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Apartment Leases, Rents Pick Up
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Headlines Top Story
Apartment Leases, Rents Pick Up as UDR and Rivals See Turnaround Signs
Industry News
Pride of Ownership May Be Fading, NAA Study Shows
Denver Apartment Seekers Willing to Pay More to Be Near Light Rail
Apartment Developer Jack Meyer on Current Industry Practices
Phoenix Apartment Market Showing Signs of Rebound
New York Multifamily Housing Sales Rebound Faster Citywide
Camden Property Trust Announces Q2 2010 Dividend
Rethinking Part of the American Dream
Apartment Vacancy Rates Rise in Canada
Tips for First-Time Apartment Residents
New York's Financial District Sees Luxury Apartment Demand
Temple U. Student Housing Popular . . . and Risky
NAA Convention Attendees Have a Lot to Look Forward to in New Orleans
Legislative/Legal News
Indiana Apartment Association Sues Hammond Over New Ordinance
Pacifica Granted More Time to Save Apartments
Top Story
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Apartment Leases, Rents Pick Up as UDR and Rivals See Turnaround Signs
Digested From "Apartment Leases, Rents Pick Up"
Wall Street Journal (06/16/10) by Dawn Wotapka
For the first time since the downturn, some of the country's biggest apartment owners are posting modest rent increases. According to Green Street Advisors, demand likely hit bottom in the first three months of this year -- two quarters ahead of expectations. Apartment trends remain closely tied to employment, analysts note. While the Labor Department earlier this month recorded disappointing hiring statistics for May, the economy has continued to add jobs. With layoffs no longer the most pressing economic woe, those who have managed to stay unemployed have been more likely to sign leases. In addition, now that the first-time home-buyer tax credit has expired, fewer renters are expected to make the leap to homeownership. Axiometrics reports that rents rose 2.8 percent nationwide from January through May. The biggest improvements included a 9.4 percent increase in Tacoma, Wash., and a 6.5 percent gain in San Jose, Calif. -- two markets benefiting from increased technology-sector hiring. Several public apartment owners are now forecasting that their 2010 results would be at the high end of their guidance. Since January, for instance, Denver-based UDR Inc. has boosted market rents by more than 4 percent. AvalonBay Communities Inc., meanwhile, recently announced that this year's funds from operations will likely range between $3.85 and $4 a share. That is up from the $3.60-to-$3.85 per-share range projected earlier in the year.
Industry News
Pride of Ownership May Be Fading, NAA Study Shows
Digested From "Pride of Ownership May Be Fading "
NorthJersey.com (06/20/10) by Donna Rolando
According to a recent survey of 2,000 adults commissioned by the National Apartment Association, 76 percent of consumers now believe renting to be a better option than homeownership -- a 5 percent increase from 2008. Half of the those respondents cited financial reasons, while 64 percent cited having no responsibility for maintenance and major repairs. New Jersey Apartment Association (NJAA) President Jeff Smith says the survey shows a more positive perception of renting. He adds, "You're seeing people really take seriously living in a rental." Mike Beirne of The Kamson Corp., which manages apartments throughout northern New Jersey, says those who rent tend to have less stress in their lives. He explains, "The apartment industry is very regulated today. Let the buyer beware applies more to single-family homes." NJAA member Ron Ladell of AvalonBay Communities Inc. says he was not surprised by the results of the survey. "For one," he reasons, "the sales market suffered more deeply than the rental market. Two, there are much more significant hurdles to overcome to purchase a home or a condo." And finally, demographic trends, such as the influence of the millennial generation, are leaning on the side of renting.
Denver Apartment Seekers Willing to Pay More to Be Near Light Rail
Digested From "Apartment Seekers Willing to Pay More to be Near Light Rail"
Denver Post (CO) (06/14/10) by Margaret Jackson
People in Denver are willing to pay about 4 percent more to rent an apartment that is within a quarter-mile of a light-rail stop, according to a recent analysis of the apartment market by Grubb & Ellis. The trend is pushing vacancy rates down in such communities while raising the cost of land near existing and potential transit stops. Tom Wanberg, senior vice president of investment services at Grubb & Ellis, confirms, "We do have a really young, educated work force that will pay a premium to be near light rail." Realizing this, developers paid an average of 25 percent more between 2006 and 2010 for properties within the quarter-mile radius of transit locations. Additionally, proximity to public transportation ranked second only to geographic location as a driver in resident leasing decisions, followed by common-area amenities. College students make up 40 percent of the population leasing near transit stops, while professionals in their 30s account for 35 percent of residents in those areas. Public transportation in the area is expanding as a result of a voter-supported 0.4 percent sales tax to build FasTracks, including six new train lines and extensions on the existing lines.
Apartment Developer Jack Meyer on Current Industry Practices
Digested From "5 Questions With Jack Meyer"
Tulsa World (OK) (06/18/10) by Robert Evatt
Jack Meyer has emerged as one of Oklahoma's most up-and-coming apartment developers, having completed his first apartment community in Sapulpa five years ago. To date, site selection and location planning have been big factors in his success. He states, "I am still refining my criteria for locations, and I anticipate that each subsequent location I choose will be better as a result. Generally, visibility, access, and unmet demand are the characteristics I look for. I also like the idea of bringing something new to an underserved community and therefore, I have to be creative and project growth." He observes that the apartment market has definitely been affected by the recent decline and gradual recovery of the housing market, both in Oklahoma and nationally. Meyer comments, "In general, to the extent homeownership is no longer a particularly attractive store of value and home loans are more difficult to qualify for, we benefit. . . . We do suffer, however, with everyone else in an environment of greater unemployment and will benefit from any upturn."
Phoenix Apartment Market Showing Signs of Rebound
Digested From "Phoenix Rental Market Showing Signs of Rebound"
Arizona Republic (06/18/10) by J. Craig Anderson
Commercial-property owners are counting on apartment communities to lead the Phoenix metro area's real-estate market toward recovery. Bret Zinn, vice president of multifamily investment services for Transwestern in Phoenix, confirms, "We are seeing a tremendous amount of buyer interest for multifamily assets in the Phoenix area. There is a scarcity premium being paid today, as the availability of saleable assets does not meet the demand of the deepening pool of investors." Zinn, a 15-year veteran of the apartment-sales business, adds that significant losses in the value of local apartment communities over the last couple of years is the main reason for the shortage of buildings for sale. As with most commercial real estate, many Phoenix-based apartment owners owe more on their commercial real-estate loans than the property is currently worth. In turn, most commercial property lenders have been hesitant to accept the financial losses they would incur from approving short sales on the properties. Zinn states, "Owners of apartments that would like to sell and take advantage of the many well-capitalized buyers in the marketplace are not able to do so without getting their lenders to agree to take a loss."
New York Multifamily Housing Sales Rebound Faster Citywide
Digested From "MF Sales Rebound Faster Citywide"
GlobeSt.com (06/17/10) by Paul Bubny
CPEX Real Estate has concluded a five-year study and found that multifamily housing assets fared better than other sectors in withstanding the worst of the investment sales drought across New York's five boroughs. Prices for apartments held up relatively well. With multifamily sales picking up in the fourth quarter of 2009 and 2010, signaling the start of a recovery in property sales generally, the report concludes "expectations are for activity and dollar volume to continue to grow [in the apartment category]. All in all, multifamily assets have been resilient over the past year as compared to office, retail and industrial assets and we expect the category to continue its preferred status." Looking at the five-year period between 2004 and 2009, researchers found that the relatively low overall decline in multifamily prices tended to favor more attractive assets. Lower-tier communities took the biggest hit in valuations. From peak to trough, dollar volume for apartments plunged 72 percent, compared to 75 percent for development sites, 80 percent for retail properties, 86 percent for office buildings, and 92 percent for mixed-use projects.
Camden Property Trust Announces Q2 2010 Dividend
Digested From "Camden Property Trust Announces Second Quarter 2010 Dividend"
Business Wire (06/15/10)
Camden Property Trust's board of trust managers has announced a second-quarter cash dividend of $0.45 per share, which will be payable July 16 to shareholders of record as of June 30. Camden specializes in owning, acquiring, and developing apartment communities nationwide. It currently owns and manages a portfolio of 185 communities, containing 63,658 apartments.
Rethinking Part of the American Dream
Digested From "Rethinking Part of the American Dream"
Wall Street Journal (06/17/10) by David Wessel
The American approach to homeownership and mortgages, once lauded for placing so many families into their own homes and for making mortgages easier to obtain, has turned into, in the words of one economist, "a case study in failure." Behind the benefits of homeownership tax breaks and the inner workings of Fannie Mae and Freddie Mac lurk two fundamental truths: One, the United States has for decades over-emphasized the necessity of homeownership; and two, too many Americans are hooked on a unique but costly kind of mortgage -- the 30-year fixed-rate loan that can be repaid slowly with no penalty. For many U.S. homeowners, the dream of buying a home has become a nightmare of foreclosure and monetary loss. Some of those new homeowners should have continued to rent, including those who took advantage of egregious subprime loans. Others relied heavily on refinancing to keep their homes, a strategy that worked as long as home prices continued to rise. Of course, as everyone knows, they did not. The most recent estimates show U.S. homeownership at a rate of around 67 percent and decreasing.
Apartment Vacancy Rates Rise in Canada
Digested From "Apartment Vacancy Rates Rise in Canada"
CBC News (Canada) (06/15/10)
According to Canada Mortgage and Housing reports, the apartment vacancy rate in Canada rose to 2.9 percent in April compared with 2.7 percent in April 2009. Finding available rental units in Quebec City and Regina is still a challenge, as the cities boast vacancy rates of 0.4 percent and 0.8 percent, respectively. Windsor, Ont., had the highest vacancy rate -- 12.4 percent. Alberta recently saw a boom in construction that was followed by a recession and subsequent job loss, which triggered a dramatic rise in apartment vacancies there and sent the rate to 6 percent. Still, its rental rates are among the highest in the nation. Overall, the cost of renting an apartment rose 1.8 percent between April 2009 and April 2010.
Tips for First-Time Apartment Residents
Digested From "Apartment Renting 101"
Wall Street Journal (05/23/10) by Anna Prior
The hunt for one's first apartment can be overwhelming and full of unknowns, from leases to rules to roommates. The article offers a few things to consider. Apartment owners and managers often ask for documentation to determine if applicants are qualified to rent. Kettler Management President Cindy Clare states, "Larger landlords will usually ask for a photo ID upfront before they even show you the apartment." She adds that they will also likely ask for pay stubs to verify income and a Social Security number in order to run a credit check. However, recent graduates often lack a credit and rental history. To this end, providing an apartment owner or manager with references from a dormitory's resident adviser and even a guidance counselor. Standard leases typically include the rent amount, what utilities are covered, the length of the lease, how much notice is required when moving out or not renewing a lease, security-deposit information, and what damages the resident will be responsible for paying, reports Michael Semko, senior counsel and vice president of the National Apartment Association.
New York's Financial District Sees Luxury Apartment Demand
Digested From "Financial District Sees Luxury Demand"
Wall Street Journal (06/15/10) by Brittany Huston
Demand for luxury apartments in New York's Financial District is picking up as are rent levels. During the first six months of this year, rental rates on luxury apartments in that part of Manhattan climbed 2.6 percent versus Dec. 31. According to Platinum Properties, the largest increase was for one-bedroom apartments, up 4.72 percent from the end of last year to an average of $3,038.22. The property services firm, which specializes in the Wall Street area, said 39 percent of new leases in the Wall Street area were for one-bedroom apartments. Platinum defines a luxury apartment as one in a building that has a 24-hour doorman and a lobby. Daniel Hedaya, an executive vice president for Platinum Properties, concludes, "The Financial District had a stigma that it was a ghost town after 6 p.m.. but that's not the case anymore. It's transitioning from a 9-to-5 neighborhood into a 24-hour neighborhood."
Temple U. Student Housing Popular . . . and Risky
Digested From "Temple U. Student Housing Popular . . . and Risky"
GlobeSt.com (06/17/10) by David Jacobs
Many developers are rushing to fill a needed gap in student housing around Temple University in Philadelphia. The campus is located in an area of the city that commercial real estate developers would likely not even consider due to demographic concerns. With Temple in place, though, there is an enormous amount of in-place demand. The university has had a 60 percent increase in enrollment in the last decade -- a growth spurt that forced the college to declare in 2004 that it no longer could provide on-campus housing for students after the first two years. This, in turn, sent private developers on a mad dash to build or rehab nearby properties. By 2008, more than 22,600 undergraduates were registered at the main campus and nearly 50 percent of those students were housed on or near campus. Temple presently has an estimated 5,000-bed shortfall on campus. While the opportunity is clearly there, developers face the daunting tasks of acquiring real estate, getting it zoned and approved, then getting the project financed. The most likely ones to succeed are those with a knack for moving along the approval and/or re-zoning process and, of course, those with the deepest pockets. However, unless Temple dramatically increases its annual enrollment, its current surplus of students will eventually dry up. In that event, the article's author writes, "the last developers to the party will be stuck holding the bag."
NAA Convention Attendees Have a Lot to Look Forward to in New Orleans
Digested From "In Treme, Where Jazz Was Born, You Feel the Heartbeat of New Orleans"
Washington Post (06/20/10) by Cheryl Lu-Lien Tan
Those attending the 2010 NAA Education Conference & Exposition this week in New Orleans have a wealth of entertainment options to consider. Visitors have always come to the Big Easy for the Creole food, the legendary Bourbon Street, and the wealth of jazz music. Lolis Eric Elie, a former Times-Picayune columnist and local documentary filmmaker, states, "You want to see New Orleans, just come to Frenchmen Street and walk up and down, listen to the music. This is where you want to be." In terms of eating, Cafe Du Monde is a popular, 24-hour place famous for its cafe au lait and beignets, fried, and covered in mounds of powdered sugar. Willie Mae's Scotch House, meanwhile, is touted to have the best fried chicken in the city. Not far from Willie Mae's is Li'l Dizzy's Cafe, a small corner eatery run by the Baquet family of restaurateurs. They been serving such staples as gumbo and fried chicken there for decades. The article's author writes: "At Li'l Dizzy's, the eye-popping brunch buffet is what you want." Other recommended spots are the Ernie K-Doe Mother-in-Law Lounge; the Cafe Rose Nicaud on Frenchmen Street, which is known for its coffee; and Blue Nile, a jazz club on Frenchmen Street.
Legislative/Legal News
Indiana Apartment Association Sues Hammond Over New Ordinance
Digested From "Hammond Facing Fed Housing Suit"
Gary Post Tribune (06/16/10) by Teresa Auch Schultz
The Indiana Apartment Association has filed a lawsuit against Hammond for charging apartment owners who do not live in the city hundreds more than those who do. The suit goes after Hammond's rental registration ordinance, which was adopted earlier this spring by the City Council. It charges apartment owners $250 a year for any apartment unit built after the ordinance goes into effect. However, the fee drops to $20 if the apartment owner lives in the actual apartment community. For owners who live in the city, the cost is $20 for the first 20 units, then $80 each for more. The Indiana Apartment Association charges that the ordinance violates the U.S. Constitution by placing an undue burden on interstate commerce. Consequently, the association is petitioning the court to declare the ordinance unconstitutional.
Pacifica Granted More Time to Save Apartments
Digested From "Pacifica Granted More Time to Save Apartments"
San Mateo Daily Journal (06/18/10)
Two apartment community owners in Pacifica, Calif., have been granted additional time to decide whether to formulate a plan to save their buildings or demolish them completely in light of a crumbling cliff. The owner of 320 Esplanade Ave. was given a 30-day extension on the decision. The owner of 330 Esplanade Ave. is working to repair the cliff beneath the building and does not have a set deadline. Neither owner was identified by name in the article.
Abstract News © Copyright 2010 INFORMATION, INC.
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