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Housing Woes Fuel Apartment Surge
Industry News
Studies Show Young Adults Leaving Home Boost Apartments
NAAEI Prepares for National Apartment Careers Month
Builder Plans Apartments for L.A.'s Wilshire District
Apartment Rent in El Paso on the Rise 
Metro Denver Apartment Vacancies at 5.5 Percent
Concierge Asset Merges With Crossbeam Capital
Wait for Rental-Assistance Grows Amid Recession
Google Drops Real Estate Listings
NYC Housing Chief Resigns
Legislative/Legal News
Crime-Free Apartment Program Starting in Orlando
Orange County Residents Face Challenges in 2011
Fannie, Freddie Seek to Cut Dividend on Government Stake
Bill Provides Tax Break for N.D. Apartment Residents
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Housing Woes Fuel Apartment Surge
Digested From "Housing Woes Fuel Apartment Surge"
Wall Street Journal (01/29/11) by Dawn Wotapka
Apartment values have skyrocketed, as millions of families have switched from being homeowners to renters. Investor demand has been so intense, prices of some communities are approaching values last seen in the summer of 2007. This is not good news for apartment residents, who enjoyed everything from declining monthly rents to owner concessions. Now rents are on the rise and vacancies are falling in a number of markets, making it harder to find a place. According to Marcus & Millichap, values of apartment communities climbed 16 percent last year after plunging 27 percent between 2006 and 2009. Values of apartment communities owned by REITs are now within 10 percent of their 2007 peak, notes Green Street Advisors. Resurgent apartment values were first seen in the fourth quarter of 2009 in such markets as New York City and the nation's capital where the economy has held up better. Now, the price surge has spread to such other markets as Baltimore, Boston, Los Angeles, and Seattle. According to analysts, apartment values also are getting a boost from powerful supply-and-demand factors. Partly due to the foreclosure crisis, renter households now top an all-time high of 37 million after increasing more than 3.5 million in the last five years. Green Street Advisors, meanwhile, projects expects an additional 4.4 million rental households to be added by 2015.
Industry News
Studies Show Young Adults Leaving Home Boost Apartments
Digested From "Young Adults Leaving Home Will Help Apartment Markets"
Investor's Business Daily (01/27/11) by Jennie Phipps
Data from a variety of sources that track commercial real estate shows that the nation's apartment sector is benefiting from more adult children moving out of their parents' homes and into their own apartments. The trend is driving vacancies down and rents up in several big-city apartment markets, with small-city markets not far behind. Green Street Advisors, for one, forecasts that revenue growth per square foot will increase in every major U.S. apartment market in 2011. According to the firm's analysis, growth rates will range from as low as 3 percent to 4 percent in Jacksonville, Fla., and Southern California's Inland Empire to at least 9 percent and more than 10 percent in San Jose, San Francisco, New York, Boston, and Seattle. Green Street Advisors analyst Andrew McCulloch states, "Apartment owners will enjoy healthy revenue and net operating income growth in 2011 and even better reported growth in 2012 as leases are rolled at higher rental rates." Hessam Nadji, managing director of Marcus & Millichap, confirms that the key drivers are young adults who moved in with family or friends between 2005 and 2009. He reasons, "The worst didn't happen for a lot of them, so they are decoupling from families and roommates." Three other positive factors noted by Nadji include: the private sector adding 1.3 million jobs in the past year, continued declines in the nation's homeownership rate, and nearly no new or pending construction in multifamily space.
NAAEI Prepares for National Apartment Careers Month
Digested From "National Apartment Association Education Institute Announces National Apartment Careers Month"
Marketwire (01/25/11) by Tim Hanson
The National Apartment Association Education Institute (NAAEI) has declared February 2011 to be National Apartment Careers Month. The month will be dedicated to highlighting the significant economic and job growth impact the industry has on the overall U.S. economy. The apartment sector directly employs more than 1.1 million people and contributes approximately $155 billion to the economy. "During the recession, employment within the apartment industry remained one of the bright spots of the U.S. economy," said NAAEI President Jeff Lowry, who expects demand for apartment managers, leasing consultants, and maintenance technicians will continue to increase. As part of National Apartment Careers Month, industry leaders across the country will be available to discuss the impact of the apartment industry, highlighting local and regional strengths of the market.
Builder Plans Apartments for L.A.'s Wilshire District
Digested From "Jerry Snyder Unveils New Plans for Wilshire District Site"
Los Angeles Times (01/28/11) by Roger Vincent
Builder Jerry Snyder has announced the launch of a $150-million high-rise apartment community in Los Angeles' Wilshire district. One of the region's most prolific commercial developers, Snyder plans to break ground this summer on the 464-unit project where he had previously planned to build a vertical shopping mall. The recession scuttled that plan. When he began considering other uses for the site, Snyder's research showed that L.A.'s apartment market is "very strong" and will soon be ready for new units. Los Angeles apartments are gaining strength as area companies rehire workers, notes Marcus & Millichap. At the same time, researchers expect the completion of new rental units in L.A. will hit a 16-year low this year. So, the time appears ripe for such new construction. Snyder and his J.H. Snyder Co., with partner Michael Wise, are finishing plans for the new apartment community. To be known as the Vermont, it will offer rental units in two towers of 25 and 30 stories. The ground floor, meanwhile, is expected to house retail stores and restaurants. The Vermont is being designed by the Jerde Partnership architecture firm to include a pool, gym, and recreation center on the seventh floor. Snyder expects to draw residents from the nearby USC campus, members of the Korean community, and young professionals such as "echo boomers who don't want to live in the suburbs."
Apartment Rent in El Paso on the Rise
Digested From "Apartment Rent In El Paso On The Rise"
KFOXTV.com (01/25/11)
The El Paso Apartment Association says many of the city's apartment communities have to raise rents in order to deal with higher stormwater fees, environmental fees, park fees, and property taxes. These factors have driven rates at one community to increase by around $200 from 2007 to 2011. The news is frustrating to apartment residents who are trying to save up money to buy a home. Rocio Castruita, housing and education director at YWCA El Paso Del Norte Region, is urging people to find areas where they can cut back, "because that is where your savings can come from." Others speculate that apartment rents in El Paso will continue to climb as a result of the expansion at Fort Bliss and the growing number of people from Juarez who move to El Paso.
Metro Denver Apartment Vacancies at 5.5 Percent
Digested From "Metro Vacancies for Apartments Reported at 5.5 Percent"
Denver Post (CO) (01/26/11)
The apartment vacancy rate in metro Denver fell to the lowest fourth-quarter vacancy rate in 10 years, dropping to 5.5 percent. According to a report released this past week by the Apartment Association of Metro Denver and the Colorado Division of Housing, it was down significantly from last year's fourth-quarter rate of 7.7 percent. However, it was up slightly from 2010's third-quarter rate of 5.3 percent. Analysts say it is not unusual for the vacancy rate to rise from the third to fourth quarter because of seasonal factors.
Concierge Asset Merges With Crossbeam Capital
Digested From "Concierge Asset Merges With Maryland Firm"
Houston Business Journal (01/25/11) by Christine Hall
Houston-based apartment investor Concierge Asset Management LLC has agreed to merge with Crossbeam Capital LLC. Terms of the deal were not disclosed. The combined company will be known as Crossbeam Holdings LLC and be headquartered in Bethesda, Md.. It will focus on the acquisition and redevelopment of U.S.-based apartment communities. Prior to the merger, the two companies jointly purchased seven apartment communities in 2010, including five in the last month of the year alone. Concierge founder Maxwell Drever has agreed to serve the new company as chairman emeritus, while Richard Devaney has been named chairman and CEO. Devany was previously employed as a principal and CIO of Crossbeam Capital. Crossbeam Holdings currently boasts $630 million in real estate assets under management, including a portfolio of 29 apartment communities with 9,045 rental units.
Wait for Rental-Assistance Grows Amid Recession
Digested From "Wait for Rental-Assistance Grows Amid Recession"
San Diego Union-Tribune (01/24/11) by Christopher Cadelago
Over the last two years, an increasing number of San Diego County residents have been applying for federal rental-assistance vouchers called Section 8. Approximately 4,000 households have applied for the county-issued vouchers since 2009, causing the waiting list to increase to more than 41,000, with applicants typically waiting 5 years to 10 years before receiving the benefits. Some residents are opting to apply for affordable-housing developments rather than Section 8 vouchers. Trina Ybarra, for instance, was able to move into a new, three-bedroom apartment for low-income tenants in 2010 after waiting two years. The building is owned by Wakeland Housing and Development Corp., which has 15 affordable complexes countywide. Wakeland Vice President and Chief Operating Officer Rebecca Louie says waiting lists for the communities average two to three years, but can be as long as 10 years. The San Diego Association of Governments estimated that from 2003 through 2009, the region required 62,771 new units for very low- to moderate-income households, but the number of units that had been approved in that time was just 11,550. Matthew Jumper, president of San Diego Interfaith Housing Foundation, says his firm's 77-unit project in Poway has more than 800 people on the interested list, of whom many may be in the "very, very low-income category."
Google Drops Real Estate Listings
Digested From "Google Drops Real Estate Listings"
Inman News (01/26/11)
Google announced last week that it will no longer support real estate listings uploaded to its classifed listings site on Google Maps. This means consumers will no longer be able to find for-sale, foreclosure, or rental properties through the search function on Google Maps. In addition, property professionals will no longer be able to upload their listings to Google Base, the company's classifieds site. It is in the process of being replaced by Google Shopping APIs and will not support real estate listings. A company statement read: "In part due to low usage, the proliferation of excellent property-search tools on real estate websites, and the infrastructure challenge posed by the impending retirement of the Google Base API, we've decided to discontinue the real estate feature within Google Maps on February 10, 2011."
NYC Housing Chief Resigns
Digested From "Housing Chief Resigns"
Wall Street Journal (NY) (01/22/11) by Eliot Brown
New York City's top housing official, Rafael Cestero, is stepping down to fill a position in the private sector, leaving at a time when the city has been struggling to mitigate the impacts of the economic downturn on apartments in lower-income neighborhoods. Cestero, commissioner of the Department of Housing, Preservation and Development, has accepted a job with L&M Development Partners, a New York-based low- and moderate-income housing developer. A factor in Cestero's decision, according to colleagues, was a desire to be closer to his family in New Jersey.
Legislative/Legal News
Crime-Free Apartment Program Starting in Orlando
Digested From "Crime-Free Apartment Program Starting in Orlando"
Orlando Sentinel (FL) (01/30/11) by Bianca Prieto
In an effort to stifle crime, the Orlando Police Department (OPD) is gearing up to introduce a national crime-free multi-housing program to the city's apartment communities. The three-pronged Crime Free Multi-Housing program is designed to make it easier for apartment owners to evict problem residents -- especially those residents or their guests who commit criminal acts. Apartment communities are being asked to sign up for the program with OPD. Their managers will then go through special training in order for their respective communities to earn security certification. An addendum can then inserted into each apartment lease, stating that residents or their guests will not engage in criminal activity while living there. When an apartment resident commits a crime in Orlando, their names and addresses go into a database made available to apartment managers who have the ability to check names at will.
Orange County Residents Face Challenges in 2011
Digested From "Tenants Face Rent Hikes, Bedbugs in 2011"
Orange County Register (CA) (01/30/11) by Jeff Collins
Tomlinson Management Inc. Vice President John Tomlinson is the new president of the Apartment Association of Orange County in California. A third-generation apartment owner, Tomlinson recently sat down to discuss the latest trends and issues facing apartment communities and their residents. Among the biggest challenges is the spread of bedbugs in the county. He stated, "We are just learning how to stem the tide of this pest, but reasonable practices and prudence will win the day." To this end, he has called on all Orange County apartment owners, managers, and residents to work together to combat this pest. In terms of the main legislative and policy issues facing apartments in the coming year, mandating low flow faucets and toilets is one such topic on the front-burner. "Fire and life safety requirements also will dominate the regulatory landscape," he added. "Foreclosures will continue at record numbers, and there likely will be added tenant protections, including limitations on any resident displacement." Tomlinson further expects state and local fiscal constraints will result in new and increased fees and charges on services. He concluded, "Anti-speculation measures may be imposed. Parcel taxes for specific purposes will proliferate. In sum, the housing industry will face many challenges beyond its past experience."
Fannie, Freddie Seek to Cut Dividend on Government Stake
Digested From "Fannie, Freddie Seek to Cut Dividend on Government Stake: Report"
Reuters (01/27/11) by Sakthi Prasad
Fannie Mae and Freddie Mac reportedly have petitioned the Treasury Department to accept a lower payout on the preferred stock issued during the government bailout. A dividend reduction would enable the two firms to start repaying $150 billion in taxpayer assistance. It also would clear the road for a reorganization of both by reducing the amount of outstanding preferred shares held by the Treasury.
Bill Provides Tax Break for N.D. Apartment Residents
Digested From "Bill Provides Tax Break for Renters"
Bismarck Tribune (ND) (01/26/11) by Rebecca Beitsch
Sen. Carolyn Nelson (D-Fargo) is urging the North Dakota Legislature to offer apartment residents the same type of relief offered to those who own their homes. For the past three sessions, Nelson has introduced legislation to offer tax breaks to those who rent. This time around, though, she is one of three legislators pushing the concept. According to Nelson, approximately 40 percent of North Dakota residents currently live in rental housing. Nelson's proposed tax break would come as a credit calculated as a percentage of rent paid and would serve as a credit against taxable liability. The maximum credit would be $216 and would not be available to more than one person in an apartment. The North Dakota Apartment Association remains opposed to Senate Bill 2252. The association's Rocky Gordon says his organization is not opposed to tax breaks for apartment residents, but notes that measures that involve any type of paperwork from apartment owners can be burdensome. Gordon adds, "I have to be honest, I don't know anyone who's lowered rent because of property tax relief, but it has slowed an increase in rent." Gordon concludes that the formula for calculating the discount is much simpler in the latest bill than in the two previous ones.
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