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Apartments Closed Out 2010 on Busy Note
Industry News
NAAEI 'Get Reel' Apartment Career Video Challenge
Apartment Owners Upgrade Rent Monitoring
Apartment Boom in El Paso Continues
Grubb & Ellis Forecasts Apartments to Rebound First
NYC Vacancies Fall, Rents Rise
Apartment Rents Rise in Hartford Area
Economic Forces Drive Population Shifts Across U.S
Dallas-Fort Worth Apartment Demand Hits 10-Year High
MBA Survey Recounts Positive First Nine Months of 2010
AvalonBay Buys Apartments in California and New Jersey
Cohen-Esrey Finds Opportunities in Apartments
Legislative/Legal News
Reform of Fannie, Freddie Unlikely This Year
Questions About Smoke Detectors at El Paso Apartments 
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Apartments Closed Out 2010 on Busy Note
Digested From "For Apartments, A Hot Winter"
Wall Street Journal (01/06/11) P. A8; by Dawn Wotapka
Bucking seasonal patterns, which tend to see the U.S. apartment market quiet down during the winter months, rental activity closed out 2010 on a busy note. According to Reis Inc., the fourth-quarter vacancy rate settled at 6.6 percent, slipping below 7 percent for the first time in two years. Occupancies, meanwhile, surged by an estimated 58,000 units -- the most in any fourth quarter for the past decade. The apartment sector appears to be preparing for a big rebound, Reis believes, after hitting bottom at the end of 2009. The market's comeback is reflected in effective rents -- the amount after discounts and incentives -- which bumped up 0.5 percent in the fourth quarter to an average of $986. Rents rose in some of the areas battered most by the housing crisis -- among them Miami and Phoenix -- while coming down in only five of the 82 major markets tracked by Reis, which researchers interpret as an "almost universal recovery."
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NAAEI 'Get Reel' Apartment Career Video Challenge
Digested From "NAAEI 'Get Reel' Apartment Career Video Challenge"
NAA News Release (01/11/2011)
In celebration of National Apartment Careers Month in February 2011, the NAA Education Institute (NAAEI) is calling for submissions for its "Get Reel" Career Video Challenge, where you can be eligible to win a trip to the 2011 NAA Conference & Exposition in Las Vegas. Create a 30-second video that covers a day in your life as an apartment industry professional. Anyone who works in apartment Management, Leasing or Maintenance may enter or for Residential Property Management (RPM) students, show us why you chose RPM as your major. Click here for the rules and regulations. All submissions must be entered by Jan. 31, 2011.
For information on the celebration of National Apartment Careers Month, click here.
Apartment Owners Upgrade Rent Monitoring
Digested From "Landlords Upgrade Rent Monitoring"
Wall Street Journal (NY) (01/04/11) by Dawn Wotapka
More and more apartment owners are beginning to use supply and demand to make quick adjustments to rent prices. To determine optimal rent, these owners are using sophisticated computerized models to monitor everything from competition to upcoming vacancies to seasonal patterns. Haendel St. Juste, a senior REIT analyst with Keefe, Bruyette & Woods, says the goal is to be "able to react quicker, changing your pricing more effectively to capture that incremental dollar." AvalonBay Communities Inc. recently finished a portfolio-wide rollout of Rainmaker LRO, a system developed by The Rainmaker Group Holdings Inc. Where the program was in use over the past year, AvalonBay saw increases healthy enough to justify the investment. Meanwhile, UDR Inc. has been using RealPage Inc.'s YieldStar Price Optimizer, which has helped it see new December rents climb almost 7 percent when compared with expiring leases at its Sullivan Place near Washington, D.C. Apartment owners using YieldStar see a 2 percent to 5 percent annual revenue premium over properties not using the service, reports YieldStar President Janine Steiner Jovanovic. However, not everyone in the apartment sector has embraced the new programs. Some smaller owners and managers say they have neither the time nor the money to invest in new technology. Those not adopting the technology also may use the systems to manage apartment renewal terms, ensuring managers are not saddled with too many vacant rental units during the winter off season.
Apartment Boom in El Paso Continues
Digested From "Apartment Boom in El Paso Continues"
El Paso Times (TX) (01/09/11) by Vic Kolenc
El Paso's apartment building boom is still going strong, with developers scrambling to meet an increasing demand for apartments fueled by the growing influx of soldiers to Fort Bliss. Approximately 1,600 rental units are on pace to be completed by the end of this year, and developers have plans in the works for construction this year and in early 2012 on an additional 1,900 apartments. More than 900 new apartments were added locally in 2010. Kelly Witherspoon, transaction manager in Austin for ARA Apartment Realty Advisors, predicts, "El Paso will see construction continue for a while. . . . El Paso's multifamily market fundamentals [rent growth, occupancies, absorption] are the strongest in the state, and arguably one of the strongest in the nation." Indeed, El Paso had a 97 percent apartment occupancy rate in last year's third quarter, reports ARA's latest El Paso market survey. Apartment rents climbed 7.7 percent from the third quarter of 2009 to this past year's July-through-September period. ARA's final tally showed that apartment rents averaged $690 in the quarter. Kathy Dodson, director of the city Department of Planning and Economic Development, concludes, "I think we're going to be in a really tight apartment market for at least the next few years."
Grubb & Ellis Forecasts Apartments to Rebound First
Digested From "In CRE, Multifamily To Rebound First"
MortgageOrb.com (01/04/11)
Grubb & Ellis Co.'s 2011 Real Estate Forecast shows the leasing market for all commercial property types is expected to begin a slow recovery this year. The research showed that modest job growth and a lack of home buyers is causing the number of renter households to outpace the current shadow supply. In turn, this should result in a relatively quick recovery for multifamily housing. Grubb & Ellis says the apartment sector's top markets in the year ahead will likely be New York; San Francisco; Long Island, N.Y.; San Jose, Calif.; and Los Angeles. Generation Y will further boost apartment demand across all markets, the study predicts. Looking at other sectors, employers are expected to add just 1.5 million net new payroll jobs in 2011, leading Grubb & Ellis to describe the office market's recovery in the new year as "half speed."
NYC Vacancies Fall, Rents Rise
Digested From "Vacancies Fall, Rents Rise"
Wall Street Journal (01/10/11)
Reis Inc. reports that the average vacancy rate for New York City rental apartment buildings was down in the fourth quarter, while average rents climbed. According to the research firm, developers delivered 7,118 rental apartments during 2010, up from 1,377 units the year before and the largest volume since 1987. Part of the reason volume was so high last year was because developers were able to restart projects that were previously postponed during the downturn. Nevertheless, Reis researchers are projecting that only 1,422 rental apartments will be delivered in 2011.
Apartment Rents Rise in Hartford Area
Digested From "Apartment Rents Rise In Hartford Area"
Hartford Courant (CT) (01/04/11) by Kenneth R. Gosselin
Rentjungle.com reports that the apartment rental market in Hartford, Conn., showed modest improvement in 2010, with average monthly rents rising 4.3 percent in the fourth quarter versus the same three-month period a year earlier. During the last three months of 2010, the average monthly rent for a Hartford apartment rose to $977 from $937 a year earlier. The gains, though, were uneven throughout the year -- strong through spring and summer, but weakening in the fall. The average rent in Hartford, which includes an area 10 miles from the city's center, climbed as high as $1,036 in the third quarter. They then fell almost 6 percent by Dec. 31. Jon Pastor, Rentjungle.com's chief executive, states, "Rents were up significantly in the first three quarters of 2010 in most markets. The fourth quarter saw a slight flattening of that trend, but nothing that would be considered a reversal." The an apartment search engine and research firm's survey is based on 3,000 advertisements a month in Hartford and 36,000 across Connecticut. Brian Lemire, incoming president of the Connecticut Apartment Association, said he believes the Hartford market is in significantly better shape than it was last year at this time.
Economic Forces Drive Population Shifts Across U.S
Digested From "Economic Forces Drive Population Shifts Across U.S., Census Shows"
RISMedia (12/30/10)
The recession changed U.S. mobility patterns at the end of the decade, with more people relocating to states with healthy job markets and affordable housing and fewer people putting down roots in the Sun Belt. Data from the 2010 Census shows a 9.7 percent jump in population between 2000 and 2010, the smallest gain since the Great Depression. Experts attribute the slower growth to a lower birth rate and a decline in immigration. With regard to mobility, more Americans have been forced to stay put because they cannot sell their homes or owe more on their mortgages than the property is worth. The economic downturn also has forced some young people to put off marriage and children and continue living with their parents. While Texas experienced a 21 percent surge in population over the last decade due to bargain home prices, lower unemployment rates, and pro-business policies, Florida posted a growth rate of just 17.6 percent, marking a substantial decrease in population growth since the 1970s. University of Florida demographer Stanley Smith says the state would have welcomed about 500,000 more residents between 2000 and 2010 had there been no recession. States with large aging populations and high unemployment rates could post slower population growth rates over the next 10 years, putting a damper on state and local government budgets and economic growth.
Dallas-Fort Worth Apartment Demand Hits 10-Year High
Digested From "DFW Apartment Demand Hit 10-Year High in 2010"
Fort Worth Star-Telegram (01/04/11) by Sandra Baker
MPF Research reports that demand for apartments in the Dallas-Fort Worth area reached a 10-year high in 2010, thanks to an improving job market and fewer people moving out of rental units to purchase homes. According to MPF analysts, North Texas recorded demand for "a stunning" 23,470 apartments last year -- the most since 27,490 units were tallied in 2000. The occupancy rate was 91.3 percent as of Dec. 31, an improvement from 88.8 percent at the end of 2009. By contrast, the U.S. apartment occupancy rate is 93.5 percent. Greg Willett, MPF's vice president of research, comments, "Apartment move-outs for home purchase are running way below the historical average. All the new residents signed now represent additional net demand, rather than just replacements for folks leaving to other housing options." He further reports that apartment communities in the region are seeing high resident retention when leases expire. In total, MPF notes that 10,753 apartments were built in 2010 in the Metroplex.
MBA Survey Recounts Positive First Nine Months of 2010
Digested From "Office Property-Sales Jumped 122 Percent in First Three Quarters of 2010"
Real Estate Channel (01/07/2011) by Alex Finkelstein
The Mortgage Bankers Association's latest office survey finds that office property sales were up 122 percent in the first three quarters of 2010. Apartment sales were up 97 percent, meanwhile, while cap rates for apartments fell to 6.7 percent from 7.1 percent. "The most heartening developments have been in consumer spending, which rose at a 2.8 percent annual rate in the third quarter and appears to be on track to equal that gain in the current quarter," the report states.
AvalonBay Buys Apartments in California and New Jersey
Digested From "AvalonBay Acquires Three Apartment Communities in California and New Jersey"
TradingMarkets.com (01/07/11)
AvalonBay Communities Inc. has been on an acquisition spree the past couple of months. Among its most recent purchases are the Canyonwoods apartment community in Lake Forest, Calif.; the Fox Run apartments in Plainsboro, N.J.; and the Waterstone Carlsbad apartment community in Carlsbad, Calif. AvalonBay Value Added Fund II LP, a private, investment vehicle in which AvalonBay has a 31 percent equity interest, purchased Canyonwoods in November 2010 for $24.7 million, Fox Run the following month for $86.5 million, and Waterstone Carlsbad earlier this month for $78.1 million. With these three additions, Fund II has acquired nine communities comprising 3,936 apartments for $569 million.
Cohen-Esrey Finds Opportunities in Apartments
Digested From "Cohen-Esrey Finds Opportunities in Multifamily Housing"
Kansas City Business Journal (01/07/11) by Krista Klaus
Cohen-Esrey Real Estate Services LLC is gearing up to take advantage of a projected recovery in the apartment market to amp up development and acquisition activity. Late last year, the firm acquired apartment communities in St. Louis and Louisville for a total of $8.6 million. R. Lee Harris, managing partner of Cohen-Esrey, said a favorable interest rate environment coupled with a higher risk premium will make it possible for an additional eight to 10 apartment investments in the new year.
Legislative/Legal News
Reform of Fannie, Freddie Unlikely This Year
Digested From "Reform of Fannie, Freddie Unlikely Despite House Republican Push"
The Hill (01/04/11) by Peter Schroeder
The reform of Fannie Mae and Freddie Mac is such a large undertaking that it is unlikely to be completed this year, according to mortgage industry experts. Further, the housing market is too fragile for lawmakers to completely kill them off this year despite Republicans’ promises to do so, and divisions over what to do with the firms along with battle scars from previous housing skirmishes make it doubtful that much progress will be made this year. "There can’t be a magic silver-bullet solution that happens in 2011," said Paul Leonard, vice president of government affairs for the Housing Policy Council. "It'll have to be the start of the big solution." Others agreed, saying this will be a year for ideas to be fleshed out but not necessarily for action to be taken. While some Republicans continue to publicly insist that they will move soon to reform the mortgage gains, most appear willing to do it slowly due to market conditions. In fact, many fear a double-dip in the housing market this year, and suddenly removing Fannie and Freddie could worsen it.
Questions About Smoke Detectors at El Paso Apartments
Digested From "Questions About Smoke Detectors At Apartment Raised"
KFOXTV.com (01/07/11) by Monica Balderrama
Dozens of northeast El Paso, Texas, residents were recently displaced after a fire ripped through the Alcantar Apartments community where they lived. Some residents immediately raised questions about the lack of smoke detectors on site. Fire officials are urging apartment owners and managers to equip their communities with smoke detectors. Battalion Chief Sam Pena with the El Paso Fire Department states, "By city code, all apartment complexes are required to have working smoke detectors in each of the sleeping area, outside the sleeping area and coverage for the living areas." He added that it is the residents' responsibility to make sure the detectors are in working condition in units where they are installed. Pena remarks, "Once the apartment is rented, it's the resident's responsibility to have to make sure they're working. They check it once a month and that they have their own evacuating plan." Recent amendments to the city's fire code mandates that all new apartment construction is required to install a combination smoke detector and carbon monoxide detector.
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