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Big Ramp-Up In Apartment Development Expected in 2011
Industry News
NAAEI 'Get Reel' Apartment Career Video Challenge
San Diego County Apartment Association Joins NAA
Buying Cheaper Than Renting in Many U.S. Cities: Trulia
Emergency Planning A Priority for Apartment Owners
Factories To Add Jobs in Texas, Michigan, Cleveland
USAA Joint Venture Funds Gables' Development Pipeline
Economy Blamed for Falling Apartment Rents in Reno
Ohio State Study Shows Why Bedbugs Won't Die
Five Apartment Stocks to Profit From Rental Boom
Housing Starts Slowed in December, Report Says
Apartment Rents Up in Colorado Springs
Apartments Posts Strong Score in Moody's Property Survey
Legislative/Legal News
Republican Calls for Fannie, Freddie to Hike Fees
Quake Risk Identified in Calif. Apartments, Residents Not Told
Blacksburg Plans to Toughen Apartment Recycling Rules
Wisconsin City Holds Apartment Owner Training Seminar
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Big Ramp-Up In Apartment Development Expected in 2011
Digested From "Break Out the Shovels: Major Ramp-Up In Apartment Development Expected in 2011"
CoStar Group (01/19/11) by Randyl Drummer
Apartment developers are eager to start replenishing their development pipelines, spurred on by favorable demographic trends, improving supply/demand metrics, and lower construction costs. The 22,536 units forecast by the CoStar Group to be added to the nation's apartment supply in 2011 is expected to spike up to 94,588 units in 2012 and just over 109,000 units in 2013. Well-capitalized investors, including REITs, are aiming to become first-movers in the trend before competition drives up the supply again. Builders have historically pulled about twice as many single-family permits as multifamily housing permits, but the ratio of multifamily to single-family has shifted in most regions of the country. A number of positive trends are improving the national outlook for apartment developers: improving occupancies, strong expected rent growth across the nation's 54 largest markets, and lower construction costs. Still, high-barrier-to-entry metros such as Boston, San Francisco, the District of Columbia, and New York may see slower delivery of new projects, keeping vacancies tight in many cases and helping apartment owners push though solid rent increases. In the meantime, both REITs and private companies are positioned to capitalize on the emerging demand for new apartments, and development starts will be the key driver of external growth over the next couple of years for apartment REITs.
Industry News
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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.
San Diego County Apartment Association Joins NAA
Digested From "San Diego County Apartment Association Joins NAA"
NAA News Release (01/25/2011)
The National Apartment Association (NAA) Board of Directors approved a charter for the San Diego County Apartment Association (SDCAA) to affiliate with NAA. SDCAA, with 16,500 members, is NAA's fourth affiliate in California. The other affiliates are the Apartment Association of Greater Los Angeles, the Apartment Association of Orange County and the Apartment Association, California Southern Cities. "Welcoming the San Diego County Apartment Association as members of NAA has grown our membership to 16,500 members throughout California," said Doug Culkin CAE, President of NAA. "Given the economic climate our members and their residents are facing, there has never been a more important time to work together. This partnership will provide additional support to SDCAA's California-based efforts and give its members access to NAA's national resources, which enhance the value of membership to an independent rental owner, property management professional or large multifamily owner."
Buying Cheaper Than Renting in Many U.S. Cities: Trulia
Digested From "Buying Home Is Cheaper Than Renting in 72 Percent of Big U.S. Cities, Trulia Says"
Bloomberg (01/24/11) by Rebecca McClay
As mounting foreclosures fuel demand for apartments, Trulia Inc.'s latest Rent vs. Buy Index shows that purchasing a home is now cheaper than leasing in 72 percent of the largest U.S. cities. According to the index, which compares the costs of renting and buying a two-bedroom home in the 50 biggest cities each quarter, renting is more affordable than buying in only four major markets: New York; Seattle; Kansas City, Mo; and San Francisco.
Emergency Planning A Priority for Apartment Owners
Digested From "Get Out and Be Safe"
The Cooperator (01/11) by Raanan Geberer
It used to be that when people talked about emergency planning for apartment communities, they mainly meant fires or temporary power outages. Then, the events of Sept. 11, 2001, made many owners and managers consider the possibility of man-made catastrophes. The New York City blackout of 2003 added lengthy power outages to everyone’s concerns, as did the possibility of hurricanes, floods, blizzards and more. Fortunately, help and resources are readily available, putting disaster and/or emergency planning on the front burner in many quarters. Mike Beirne, a regional vice president of the National Apartment Association (NAA), states that managers and other building administrators and staff should be conversant in the local fire codes. In New York City, for instance, the source for this information would be the Department of Buildings (DOB). However, smaller towns and cities typically have their equivalents. Beirne, who is also executive vice president of Kamson Corp., states, "Some towns, like Newark, have ordinances about what has to be in the emergency plan—you want to check with the town." In addition, he points out that even some safety devices meant to prevent problems can actually create them. "One of the great things about sprinkler systems is that they make your building systems safer," he reports. "But one of the bad things is that, if activated in cases other than a fire, they can create their own emergency."
Factories To Add Jobs in Texas, Michigan, Cleveland
Digested From "U.S. Factories Buck Decline"
Wall Street Journal (01/19/11) by James R. Hagerty
For the first time in over a decade, U.S. manufacturing has begun creating more jobs than it eliminates. As the economy strengthened and big companies started upgrading old factories or building new ones, the number of U.S.-based manufacturing jobs last year increased 1.2 percent, or 136,000 -- the first increase since 1997. That tally will increase again this year, reports economists at IHS Global Insight and Moody's Analytics. Some big-name companies are getting active, too. Caterpillar Inc., for instance, is in the process of building a $120 million plant to make excavator machines in Victoria, Texas. The facility will produce certain machines that currently are being shipped from a Caterpillar plant in Japan to North American customers. In exchange for creating 500 jobs in the Lone Star State, Caterpillar also got incentives from state and local authorities, including 320 acres of free land and a series of tax breaks. Meanwhile, Dow Chemical Co. is building a 800,000-square-foot plant close to its Midland, Mich., headquarters. This new facility will design and make batteries for hybrid and electric vehicles. Finally, Whirlpool decided in mid-2010 to spend $120 million on a new plant in Cleveland in what will be the company's first new U.S. factory since the mid-1990s. Among the remaining risks is a big one -- that manufacturing jobs will start to vanish again if the U.S. economy can't sustain its current recovery and slips back into recession. Still, there is no denying that rising capital investments and industrial production are two signs that manufacturing will remain a significant part of the U.S. economy at least in the near future.
USAA Joint Venture Funds Gables' Development Pipeline
Digested From "$400M USAA JV Funds Gables' Development Pipeline"
GlobeSt.com (01/18/11) by Jennifer Duell Popovec
Gables Residential's newly inked $400 million joint venture with USAA Real Estate Company gives it the funds it needs to advance its development pipeline. According to David Fitch, the Atlanta-based REIT's president and CEO, "We have a partner in USAA that has similar investment goals and the financial strength and experience to allow us to continue our development program of delivering high quality communities in our core markets." The venture will develop Class A apartments at select urban infill sites. Under terms of the deal, Gables will provide development, construction, and property management services to the venture. According to Fitch, Gables started seeking an institutional partner to take part in a portion of its new developments about a year ago. He states, "We were anxious to leverage our significant experience in developing new communities, and with the recovery in the multifamily markets, we wanted to get started sooner rather than later. USAA appeared to have a similar vision regarding the timing for new development and a desire to invest in high quality assets." This marks the first time Gables has partnered with USAA.
Economy Blamed for Falling Apartment Rents in Reno
Digested From "Decline in Reno, Sparks Rental Rates Reflects Poor Economy"
Reno Gazette-Journal (01/19/11) by Bob Brundage
The average apartment rent in the Reno-Sparks area fell 1.19 percent from $834 per month to $824 per month in last year's fourth quarter, according to a survey of 74 apartment communities conducted by Johnson-Perkins & Associates Inc. Len Ramos, a vice president at CB Richard Ellis, laments, "That is the first time vacancy has gone up since July of 2009." Research further shows that the average area monthly rent in January is also down from $848 per month a year ago to $824 per month, a 2.83 percent decline. Vacancy numbers remain mixed. The October-through-December period saw an increase in vacancies, from a two-year quarterly low of 6.18 percent in the third quarter to 7.16 percent. The year-over-year vacancy rate, meanwhile, declined from 8.54 percent to 7.16 percent. Ramos notes, "In July of 2009, vacancy was as high as it's been here since forever, and has gone down every quarter since. I was hoping vacancy wouldn't go up and that rent rate would just hold." Although numbers did indeed go the wrong way in the final three months of last year, Ramos concluded that the trend is still strong. He added, "Next quarter, if I see vacancies continue to go up and rent not holding, I’ll be more concerned."
Ohio State Study Shows Why Bedbugs Won't Die
Digested From "Why Bedbugs Won't Die"
Wall Street Journal (01/20/11) by Robert Lee Hotz
New findings from an Ohio State University study on bedbugs indicates the pests are quickly evolving to withstand the pesticides used to combat them. The research shows that bedbugs may have boosted their natural defenses by generating higher levels of enzymes that can cleanse them of poisons. For example, as reported by the University of Massachusetts in Amherst, bedbugs in New York City are now 250 times more resistant to the standard pesticide than bedbugs in Florida due to changes in a gene controlling the resilience of the nerve cells targeted by the insecticide. Bedbugs today appear to have nerve cells better able to withstand the chemical effects, higher levels of enzymes that detoxify the lethal substances, and thicker shells that can block insecticides -- factors taken together that explain the spread of bedbugs in the past decade. Unfortunately, there are few chemical alternatives, because the residential market for insecticides is fairly small, and the cost of development, safety tests, and regulatory approval is relatively high. Still, researchers are hopeful that a fundamental understanding of the insect's biochemistry will one day lead to more lasting control measures.
Five Apartment Stocks to Profit From Rental Boom
Digested From "5 Stocks to Profit From the Boom in Rentals"
Motley Fool (01/18/11) by Dan Dzombak
As more Americans choose to rent, monthly rents are rising in many markets and apartment REITs' earnings are making for an enticing stock option. Rental prices and demand are expected to continue rising as the economy strengthens and as builders work to catch up with demand. This all means potentially larger returns for apartment REITs. The average apartment REIT has risen more than 40 percent in the past year, with room to grow. The article singles out five particularly notable apartment REITs that are set to grow profits in the year ahead: BRE Properties, Camden Property Trust, Equity Residential, Post Properties and UDR. The average yield of the group is 3 percent, and they have the potential to reach for real capital appreciation as the value of the owned properties rise in the long run.
Housing Starts Slowed in December, Report Says
Digested From "Construction Slowed in December, Report Says"
Washington Post (01/20/11) P. A12
The Commerce Department reports that housing starts declined 4.3 percent in December to an annual rate of 529,000 units -- the slowest pace since October 2009 and an indication that the housing market is still struggling. Construction of single-family homes was down 9 percent from November to 417,000 units, while work on multifamily housing projects was up 18 percent to 112,000 for its first gain in four months.
Apartment Rents Up in Colorado Springs
Digested From "With Apartment Vacancies Down, Rents Are Up"
The Gazette (01/19/11) by Rich Laden
According to a report released Wednesday by the Colorado Division of Housing and the Apartment Association of Southern Colorado, the vacancy rate for Colorado Springs-area apartments stood at 7.2 percent in the fourth quarter of 2010 versus 6.6 percent in the third quarter. The rate, though, is still down more than a full percentage point from 8.7 percent in the fourth quarter of 2009. Housing Division spokesman Ryan McMaken says the vacancy rate has been driven down by three factors -- troops returning to Fort Carson, homeowners who were foreclosed upon, and the lack of new apartment construction. The increased demand translates to increased rents, which rose to an average of $738.15 a month in the fourth quarter. That is compared with $729.47 in the third quarter and $711.66 in the fourth quarter of 2009. Finally, median rents increased to $711.12 in the fourth quarter, an increase from $700.90 in the third quarter and $700.17 in the fourth quarter last year. Analysts say this is a sign rents are finally beginning to keep pace with inflation.
Apartments Posts Strong Score in Moody's Property Survey
Digested From "Moody's: US Commercial Real Estate Markets Show Improvement "
Wall Street Journal (01/20/11) by John Kell
According to a newly released Moody's Investors Service study, U.S. commercial real estate markets showed either moderate improvement or were stable during the last three months of 2010. The ratings agency notes that six of the seven property types in U.S. commercial mortgage-backed securities had "yellow" scores in the fourth quarter, indicating middling strength. Six of those showed some improvement, while only the apartment sector had a strong score. The five best markets in the U.S. were Honolulu; New York City; Los Angeles; Washington, D.C.; and California's Orange County. Moody's Vice President Keith Banhazl states, "The commercial real estate markets are continuing down the road to recovery, though the fact that most markets remain yellow indicates that a comfortable point of stability has not yet been reached."
Legislative/Legal News
Republican Calls for Fannie, Freddie to Hike Fees
Digested From "Republican Calls for Fannie, Freddie to Hike Fees"
MarketWatch (01/24/11) by Ronald D. Orol
Rep. Randy Neugebauer, the new chairman of the oversight and investigations subcommittee of the House Financial Services Committee, insists that the U.S. government can reduce its role in housing finance by raising the fees that mortgage giants Fannie Mae and Freddie Mac charge for guaranteeing credit risk. This call by the Republican lawmaker comes as the Obama administration appears hesitant to come up with a single proposal on how to replace Fannie and Freddie in an upcoming, key report. However, Neugebauer's comments also suggests a realization among GOP legislators that the federal government's role in housing finance is likely to continue.
Quake Risk Identified in Calif. Apartments, Residents Not Told
Digested From "Earthquake Risk Identified in Apartments, but Not Released to Residents"
San Jose Mercury News (01/24/11) by Lisa Krieger
Eight years after a survey determined that there were 2,630 earthquake-vulnerable "soft story" apartments in California's Santa Clara County, little progress has been made in publicly identifying, inspecting, and fixing these units. The pancake collapse of an apartment community during the 1994 Northridge earthquake exposed the dangers of buildings with weak first floors, dubbed soft stories. Scientists say the recent flurry of moderate earthquakes in the state's South Bay region is further testament of the risk. In 2003, San Jose State engineers estimated that approximately 90,000 residents live in at-risk apartments. The exact addresses of these communities, though, have never been disclosed. "Density maps" that show their general locations have been released to city officials throughout the county, but not residents. According to the report's author Guna Selvaduray, the survey was inspired by the Santa Clara County Emergency Managers' Association and partially funded by the Santa Clara County Emergency Preparedness Council. He states that his team's executive board have been afraid they would be exposed to litigation if the list caused property values to fall. In addition, because the inventory is a field survey based on visual observations instead of on detailed structural engineering inspections, some of the apartment buildings may have been retrofitted to be safe.
Blacksburg Plans to Toughen Apartment Recycling Rules
Digested From "Blacksburg Plans to Toughen Recycling Rules"
Roanoke Times (VA) (01/19/11) by Lerone Graham
In Virginia, the Blacksburg Town Council has scheduled a first reading to be held in February for a proposed ordinance update designed to better enforce the local recycling code that has been on the books for nearly two decades. The code mandates that apartment community owners provide recycling to its residents, either via contract with the town or a private business. In addition, it calls for centralized and organized on-site recycling facilities. Of Blacksburg's 109 apartment communities, 80 percent are reportedly not in compliance with these recycling requirements, with an estimated 25 percent not offering recycling at all. The proposed change calls for a $100 fine for the first offense and a $200 fine for the second offense. Fines are not to surpass $3,000. Should the ordinance update pass, apartment communities will be required to submit recycling plans within 30 days. Each plan must be a document created through collaboration with apartment management and town representatives, detailing how the recycling program will work for that particular community. This way, apartment owners will be clear on how to comply and residents will have access to a document telling them how to recycle. If adopted, the New River Valley Apartment Council will hold four informational meetings for apartment communities to assist them in the process.
Wisconsin City Holds Apartment Owner Training Seminar
Digested From "Landlord Training Seminar Set for Saturday"
Appleton Post-Crescent (01/18/11)
In Appleton, Wis., the city's landlord training seminar was held this past Saturday at the local police department. The goal of the seminar was to help area apartment owners and managers keep illegal drug activity and other crimes off their premises. The program was run in conjunction with the Fox Valley Apartment Association, the Appleton Housing Authority, and Rent Finders and is based on the National Landlord Training Program originally supported by the U.S. Department of Justice's Bureau of Justice Assistance. Topics covered ranged from applicant screening and rental agreements to ongoing management strategies and being able to notice the warning signs of drug activity.
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