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Apartment Vacancy Rates in U.S. to Decline in 2010, CBRE Says
Industry News
Barney Frank Tells Real Estate Groups: 'I Shouldn't Be a Homeowner'
Short-Term Apartment Leases Can Make Sense
Lower Apartment Vacancy Rates Set to Hike Hub-Area Rents
Central Ohio Apartment Owners Still Reeling From the Recession
NBS Multifamily Management Launches, Focusing on West Coast Apartments
Germany's CR Capital Part of Europe's REIT Renaissance
Southeast Venture Targets Apartment Market
REITs Show Rising Prices but Growing Risks
Legislative/Legal News
San Diego Set to Require Multifamily Housing Water Meters
Politics, Shaky Economy Create No Rush to Restructure Fannie and Freddie
Police, Apartment Owners Team Up To Fight Crime in Cincinnati
Recent Seminar Shows the Importance of Detailed Resident Screening
California Town OKs Fake Grass for Apartments
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Apartment Vacancy Rates in U.S. to Decline in 2010, CBRE Says
Digested From "Apartment Vacancy Rates in U.S. to Decline in 2010, CBRE Says"
Bloomberg (03/11/10) by Prashant Gopal
CB Richard Ellis Group Inc. reports that apartment vacancies in the U.S., which hit an all-time high of 7.4 percent in 2009, will decline throughout 2010 as job losses stabilize and fewer new rental homes are added to the market. The nation's vacancy rate will fall to 6.8 percent in 2010, the property broker forecasts. Effective rents, meanwhile, will end the year less than 1 percent down from the fourth quarter of 2009. In some areas, apartments could fill up quickly as employers begin hiring again and Americans in their 20s and early 30s give up sharing housing with roommates and parents. To this end, AvalonBay Communities Inc. CEO Bryce Blair believes developers will have to ramp up rapidly to meet demand after cutting apartment starts by 58 percent in 2009. Manhattan, Boston, Denver, Seattle and the nation's capital are among the markets where rents are expected to rise. In Boston, for instance, monthly rates are projected to climb 2.8 percent in this year's fourth quarter versus the same period a year earlier. Such incentives as parking and rent reductions might be boosting the Beantown market, notes Matthew Petty, general manager of Exit Realty Associates in Boston. Rents in the city slid 2 percent in the last three months of 2009 compared with a year earlier and should recover this year. Petty concludes, "Landlords have woken up to the fact that the economy is not as strong as it was three years ago, and rents have become more reasonable."
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Barney Frank Tells Real Estate Groups: 'I Shouldn't Be a Homeowner'
Digested From "Rep. Barney Frank: 'I Shouldn't Be a Homeowner'"
The Hill (03/08/10) by Christina Wlkie
In a recent speech Friday to three real estate groups -- the National Association of Hispanic Real Estate Professionals, the National Association of Real Estate Brokers and the Asian Real Estate Association of America -- Rep. Barney Frank (D-Mass.) said that despite having owned condominiums before, he prefers to rent his living space. Frank described himself as a "double renter," with an apartment in the District of Columbia and one in Newton, Mass. He remarked, "Given my personality and my work demands, I shouldn’t be a homeowner. I don’t want to be in the middle of a committee session and be told the pipes broke or the roof is leaking or this or that. I need when that happens to be able to call somebody and say, 'Please fix it and call me when I can come home.'"
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Short-Term Apartment Leases Can Make Sense
Digested From "Short-Term Leases Can Make Sense"
NorthJersey.com (03/14/10) by Donna Rolando
More and more of today's potential apartment residents are seeking out short-term leases -- ones that typically run less than six months -- due to such factors as uncertain employment and the need to stay flexible within their work and family situations. Peggy Abkemeier of Rent.com reasons, "Some renters would prefer shorter-term leases for the sheer flexibility they provide to act on various types of opportunities, whether that be moving for work, family, travel or a better apartment down the street. The trade-off is that flexibility usually comes with a higher price. However, there are cases where shorter-term leases can really pay off for the renter." They really come to the rescue for those in temporary work assignments, for instance. A short-term lease can also benefit an apartment resident who has just moved to a new city and needs time to locate the perfect area to settle down. Finally, such leases can enable a renter to search for a job outside his/her commuting zone. For apartment owners, the upside is sustained occupancy. The downside, with resident turnover higher, there is the cost involved each time an apartment needs to be prepped for new occupancy. Inevitably, there is also the risk of attracting an unreliable resident from time to time. Charging a premium is the most common option. Ron Ladell, vice president of Avalon Bay Communities, states, "Our standard lease is one year, but we do short-term leases for people who require flexibility and are willing to pay a premium."
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Lower Apartment Vacancy Rates Set to Hike Hub-Area Rents
Digested From "Lower Vacancy Rates Set to Hike Hub-Area Rents"
Boston Herald (03/12/10) by Thomas Grillo
CB Richard Ellis forecasts that vacancy rates in Greater Boston's apartment communities are expected to decline this year, pushing up rents slightly. CBRE projects that the region's vacancy rate will drop to 4.6 percent by the end of December from 5.4 percent at the end of 2009. Meanwhile, the average effective rents are expected to rise by almost 3 percent to $1,458 per month, up from $1,417. Gleb Nechayev, senior economist at CBRE, comments, "Boston is faring quite well, due in part to the fact that the residential housing market has held up compared to lots of other cities." For its results, CBRE researchers tracked data in five Bay State counties and interviewed apartment owners who own communities of five or more rental units.
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Central Ohio Apartment Owners Still Reeling From the Recession
Digested From "Recession Is Hurting Apartment Owners"
Columbus Dispatch (OH) (03/12/10) by Jim Weiker
The weak economy is translating into higher apartment vacancy rates in central Ohio this year, with rates increasing from a little more than 6 percent last spring to approximately 7.5 percent today. Robert Vogt, a partner in VWB Research, and Daniel Hogan, a Columbus multifamily-market analyst, point to the first-time homebuyer tax credit, greater numbers of single-family homes available for rent, and greater instances of apartment-sharing as reasons for the increase in vacancies. Class A apartments are still faring well in the downtown Columbus area. However, Class B and C apartment communities are seeing higher vacancies as a result of massive job losses in blue-collar industries. Despite the trend locally, national forecasts expect apartment vacancies in many parts of the country to fall in 2010.
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NBS Multifamily Management Launches, Focusing on West Coast Apartments
Digested From "Portland Commercial Real Estate Experts Launch New Company, NBS Multifamily Management"
Centre Daily Times (PA) (03/11/10)
Norris, Beggs & Simpson Companies and Susan Stratton are teaming up to found NBS Multifamily Management, which will manage apartment communities of 100 or more units on the West Coast. NBS President J. Clayton Hering expects the demand for housing to increase as the job market grows, thus necessitating professional, value-added apartment management. He further believes more people will enter the apartment market because lenders have begun to require greater equity and better credit from those interested in becoming homeowners. Norris, Beggs & Simpson Companies has been operating as a full-service commercial real estate company for 77 years, and Susan Stratton is a successful apartment management executive with more than two decades of experience. NBS expects to hire more than 100 staffers to maintain its various communities.
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Germany's CR Capital Part of Europe's REIT Renaissance
Digested From "REITs Roll Out in Europe"
Wall Street Journal (03/10/10) P. C11; by William Boston
With European property markets starting to recover from the recession, there are early indications that a long-awaited REIT breakout could finally be in the works. Berlin-based CR Capital Real Estate AG, for instance, has confirmed its goal to list as a REIT in 2011 following its planned listing by summer this year on the Prime Standard subsector of the Frankfurt Stock Exchange. The Berlin-based company, which was formed nearly two years ago, focuses primarily on residential property. Under German law, REITs are not permitted to own residential property in Germany built prior to 2007 when the law was enacted. As a result, CR Capital focuses its housing investment in new units in the Berlin and Potsdam regions. Residential real estate now accounts for 43 percent of its total portfolio. The company's most recent project was launched last month with the acquisition of a plot in Berlin's trendy Prenzlauer Berg district of Berlin. The plan there will be to erect a seven-story building with 20 apartments. When the deal was announced Feb. 22, Capital Chief Executive Thomas Ehrich said the project demonstrated that the company is "moving successively towards becoming Germany's first residential REIT."
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Southeast Venture Targets Apartment Market
Digested From "Southeast Venture Targets Apartment Market"
Nashville Business Journal (03/08/10) by Eric Snyder
Nashville-based Southeast Venture has announced plans to expand its brokerage services to include multifamily housing investment sales services. Managing partner Wood Caldwell remarks, "We believe there is a lot of potential in the apartment market. Our goal has always been to provide comprehensive services for our clients and this is a logical step for us." The new division will be headed by Tarek El Gammal, a member of the Greater Nashville Apartment Association who sits on its statistics committee. He is also a past president of the 12 South Neighborhood Association.
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REITs Show Rising Prices but Growing Risks
Digested From "REITs Show Rising Prices but Growing Risks"
Washington Post (03/14/10) by Jeffrey R. Kosnett
REIT indexes have enjoyed a 90 percent rise since March 2009. Commercial real estate has traditionally lagged the business cycle. To this end, REIT shares do not normally rebound until after it is apparent the economy is well off the bottom. In this stop-and-go recovery following the Great Recession, though, the timing for property investment has been backward. Columnist Jeffrey R. Kosnett writes: "I would ascribe this REIT surge to general investor bullishness and a hunger for dividends rather than to a commercial real estate rebound. If the rally isn't backed up by improved industry fundamentals soon, it will crash and burn." This bullishness is partly the result of some REIT analysts suspecting that publicly traded REITs "will poach fine properties cheaply from distressed owners." Kosnett calls that "wishful thinking," adding, "The fact is, REITs face stiff competition for discounted trophy properties from Russian and Chinese billionaires and other global moneybags." Most REITs will be faced with either refinancing or erasing large balloon debts this year and in 2011. Kosnett concludes, "The credit markets are no longer frozen, but banks are demanding -- and getting -- harsher terms to re-extend REIT debt."
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Legislative/Legal News
San Diego Set to Require Multifamily Housing Water Meters
Digested From "S.D. Could Require Multifamily Water Meters"
San Diego Union-Tribune (03/08/10) by Mike Lee
San Diego's city council is preparing to set a new water conservation benchmark by requiring developers of new mixed-use communities and multifamily housing to install individual water meters in each unit where three or more units exist. City leaders say the measure will encourage water conservation by creating incentives, adding that it is easier for people to change when they can see exactly how much they are spending and using. Studies have shown that residents who rent decreased their water use by as much as 39 percent when they were made to pay for the individual amount rather than having their water bill included in the overall monthly bill. Under the ordinance, the city's Water Department would charge owners and managers, who would then be responsible for providing individual bills.
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Politics, Shaky Economy Create No Rush to Restructure Fannie and Freddie
Digested From "Politics, Shaky Economy Create No Rush to Restructure Fannie and Freddie"
Washington Post (03/11/10) by Zachary A. Goldfarb
The federal government has spent the past six months looking to roll back its emergency efforts at propping up the nation's financial markets, with the notable exception of its involvement in mortgage giants Fannie Mae and Freddie Mac. As the government has pledged more and more money to cover the two government-sponsored enterprises' losses, it has assured the public that planning was underway for overhauling the firms so the bailouts would end. As recently as the end of last year, the White House said it expected to release a preliminary report on how to remake Fannie Mae and Freddie Mac around Feb. 1. No plan was produced, though. In fact, Treasury Secretary Timothy F. Geithner has since clarified that it would be at least another year before the government proposes how to restructure both. Michael Barr, assistant Treasury secretary for financial institutions, remarks, "We've obviously had our hands full, as has the Congress. We're just beginning to see some positive signs in the housing market, but we're not out of the woods yet and so we want to be careful to be sure that we had an appropriate, paced process."
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Police, Apartment Owners Team Up To Fight Crime in Cincinnati
Digested From "Police, Landlords Team Up To Fight Crime"
WLWT Channel Cincinnati (03/13/10)
The city of Cincinnati is getting aggressive in fighting crime in apartment communities. A special training session was recently held at the Community Action Agency to help the city's apartment owners and managers do a better job keeping illegal criminal activity off their premises. The program is modeled after the National Landlord Training Program supported by the U.S. Justice Department. Cincinnati Police Lt. Bret Isaac states, "It's critically important we work in partnership, because a lot of times crime happens in [these] places. So if we can get to a point where we can have specific knowledge about what's going on in a specific property, we can be more effective in dealing with the problem." Session topics ranged from an apartment owner's rights and responsibilities under the law to how to get maximum cooperation from local law enforcement.
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Recent Seminar Shows the Importance of Detailed Resident Screening
Digested From "Records Key To Renting, Police Say"
Courier Press (03/11/10) by Garret Mathews
During a recent seminar about Evansville's Drug House Ordinance, police cautioned apartment managers about the importance of detailed screening of prospective residents. Jeff White, legal counsel for the Apartment Association for Southern Indiana, warned against limiting a screening to felony arrests. Detective Keith Whitler, meanwhile, urged apartment owners and managers go to the county clerk's office, get background checks, and get access to public records. Whitler advised that they put criteria in writing by listing the criminal issues that will not be tolerated and including release language that permits eviction in the case of an untruthful resident. He added that some apartment residents will fill out paperwork in an intentionally illegible fashion in order to avoid being contacted for violations.
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California Town OKs Fake Grass for Apartments
Digested From "Garden Grove OKs Fake Grass for Apartments, Businesses"
Orange County Register (CA) (03/11/10) by Deepa Bharath
In Garden Grove, Calif., the City Council last week voted 3-1 to allow apartment communities, office buildings and shopping centers throughout the city to install artificial turf on their properties. Last spring, a majority of council members approved the use of artificial turf for single-family homes requiring residents to obtain approval from planning officials to make sure they have satisfied several conditions before installing the turf. Since that ordinance passed, Senior Planner Lee Marino said his staff has received inquiries from apartment owners about installing fake grass on their grounds. The conditions that apply to single-family homes will also apply to apartment, commercial and industrial properties. In addition to the turf having to have a minimum eight-year "no fade" warranty, it must be installed by a licensed professional. Owners will also be required to submit three sets of landscape and irrigation plans to Garden Grove's Planning Division for review and approval prior to installation. Resident Charles Mitchell states, "The idea of artificial turf with our drought condition is a good one."
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