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More Apartment Residents Are Cutting Deals for Lower Rents
Industry News
Apps for Apts: The Latest Technology-Based Marketing Trend
Metro Indy Vacancies Spur Apartment Deals
Apartment Rents Rising in Iowa City Area
Demand Grows for Affordable Housing for Seniors
Bulk Buyers Swarm Florida's Overbuilt Condominium Market
Cautious Buys in REITs Includes Apartment Trust
Apartment Transactions Revving Up Again in Tampa
UDR Partners With Kuwait Bank to Develop U.S. Apartments
Apartment Occupancy Down in Atlanta
Student Housing Lease-Up News
Foggy Enrollment Numbers Concern Owners
Central Fla. Students Get Great Deals on Rent
Unique Community at Texas A&M to Open
MD, VA Universities Anticipate Freshmen Enrollment Drop
Legislative/Legal News
Handicapped-Accessible Change Offered for El Paso Apartments
Madison's Chronic Nuisance Ordinance Up for Renewal
Mississippi Town Debates Apartment Ban
U.S. Will Extend TALF Lending Program
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More Apartment Residents Are Cutting Deals for Lower Rents
Digested From "Why You Should Make a Deal to Lower Rent"
Erie Times-News (PA) (08/18/09)
A newly released survey of apartment owners found that 88 percent of respondents said that job losses are having a negative impact on vacancy rates. Approximately 45 percent of the owners polled added that the trend of more people doubling up with roommates is definitely causing more apartments to sit empty than a year ago. The survey included owners representing nearly 3,200 apartment communities nationwide. Survey analysis found that there was even more inventory to compete with these days because in such a sluggish housing market many homeowners have no choice but to rent their houses when they can't sell them. At the same, more apartment residents are making the leap to homeownership as prices drop and the government's first-time buyer tax credit proves irresistible. A separate survey by a resident screening firm determined that 50 percent of apartment managers are finding it harder to find qualified residents than a year earlier.
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Industry News
Apps for Apts: The Latest Technology-Based Marketing Trend
Digested From "Apps for Apts"
UNITS (08/09) by Kerry A. Sullivan
Many forward-thinking decision-makers in the apartment industry are paying closer attention to mobile apps, believing such technology is what their customers want and need in their search for apartments. Melanie Stiles, Milestone Management's national director of training and marketing, agrees. She states, "As consumer habits change, so should our industry. Generally speaking, the apartment industry has been slow to adapt to changing technologies, but text messaging and mobile apps provide us with another mode of communication -- a mode many folks prefer." Although lead tracking for apps remains a work in progress, everyone from vendors to management firms to owners are focusing on developing and expanding app function and availability. Prospective apartment residents are increasingly on the go and are more easy to reach on their mobile devices than via traditional means. Not everyone is convinced. Kevin Thompson, AvalonBay Communities Inc.'s vice president of marketing, says that until mobile phone apps provide services that existing Internet listing services (ILS) do not, they will emerge as viable marketing tools. He adds, "If apartment-search apps were to link to auxiliary features, such as utility hookups, on-line lease applications, local neighborhood maps, or local mover information, they might have more appeal. There's just no 'hook' yet that would draw a prospect from the existing ILS. However, it's still early in the game, and as with all new technology platforms, AvalonBay continues to monitor its potential."
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Metro Indy Vacancies Spur Apartment Deals
Digested From "Metro Indy Vacancies Spur Apartment Deals"
Indianapolis Star (08/21/09) by Amber Travis
In the Indianapolis metro area, apartment communities are offering everything from reduced rent to free laundry and even free heat to entice new residents and retain existing ones. A recent study by the Regional Economic Information System shows that the average asking monthly rent was down slightly in this year's second quarter from $674 last year to $673. This follows a year of increasing rents throughout the state, except in the Muncie area. George Tikijian of Indianapolis-based Tikijian Associates attributes lower rents in Muncie to the troubled auto industry. Researchers further note that Kokomo, Lafayette and Evansville could also be at risk for a downturn later this year. The current 10.2 percent apartment vacancy rate in the Indianapolis metro area is a slight gain from last year, reports the survey. Three groups -- apartment residents who have lost their jobs and have had to move, recent college graduates still without a job and now living back with their parents, and people taking advantage of the first-time homeownership incentives -- contributed to a rising apartment vacancy rate.
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Apartment Rents Rising in Iowa City Area
Digested From "Rent Costs Rising in Iowa City Area"
Iowa City Press-Citizen (08/22/09) by Josh O'Leary
Cook Appraisal has released the results of its biennial apartment rental survey for the Iowa City area. The firm's researchers found that the average cost of one month's rent in the downtown area rose $56 from two years ago to $1,033. The study further shows that the downtown Iowa City apartment vacancy rate is currently around 1.5 percent, down from 1.66 in 2007. This means that more apartments are occupied now than two years ago. Compiled by city officials in 2007, the Iowa City Metro Affordable Housing Market Analysis stated that the preferred vacancy rate was in the 3 percent to 5 percent range. The Cook Appraisal report further noted that that lower apartment vacancy rates typically mean higher rents, rendering many apartments less affordable for lower income households. Cook Appraisal canvassed almost 5,000 rental apartments in Iowa City, Coralville and North Liberty for its results. Researcher Dean Meester said that overall rents are 3 percent to 6 percent higher this year than they were two years earlier. Outside of the downtown area, the average rent in Iowa City is $675 a month, while North Liberty's is $704 and Coralville's is $631.
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Demand Grows for Affordable Housing for Seniors
Digested From "Demand Grows for Affordable Housing for Seniors"
Seattle Times (08/22/09)
Housing availability for the country's poorest seniors will rank among the most pressing issues in the years to come. According to a congressional study conducted earlier in the decade by a commission on affordable housing and health needs for seniors, one in six people will be age 65 or older in 2020 compared to the current ratio of one in 12. Demand for government-subsidized rental properties for seniors significantly outweighs projected future supply, and many existing buildings are in dire need of upgrades and repairs. Despite the best efforts of nonprofit groups and developers, new construction is simply not keeping pace with demand, especially in these credit-crunched times. The low-income senior population lives mostly on fixed incomes from Social Security. The most recent Census Bureau data shows that two in five households 65 or older earn less than half of the U.S. median income. Meanwhile, about one in 10 household heads in this age group live in poverty. Section 202, the only affordable housing program dedicated solely to senior citizens, presently has around 250,000 units. Waiting lists can be at least a year or longer for affordable rental apartments. On average, nine people are on the waiting list for each existing Section 202 unit. Further research shows that nearly 33 percent of renters age 65 and over spend half or more than half of their income on rent and utilities. Taking into account the cost of health care, medicine and food, this growing group fights for its survival on a monthly basis.
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Bulk Buyers Swarm Florida's Overbuilt Condominium Market
Digested From "Bulk Buyers Swarm Florida's Overbuilt Condominium Market"
Investor's Business Daily (08/21/09) P. A5; by Marilyn Alva
Investors are swooping into distressed condominium markets from New York to Las Vegas, with Miami considered ground zero for the trend. The city has more unsold condo units than anywhere else in the country -- as many as 10,000 held by developers alone. The glut of unsold inventory is attracting speculators to the area, as is Miami's growing popularity among the global set. Since June, five major bulk transactions have closed in South Florida; a total of 10 -- encompassing more than 600 units -- have closed since July 2008; and several more deals are in the pipeline. Meanwhile, additional deals for multiple units have been carried out via foreclosure auctions. Despite the draw, bulk investing has not emerged to the extent that analysts had predicted. In fact, more and more individual buyers are driving the transactions. The reason is that while bulk sales can yield discounts of as much as 25 percent off of already-reduced prices, developers and lenders are not lowering the prices enough to bring in all-cash buyers in high numbers. The prices are low enough, however, to catch the interest of a growing pool of regular home buyers.
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Cautious Buys in REITs Includes Apartment Trust
Digested From "Cautious Buys in REITs"
Forbes (08/19/09) by Peter Slatin
Since the REIT market began showing signs of improvement earlier this year, investors have bought up shares that had fallen 70 percent and more from their peak prices earlier in the decade. They have gobbled up $16 billion in new shares -- with more share offerings on the way from some high-quality REITs -- as these companies scramble to raise capital. Columnist Peter Slatin now recommends: "Take some money off the table. . . . The reason for lightening up is that the fundamentals don't look good. For office, industrial and retail properties as well as for apartment buildings, both rental values and occupancy rates are falling." He adds that the kind of jobs-generating economic rebound that will fill office towers and put money in the wallets of shoppers, travelers and apartment residents has yet to take hold. "Even when that recovery does arrive in earnest," he writes, "its effect on real estate revenues will not be immediate." Looking at individual REITs, Slatin recommends Associated Estates Realty (AEC), which owns a portfolio of "blue-collar apartments" throughout the Midwest. He believes that the company's management has done a good job rejuvenating the REIT's portfolio by cycling out older apartment communities and adding newer ones. At the same time, AEC has kept its apartment occupancy rates high. Slatin forecasts: "AEC will either grow slowly as an independent or get bought when the recovery kicks in."
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Apartment Transactions Revving Up Again in Tampa
Digested From "Apartment Transactions Revving Up Again"
GlobeSt.com (08/19/09) by Carl Cronan
Sales of Tampa-area apartment communities are gaining steam. According to CB Richard Ellis, the number of transactions in the market have totaled six over the past couple of months, nearly matching those recorded through the entire first half of the year. Still, weaknesses remain. Jim Bobbitt, senior vice president with CBRE's Tampa office, laments, "We haven't had a true Class A transaction in almost a year and a half." In a recent study, Marcus & Millichap projected that prospective apartment buyers in the Tampa Bay market will remain conservative for at least the foreseeable future, with some even delaying purchases based on the suspicion that prices will fall further. According to the report: "Many investors are focusing on acquisition opportunities with attractive assumable financing in place or instances where the sellers carry a second mortgage." CBRE's study, meanwhile, states that even though the fortunes of Tampa and other Florida markets hinge on the national economy, overall fundamentals are sound with limited new apartment construction in the pipeline. Bobbitt predicts as many as eight more closings in the market between now and the end of the year. He further expects market conditions to stay the same going into 2010, with improvements expected the following year.
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UDR Partners With Kuwait Bank to Develop U.S. Apartments
Digested From "UDR in Deal With Kuwait Bank"
Denver Business Journal (08/17/09)
UDR Inc. and Kuwait Finance House have teamed up with plans to invest as much as $450 million in apartment communities throughout the United States. According to the Denver-based apartment REIT, the partners will contribute equity of $180 million, with UDR responsible for 30 percent of that total. UDR, which owns a portfolio of 44,990 rental apartments, adds that the joint venture will be fully invested over a two-year period. The partners plan to invest in Class A apartment communities that are less than seven years old and worth at least $20 million.
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Apartment Occupancy Down in Atlanta
Digested From "Apartment Occupancy Down, Renters Have Upper Hand"
Atlanta Journal-Constitution (08/17/09) by Michelle E. Shaw
Dale Henson Associates President Dale Henson reports that Atlanta-area apartment occupancy rates have declined, despite reduced rents and more incentives offered by owners. Henson, who has studied Atlanta's apartment sector for more than 15 years, calculates that occupancy has fallen from 91 percent to 88 percent over the last year. Rising unemployment has played a big role. Tom Wilkes, president of Post Properties' apartment management division, notes that a loss of more than 133,000 jobs locally in the past year has resulted in an undetermined number of leases being broken or not renewed. The credit crunch has also weighed heavily on area apartments. Russ Webb, vice president of the Atlanta Apartment Association, comments, "What's happening with most of these people who are going through the foreclosures, unfortunately for them it does wreck your credit. So they are than unable to pass a credit qualification, especially if they've had a bankruptcy on their record." In a myriad of cases, people who would normally get a rental apartment are instead moving in with family and friends. Finally, a number of apartment communities are in danger of foreclosure or have already ceded control back to the banks. The advantage is definitely with residents. Not only do they have the apartment market to look at, they also have the option to rent one of the many single-family homes that have languished for too long on the selling block.
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Student Housing Lease-Up News
Foggy Enrollment Numbers Concern Owners
Digested From "Late Leasing Season Leaves Student Housing Owners Foggy on Numbers"
APTly Spoken (NAA Blog) (08/20/09)
With the first day of classes at many colleges and universities close at hand, the outcome of the 2009-2010 leasing season is still mired in uncertainty as many students delay their decisions until the last minute. As a result, some student housing owners and managers will have to wait until September to see if they will match the previous school year's performance. Campus Apartments COO Miles Orth states, "We believe the leasing season has extended this year with many students looking for deals and making their housing decisions later in the lease-up. Overall, we're slightly behind last year's numbers in certain markets, as is our competition. However, our recent leasing velocity suggests we'll achieve lease-up goals, albeit later than last year." Campus Apartments is a leading student housing provider, whose portfolio contains more than 21,000 beds in 17 states. Orth calls to task those leasing agents who wait until the end of the year to offer incentives rather than offering a tiered structure that provides incentives earlier in the cycle. He contends that doing so just conditions students to hold out later and later for leasing specials. Earlier this summer, UNITS magazine predicted that the 2009-10 leasing season would be a proving time for the industry as a whole. In the past, student enrollment at universities has spiked during recessionary times as young workers opt to enroll in classes rather than continue braving the job market. This time around, however, state budget constraints have caused some schools to reduce enrollment. At the same time, increasingly tight credit markets have made it harder to obtain student loans.
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Central Fla. Students Get Great Deals on Rent
Digested From "Students Get Deals on Open Housing"
Central Florida Future (08/16/09) by Megan Garard
Near the University of Central Florida, student apartment communities that are struggling to fill units are offering some unprecedented discounts and incentives to both new students and those renewing leases. For instance, Campus Crossings has been dealing with a 30 percent vacancy rate, mainly due to its size. It boasts 896 rental units, which is almost double the number found at other nearby communities. To cope, Campus Crossings is offering the lowest monthly rent in the area for a student apartment at $399 per person for an unfurnished four-bedroom, three-bathroom apartment. Campus Crossings has also made shrewd use of Facebook to keep residents informed about lease renewals and other important information. Other area apartment communities offer such extra amenities as a free shuttle to and from campus. Student apartment communities also continue to face stiff competition from conventional apartment communities throughout the metro area. As a result, some owners and managers are offering as much as three months free rent to those signing 12-month leases.
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Unique Community at Texas A&M to Open
Digested From "Asset Campus Housing Announces Grand Opening of First-of-its-Kind Student Housing Development"
PRWeb (08/14/09)
The Lofts at Wolf Pen Creek is a first-of-its-kind student housing development on the campus of Texas A&M University. Managed by Asset Campus Housing, the upscale 683-bed student housing community boasts the major components of a successful pedestrian-orientated development. The company began leasing the property in October 2008. Today, more than 90 percent of the Lofts is leased. The area is special in that it encompasses the Wolf Pen Creek Park and Trails, which serves as a natural wildlife sanctuary and indeed makes this student housing community one of a kind in its class. The site plan offers a mix of 264 stacked flats and townhouses arranged around landscaped courtyards. It is situated next to a structured parking garage and above a retail and community area. Surface parking will also be offered along the community's perimeter. Meanwhile, a grand water feature and an outdoor cafe will emphasize the environment unique to this location. Also included will be a state-of-the-art clubhouse featuring everything from a game room and a theatre with stadium seating to a Wi-Fi Internet cafe and a fitness facility. The Lofts offer one-, two-, three-, and four-bedroom apartments, ranging in size from 544 square feet to 1,575 square feet.
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MD, VA Universities Anticipate Freshmen Enrollment Drop
Digested From "Colleges Trying to Firm Up Shaky Freshman Enrollment"
Washington Post Magazine (08/13/09)
The recession continues to complicate the task of filling the freshman class for some colleges and universities. For the first time in three years, the University of Maryland and Virginia Tech have created wait lists of applicants who might get spots in this fall's freshman class if enough admitted students decide at the last minute not to attend. The downturn has affected such colleges in the form of shrunken endowments and dwindling funds. Mark Owczarski, a spokesman for Virginia Tech, remarks, "It's critical we hit the target of how many kids are coming to Tech in fall. We'll need that tuition money." Schools traditionally collect deposits from more students than they plan to enroll, mindful that some will opt not to attend before classes start in September. This year, more and more institutions have admitted slightly larger classes, wagering that the economy would drive some students to less expensive universities and chase others out of higher education altogether. To date, this strategy appears to be working. Both public and private colleges report a satisfactory yield of students who have accepted offers of admission, paid their deposits and still plan to attend as of mid-August. But there is no reason not to cover all of the proverbial bases. That is why the incoming class at Virginia Tech includes 309 students from the wait list, while U-Md. has assembled a wait list of 450 students this year.
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Legislative/Legal News
Handicapped-Accessible Change Offered for El Paso Apartments
Digested From "Handicapped-Accessible Change Offered"
El Paso Times (TX) (08/21/09) by Chris Roberts
Under a proposal the El Paso City Council is set to consider in September, fewer handicapped-accessible units would be required in some new apartment communities. In response, builders have said they are uncertain whether they would pursue future apartment communities if the measure did not pass. Handicapped advocates note that there remains a shortage of handicapped-accessible housing under existing requirements. Among them is Luis Enrique Chew, executive director of the Volar Center for Independent Living, who has consistently been put on waiting lists when he tries to find handicapped-accessible apartments. The proposal would require builders to make 2 percent of the apartments handicapped-accessible rather than 5 percent, El Paso's current requirement. It would apply to apartment communities containing more than four units. Texas and U.S. standards are set at 2 percent, notes Victor Torres, director of El Paso's Development Services Department.
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Madison's Chronic Nuisance Ordinance Up for Renewal
Digested From "Madison Chronic Nuisance Ordinance Up for Renewal"
Isthmus Daily Page (08/20/09) by Joe Tarr
In Wisconsin, Madison's two-year experiment with a chronic nuisance ordinance is set to end on Sept. 30. City officials are now debating whether to renew it. The law allows the city to hold apartment owners accountable for such frequent problems as noise complaints, code violations, and even illegal drug activity. Among its supporters is Captain Joe Balles, commander of the Madison Police Department's south precinct, who calls it a useful tool to show owners "we're serious about problems going on in your property." Under the ordinance, police send a letter to the apartment owner, detailing problems and requesting a meeting. It is then the owner's responsibility to come up with an abatement plan. If the problem(s) persists, the owner can be fined and ultimately have the property seized by the city. Nancy Jensen, executive director of the Apartment Association of South Central Wisconsin, is another advocate of the ordinance. She states, "Good property managers, good owners, do not have a problem with the chronic nuisance ordinance because they don't have problem [residents]. They have good management practices in place."
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Mississippi Town Debates Apartment Ban
Digested From "Byram Apartment Ban Debated"
Clarion-Ledger (08/21/09) by Kathleen Baydala
In Mississippi, Byram officials are considering extending the city's temporary ban on apartment communities. Earlier this month, the local Board of Aldermen passed a three-month moratorium on any zoning changes, including any planned construction of apartment communities and other multifamily housing units. Byram Mayor Nick Tremonte notes that hundreds of multifamily housing units already exist in the city, adding, "There is a place in this city for apartments proportionate to the population. Looking out 25 years, I have to believe there will be more apartments. But [construction of them] should be in accordance with the 25-year plan we are trying to develop." According to Tremonte, the city placed a temporary ban on apartments so it could build its own planning commission, study land-use needs and pass zoning ordinances.
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U.S. Will Extend TALF Lending Program
Digested From "U.S. Will Extend Lending Program"
Washington Post (08/18/09) P. A9; by Annys Shin; David Cho
The Federal Reserve and the Treasury Department have agreed to extend the Term Asset-Backed Loan Facility (or TALF), which frees up loans to build apartment communities, office complexes, and other income-generating properties. The move comes even though the program has yet to make significant progress in resuscitating the ailing commercial property market due to its relatively small size. White House officials have no plans to pad the program with more federal resources, even as rising vacancies and declining rents leave building owners vulnerable to default. Some observers fret that a new wave of defaults is on the horizon, with $814 billion in commercial real estate loans on pace to mature between now and 2011.
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