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Apartment Vacancies Declining Nationwide
Industry News
Residents Turn to Lenders to Repair Buildings
Madison's Falling Vacancies Good for Investors
Historic Houston Site Awaits New Life, As Apts
Cities Build 'Aerotropolises' for Growth
Obama Tells Facebook Friends About Renting
Apartment Vacancies Fall, Rents Rise in Colorado Springs
Plainfield, N.J., Apartments to Be Auctioned in May
Equity Residential Snaps Up L.A. Apartments
Historic Nevada Auction to Include Apartments
Fannie Mae: Apartment Foreclosures Piling Up
Legislative/Legal News
Could Debt Worries Speed Up Fannie, Freddie Overhaul?
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Apartment Vacancies Declining Nationwide
Digested From "Apartment Vacancies Declining"
Associated Press (04/24/11)
Across the country, apartments are filling up and owners are boosting rents as more renters, feeling better about the economy and their jobs, are moving out of their parents' home or ditching a roommate. Rental activity recorded its best start to the year since 1999, according to real estate tracker Reis Inc. The vacancy rate dropped to levels not seen since mid-2008, and rents have increased for the past five quarters to $991 per month. Concessions are also sliding, as apartment owners are back to offering typical inducements like one month free. A year ago, new tenants received three to four months rent-free to ink a lease. Analysts expect apartment vacancies to shrink and rents to rise all the way through 2013 as the economy recharges and the labor market improves. The cities where demand for apartments is the highest are on the coasts, including New York, Washington, D.C., Boston, Los Angeles, San Francisco, Seattle, and San Jose, Calif. New supply in these areas is low and the local economies are adding jobs.
Industry News
Residents Turn to Lenders to Repair Buildings
Digested From "Tenants Turn to Lenders to Repair Buildings"
Wall Street Journal (04/25/11) by Eliot Brown
Instead of targeting apartment owners as they have in the past, housing advocacy groups are teaming up with New York City Mayor Michael Bloomberg in calling on bank regulators to help fix up deteriorating apartment buildings. Advocates say that hundreds of buildings in the city are falling into disrepair and note that with many of these properties now in foreclosure proceedings and building-code violations stacking up, banks and other debtholders will help decide their future. Lenders are being asked to fix up properties themselves, and to sell troubled mortgages at discounts so the new owners will be able to afford repairs. However, lenders have rejected the notion that they should sell foreclosed properties or distressed mortgages for less than what buyers will pay, arguing that they have an obligation to maximize returns for their investors. To raise pressure on the banks, advocates and Bloomberg officials recently met with Federal Deposit Insurance Corp. officials to convince the bank regulators to intervene on the issue. The FDIC did not make specific commitments on the issue, say attendees. Elected officials and advocates are hoping regulators will be able to push banks to sell properties to buyers with strong track records at sustainable prices. A spokesman for the city's Department of Housing Preservation and Development says the agency was encouraged by the initial talks with the banking regulators and it expects to follow up in coming days.
Madison's Falling Vacancies Good for Investors
Digested From "Falling Apartment Vacancy Rates Could Mean Good Deals for Local Investors in Multifamily Real Estate"
Madison Capital Times (04/20/11) by Karen Rivedal
According to Madison Gas & Electric's latest survey of apartment communities, the Madison, Wisc., area's vacancy rate fell to its lowest level since at least 2005 during this year's first quarter. Indeed, more people locally appear to choosing apartments over home purchases. The first quarter's vacancy rate of 2.85 percent was down from the 2.94 percent seen in the fourth quarter of 2010. Keller Williams agent Dan Miller observes, "More people are choosing to rent versus buy, driving vacancy rates lower and apartment rents higher. We see this trend continuing for the foreseeable future due to the current path of the market and the future impact of state and local budget cuts on the rental market." Miller and other Realtors expect fewer home purchases in the Dane County area over the next couple of years partly because of pay cuts many public employees are slated to receive under Gov. Scott Walker's budget proposals.
Historic Houston Site Awaits New Life, As Apts
Digested From "Historic Site Awaits New Life"
Houston Chronicle (04/20/11) by Purva Patel
Developers are reportedly close to finalizing a deal to buy the former Texaco building in downtown Houston for redevelopment into apartments. Michael Hassler, a real estate broker with CB Richard Ellis in Houston representing owner Kimberly-Clark Corp., recently told the board of the Downtown Redevelopment Authority that Dallas-based EFO Holdings was close to buying the 13-story building. "Kimberly-Clark feels comfortable we have the right buyer and feel comfortable we will get the deal done," Hassler said at a public board meeting. Hassler was at the authority's recent board meeting to notify it that EFO would likely apply for a grant to help pay for a renovation of the historic property. The Downtown Redevelopment Authority operates a tax increment reinvestment zone that encompasses 60 downtown city blocks. Greg Willett, vice president of research and analysis for MPF Research in Dallas, said the difficulty many potential homebuyers are having getting financing is driving demand for apartments throughout the city. "Plus, overall construction has dropped to such an usually low level, it's a market that's going to get stronger and stronger over the years," he said. Occupancy for apartments built since the 1990s is at 94 percent in the downtown market, while average rents climbed 3.8 percent to $1,179 during the first quarter of the year, compared with the same period last year. Bruce McClenny, president of Apartment Data Services in Houston, notes that those who rent are renting longer. "There are more and more developers and investors looking more toward apartments right now because of that demand," he said, adding that he's tracking at least 25 possible deals for new apartments around Houston that are being discussed by those in the industry.
Cities Build 'Aerotropolises' for Growth
Digested From "Cities Build Airport Cities — 'Aerotropolises' — for Growth"
USA Today (04/19/11) by Roger Yu
Development projects next door to airports are gaining popularity throughout the United States, as financially struggling cities look to attract export-oriented and high-tech businesses. Several cities are latching onto the trend of trying to build all the aspects of a city around an airport, a concept known as an "aerotropolis" by planners. The push is for aviation authorities to partner with private companies to develop land near the airport to attract apartments, office space, warehouses, logistics centers, retail stores, and recreational facilities. Atlanta, Detroit, Indianapolis, Milwaukee, and the Winston-Salem/Greensboro region in North Carolina all currently have plans to pursue aerotropolises.
Obama Tells Facebook Friends About Renting
Digested From "Obama Tells FB Friends About Renting"
HAA Blog (04/21/11)
Speaking at his April 20 townhall meeting at Facebook headquarters, President Obama commented on his administration's housing policy. "The challenge we still have ... is that a lot of people who bought a first home when credit was easy now are finding that credit is tough," Obama stated. "And we've got to strike a balance. Frankly, there's some folks who are probably better off renting. And what we don't want to do is return to a situation where people are putting no money down and they've got very easy payment terms at the front end and then it turns out five years from now, because they've got an adjustable rate mortgage, that they couldn't afford it and they lose their home."
Apartment Vacancies Fall, Rents Rise in Colorado Springs
Digested From "Springs Apartments Getting Tough to Find"
Colorado Springs Gazette (04/21/11) by Rich Laden
Colorado Springs' apartment vacancy rate fell to 5.8 percent during the first three months of this year, a decrease from 7.2 percent in the fourth quarter of 2010, notes a Colorado Division of Housing and the Apartment Association of Southern Colorado survey. This latest vacancy rate was the lowest since the 5.4 percent registered in the third quarter of 2001, Housing Division researchers further note. Apartment Insights also pegged the first quarter vacancy rate at 5.8 percent, which it called the lowest in at least five years. Monthly apartment rents, meanwhile, averaged $737 a month during this year's January-through-March swing -- a $27 from the same period a year earlier. The median of all rents was $714.14 in the first quarter, an increase from $687.15 a year ago. Both reports note that vacancy rates and monthly rents vary around the Colorado Springs metro area, depending on location, the age of the apartment community, and the various amenities offered. For the past several years as vacancies rose, apartment residents have enjoyed stable rents, along with such concessions as free utilities, observes Doug Carter of Apartment Insights and a commercial broker for Sperry Van Ness. During that time, however, many apartment owners and managers delayed repairs and much-needed improvements. With rental housing now in greater demand locally, these same owners and managers have begun to hike rents partly to pay for deferred maintenance.
Plainfield, N.J., Apartments to Be Auctioned in May
Digested From "Plainfield Apartment Properties Due to Be Auctioned"
MyCentralJersey.com (04/22/11) by Mark Spivey
As part of the dramatic decline of once-powerful city real-estate giant Connolly Properties, a total of nine Plainfield, N.J. apartment communities are due to be auctioned in May. The various communities, which range in size from 16 to 69 units, will go to auction May 24 at the local Woodbridge Hilton. Opening bids are expected to range from $250,000 to $1.5 million.
Equity Residential Snaps Up L.A. Apartments
Digested From "Plots & Ploys: Equity Snaps Up Apartments in L.A."
Wall Street Journal (04/20/11) by Dawn Wotapka
Eight years ago, developer Kor Group converted downtown Los Angeles's landmark General Petroleum headquarters into luxury rental apartments and renamed it Pegasus. Today, Kor and equity partner Buchanan Street Partners are taking advantage of Southern California's healthy apartment-sales market and have sold the 322-unit building for $100 million. Apartment giant Equity Residential is the buyer. The purchase ranks as one of the city's largest multifamily housing deals in the past year and comes as investors are rushing to the apartment sector in other parts of the country. Lured by strong occupancy and increasing rents, buyers are especially interested in coastal cities where lots of new units cannot easily flood the market and bring down rents. For its part, Pegasus is around 96 percent occupied, with rents averaging about $1,800 per apartment.
Historic Nevada Auction to Include Apartments
Digested From "Largest U.S. Auction Ever at $1 Billion Nevada Assets Slated for May"
CoStar Group (04/19/11) by Mark Heschmeyer
Auction.com is partnering with Archetype Advisors to auction $1 billion of Nevada commercial real estate properties and notes, making it the biggest commercial real estate and note auction in U.S. history. The three-day auction will be held May 17-19 in a simultaneous online and live event in Las Vegas. The offering will include everything from apartment communities and retail properties to land and industrial assets spread across Nevada. Most of the 55 properties are in Las Vegas, with additional assets in Carson City, Henderson, Reno, and Sparks. Auction.com CEO Jeff Frieden states, "In our opinion, the unprecedented volume of distressed real estate we are seeing here represents the bottom of the market for Nevada and in particular, Las Vegas. The quality and condition of these assets will compel even the most sophisticated of investors to take notice. In any financial cycle, there is a best time to be active. For investors interested in Nevada, we believe that time is now."
Fannie Mae: Apartment Foreclosures Piling Up
Digested From "Apartment-Building Foreclosures Piling Up"
Wall Street Journal (04/20/11) P. C10; by Nick Timiraos; Dawn Wotapka
Fannie Mae is dealing with an increase in souring loans backing apartment communities made as the market peaked four years earlier, with Arizona, Florida, Georgia, and Ohio accounting for 39 percent of its seriously delinquent loans. Freddie Mac's multifamily housing book has turned in a much stronger performance, by contrast, holding just 14 foreclosed properties as of Dec. 31 and registering almost $1 billion in net income from its multifamily business in 2010. Fannie Mae and Freddie Mac's share of multifamily loan purchases soared to 85 percent in 2009 from 29 percent in 2007, reports the Mortgage Bankers Association (MBA). As such, MBA officials credit the two government-sponsored enterprises with shielding apartments from the credit crisis that hit office and retail properties so hard.
Legislative/Legal News
Could Debt Worries Speed Up Fannie, Freddie Overhaul?
Digested From "Could Debt Worries Accelerate Fannie, Freddie Overhaul?"
Wall Street Journal (04/18/11) by Nick Timiraos
Some experts believe concerns about the nation's debt could prompt federal lawmakers to act on Fannie Mae and Freddie Mac reform prior to the 2012 election. The nation's AAA-rating was put on negative outlook by Standard & Poor's on April 18, mainly due to the costs of keeping the government-sponsored enterprises (GSEs) in conservatorship. Already, the government has spent $148 billion on Fannie Mae and Freddie Mac, and S&P believes losses ultimately could hit $280 billion. If the government capitalizes the GSEs on a commercial basis, S&P says losses could reach $685 billion. "We estimate that it could cost the U.S. government as much as 3.5 percent of GDP to appropriately capitalize and relaunch Fannie Mae and Freddie Mac, two financial institutions now under federal control, in addition to the 1 percent of GDP already invested," says the report.
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