vacant units. "My sense is that we're still normalizing, and it hasn't tipped into a lessors' market," said Andrew Timms, president of Central Illinois Rental Property Professionals and a property manager in Champaign. "The renter and the property manager are on a pretty even field."
Legislative/Legal News
Debt Limits Keep More From Becoming Homeowners
Digested From "Home Buyers' Debt, Feeling Heavier"
Washington Post (06/10/11) P. A12; by Dina ElBoghdady
A proposal to avert a repeat foreclosure crisis is getting plenty of press and eliciting frowns for its requirement that buyers put 20 percent down in order to qualify for the best-rate loans, but the plan's tough stipulations on borrower debt could be equally burdensome. Buyers could not have debt loads exceeding 36 percent of gross monthly income or mortgage payments greater than 28 percent of gross monthly income -- benchmarks that critics say would shut a large number of potential buyers out of the market. "The debt limits are far and away the most binding constraint," according to Moody's Analytics chief economist Mark Zandi. "It's probably the one thing that will knock the largest number of borrowers out of the market by keeping them from getting the most favorable rates." CoreLogic reports that almost three out of five buyers last year fell short of the guidelines, and a separate federal analysis reveals that more than 50 percent of loans sold to Fannie Mae and Freddie Mac in 2009 would have failed to satisfy one or both of the debt requirements.
Recycling Up at Santa Cruz Apartments Thanks to Initiative
Digested From "Recycling Up at Apartments, Thanks to Ecology Action's Initiative"
Santa Cruz Sentinel (CA) (06/05/11) by Jondi Gumz
In California, recycling is available to 70 percent of those living in single-family homes but to only 40 percent of apartments and condo residents. In the Santa Cruz area, local nonprofit Ecology Action has been working to close that gap. Over the past four years, thanks to a couple of state grants totaling more than $4 million, Ecology Action has helped 290 apartment and condo communities throughout Santa Cruz, San Benito, and Monterey counties improve and/or implement recycling services. In Santa Cruz County alone, 161 communities introduced recycling as a result. Participants range from 19 communities in the city of Santa Cruz to the campus housing on the University of California Santa Cruz. Ecology Action has been promoting the Zero-Waste Move Out on campus as students depart, helping recycle bulky items that otherwise might get dumped. Perhaps the biggest improvement has been in the suburb of Watsonville, where recycling has been introduced or upgraded at 33 apartment communities comprising 1,722 rental units. Recycling poses a number of challenges at apartments and condos partly because most such buildings were not designed with recycling in mind. Indeed, there is usually little space in individual units and common areas to collect and store recyclables. Additionally, there often can be confusion over what is recyclable. Ecology Action addresses those concerns by providing information as well as supplies, working with more than 20 stakeholders.
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