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MPF Research Predicts 95 Percent U.S. Apt Occupancy by June 2012
Industry News
Echo Boomers Take Charge of Apartment Market
Apartments Boost Amenities to Attract, Retain Residents
Tulsa-Area Apartment Rents Up, CBRE Reports
Apartment REIT Returns Boost CEO Pay
Camden Acquires Eight Texas Apartment Communities
University of Great Falls Adds Student Housing
Essex Property Trust Gets $115 Million Private Placement
UDR Adds Apartment Community at Record Price
Fort Wayne to Lure Apartment Residents With Ballpark Views
Legislative/Legal News
Calif. City Council Considers Smoking Restrictions in Apts
Wausau Renovates Housing Through WHEDA Grants
CO Detector Law Takes Effect in California
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MPF Research Predicts 95 Percent U.S. Apt Occupancy by June 2012
Digested From "Cheap Rent? Forget About It as Apartment Living Trumps Home Ownership in the Recession"
CultureMap Houston (06/28/11) by Ralph Bivins
MPF Research's Greg Willett expects the national apartment occupancy rate will increase to approximately 95 percent by this time next year, which will almost certainly mean an increase in monthly rents. Texas, in particular, is registering strong growth in its apartment occupancy rates and rents as it is one of the few states with positive job growth. With foreclosures still weighing down the housing market and consumers growing increasingly concerned about continued declines in home prices, moving into rental housing has become an increasingly appealing option for many. The strength of the apartment sector is attracting a lot of interest even from newcomers to multifamily housing, reports Stacy Hunt of Greystar Real Estate, which manages approximately 187,000 apartments nationwide. Hunt, former president of the Houston Apartment Association, notes that such major home builders as Lennar Homes are now building rental apartments. The Hines development firm recently branched into the apartment industry for the first time since its 1957 founding. Furthermore, Hunt notes, the newcomers are staffing up with expertise from the apartment industry and are expected to have few difficulties transitioning into multifamily development. In terms of potential pitfalls and roadblocks down the line, the ability to finance new apartment construction could be disrupted by proposed reforms of Freddie Mac and Fannie Mae.
Industry News
Echo Boomers Take Charge of Apartment Market
Digested From "Young, Savvy Renters Have Taken Charge of the Market"
Minneapolis Star Tribune (MN) (07/03/11) by Don Jacobson
The apartment sector in Minnesota's Twin Cities is booming, with vacancies at a five-year low. Developers have hundreds of new rental units now under construction or in the pipeline locally to answer the demand from those who either cannot afford homeownership or refuse to enter the currently depressed market. Interestingly, the majority of them are "echo boomers," also known as "millennials" -- young people between the ages of 18 and 30. While it may seem obvious that most apartment hunters would be young, research indicates that echo boomers actually have not made up the dominant demographic. Until recently, they have constituted only a sizable minority, sharing that status with thirty- and fortysomething "Generation Xers" and baby boomers nearing or at retirement age. Now with younger people steering the market, their wants and needs must be addressed in order for the new construction to be successful. At last month's National Apartment Association Education Conference and Exposition in Las Vegas, a J. Turner Research survey of existing residents in DEI Communities' 71 apartment communities showed that among echo boomers' most desired amenities is central Wi-Fi Internet access. By comparison, Wi-Fi didn't even make the top five on the baby boomers' list. Instead, their biggest need was additional storage space. Having an apartment in a trendy and/or desirable community has emerged as a new status symbol. Stefanie Balsis, regional sales and marketing director for Village Green Apartments, comments, "It's cool to rent again, and the millennials want the latest and the greatest in their apartments and are seeking status and the approval of their friends. It's probably the equivalent of what buying a new car was to older generations."
Apartments Boost Amenities to Attract, Retain Residents
Digested From "Apartments Boost Amenities to Attract, Retain Ownership-Shy Tenants"
Columbus Dispatch (OH) (07/03/11) by Jim Weiker
The depressed housing market has driven hundreds of affluent central Ohioans to apartment communities. The question now is will increased amenities such as community gardens, nine-foot ceilings, and granite countertops keep them in place. New high-end apartment communities from suburban Groveport to Hilliard are indeed offering a wide array of amenities to attract and retain residents. Many are actually paying more in rent than they might on a mortgage. Sam Stark, an apartment sales manager with Lifestyle Communities, explains, "The same people who rent today might have bought three years ago. There's still fear in the housing market. People want to be mobile, and they're willing to pay a premium for living in an apartment." Perks such as granite countertops and stainless steel appliances are in addition to the once-luxurious features now considered a must in high-end rentals, including: fitness facilities, movie rooms, swimming pools, and open floor plans. The U.S. homeownership rate has slipped to 66.4 percent of households, its lowest level in 13 years.
Tulsa-Area Apartment Rents Up, CBRE Reports
Digested From "Tulsa-Area Apartment Rents Up"
Tulsa World (OK) (07/01/11) by Robert Evatt
A new survey by CB Richard Ellis/Oklahoma shows that the average monthly apartment rent in Tulsa rose between $3 and $32, depending on the floorplan, from June 2010 to now. The average apartment occupancy remained flat at 91.5 percent, notes report co-author Brian Donahue. Still, apartment owners are feeling more confident, which is leading to fewer deals, such as free or reduced rent, for potential residents. Donahue does note that apartment residents are flocking to newer and higher-quality Class A apartment communities, which now have an occupancy rate of 94.5 percent. Rents and occupancy are expected to continue to go up in the months to come, though five new apartment communities that are being built this year that will add a total of 1,365 rental units to the area could act as a wild card.
Apartment REIT Returns Boost CEO Pay
Digested From "REIT Returns Boost CEO Pay"
Wall Street Journal (06/29/11) by A.D. Pruitt
FTI Consulting's latest research shows that REIT chief executives median compensation climbed 13 percent last year amid the market's almost 30 percent returns. The FTI report noted that apartment owners received the largest gains in 2010 compensation of 17 percent. The multifamily sector continues to rank as one of the best performing among REITs, benefiting from a growing pool of renters amid a turbulent housing market. Indeed, the apartment sector registered a total return of 47 percent last year, states the National Association of Real Estate Investment Trusts. According to FTI researchers, compensation committees continue to allocate the biggest portion of total compensation to equity compensation. Anthony Saitta, managing director of FTI, comments, "The vast majority of REITs received shareholder approval on their say-on-pay votes in 2011 and by a fairly wide margin. In year-end 2010, decision making, REIT boards were mindful of the upcoming votes and made the right call by continuing to tie pay to company performance and by providing the bulk of increases through incentive compensation."
Camden Acquires Eight Texas Apartment Communities
Digested From "Camden Acquires 8 Texas Apartment Complexes"
Houston Business Journal (07/01/11)
Houston-based Camden Property Trust has acquired a portfolio of eight apartment communities for $261 million via the REIT's discretionary investment funds. The communities include 2,957 rental units with an average age of three years and average occupancy rate of 95 percent. Camden Chairman and CEO Richard Campo states, "These assets were acquired at a discount to replacement cost and should provide attractive returns on our investment." The fund has three additional apartment communities from the same portfolio that are expected to close in this year's third quarter.
University of Great Falls Adds Student Housing
Digested From "UGF Adds More Student Housing"
Great Falls Tribune (MT) (06/30/11) by Kristen Cates
In Montana, the University of Great Falls confirms that it has created long-term lease agreements with five apartment communities near the campus. Two of the communities were added to campus housing roster in the past few years in an effort to create more on-campus accommodations for students. UGF President Eugene McAllister is happy to add the additional units, stating, "We brought three more [apartment communities] on this year, so we thought we should put signs up. We want to continue growing this campus." In the last couple of years, the university has erected two new on-campus apartment buildings, and McAllister said it is looking to add a third higher-density community in the next few years to keep up with the higher demand for housing. McAllister added that signing long-term leases with the nearby apartment owners and managers, rather than buying their apartments outright, gives the university flexibility should the student population fluctuate or in case the university gets the go-ahead to construct additional housing sooner than anticipated.
Essex Property Trust Gets $115 Million Private Placement
Digested From "Essex Property Trust Gets $115 Million Private Placement"
San Francisco Business Times (07/01/11)
Essex Property Trust Inc. and its operating partnership Essex Portfolio LP have completed a $115 million private placement of senior unsecured notes. The California-based apartment REIT says it will put the funds toward outstanding debt under a $275 million unsecured line of credit and general corporate purposes. Mitsubishi UFJ Securities (USA) Inc. served as the lead placement agent, with co-placement agents KeyBanc Capital Markets Inc. and PNC Capital Markets LLC.
UDR Adds Apartment Community at Record Price
Digested From "UDR Adds Asset at Record Price"
Zacks Equity Research (06/30/11)
UDR Inc. confirms that it has acquired a luxury condo-turned-apartment community in Washington, D.C., for $104 million, or $670 per square foot. It marks the highest price per square foot ever paid for a Class A apartment asset in the region. Dubbed View 14, it was purchased from Level 2 Development LLC and is the second such community that UDR has acquired from the locally based company. With this most recent acquisition, UDR now has 16 apartment communities in and around the nation's capital. View 14's 185 fully leased apartments currently demand some of the city's highest aggregate rents at $2,868 a month. Its affluent residents, meanwhile, boast an average household income of $130,000 a year. The community also includes a 31,000-square-foot retail space that is currently looking for a tenant. For its part, UDR continue to rank among the best-positioned apartment REITs in the country, with the bulk of its portfolio situated in California, Florida, and along the Atlantic Coast -- areas where housing costs have skyrocketed in recent years and where the rent-versus-own spread remains high.
Fort Wayne to Lure Apartment Residents With Ballpark Views
Digested From "An Indiana Town Tries to Lure Renters With Ballpark Views"
New York Times (06/29/11) by Jamie Duffy
Fort Wayne, Ind., is hoping to kick-start an ambitious downtown renovation plan by offering apartments with ballpark views. The 42-unit Harrison apartment community will have balconies overlooking Parkview Field, the home of the Fort Wayne TinCaps minor-league team. Jason Freier, CEO of Hardball Capital of Atlanta and the owner and managing partner of the 6,100-seat stadium that opened in April 2009, beams, "It's entirely conceivable you could catch a home run sometime." The $110 million redevelopment effort, dubbed Harrison Square, so far includes the ballpark, a brand-new Marriott Courtyard hotel, and a 900-space parking garage. The Harrison, meanwhile, will also have space for retail stores and offices in addition to apartments. It has been stalled by the recession and difficult in getting financing. On June 13, though, Fort Wayne Mayor Tom C. Henry announced a private-public partnership that will finance the $18 million building. Henry remarks, "When the economy took a nose dive is when we needed everything put together. Once the needle began to point upward, banks started to get a little more generous."
Legislative/Legal News
Calif. City Council Considers Smoking Restrictions in Apts
Digested From "City Council Considers Smoking Restrictions in Apartments and Hotels"
LookOut News (CA) (07/01/11) by Jason Islas
Under new rules being considered by Santa Monica's City Council, smoking in the California city's apartment communities may soon be restricted and banned altogether in new hotels. Council members directed staff earlier this week to prepare ordinances banning smoking in all newly-constructed hotels and requiring apartment owners to designate units in multifamily communities as either smoking or non-smoking apartments. Mayor Pro Tem Gleam Davis comments, "I think we can all agree that there's no doubt that second hand smoke is dangerous. But the question becomes how do we take that and enact ordinances that restrict the exposure people might suffer to second hand smoke and balance that against other policies. It is a fundamental civil rights issue for me about regulating what is a lawful activity [in private homes]." In addition, Davis remains worried that prohibiting smoking in multifamily housing would interfere with smokers' rights to housing, especially with regard to the city's housing first program for homeless people. Currently, Santa Monica's policy is to find housing for homeless people before they get off drugs, smoking, and/or drinking.
Wausau Renovates Housing Through WHEDA Grants
Digested From "Wausau Renovates Housing Projects Through WHEDA Grants"
WAOW Newsline 9 (Wausau, WI) (06/28/11) by Anna Carrera
In Wisconsin, Wausau city officials have been taking different approaches to renovating the downtown corridor and improving the local housing conditions. Among the projects workers are currently focused on is the Trolley Quarter Flats apartment community. Shreedhar Ranabhat, the Wisconsin Housing and Economic Development Authority's (WHEDA's) assistant manager of multifamily housing, remarks, "It's a brand new unit that has significant amenities like common spaces and is highly energy efficient. It's going to be a class A apartment." MetroPlains, the company that is handling the development work, has been active in the Wausau market for some time. It is also planning to transform the city's downtown Federal Building into smaller housing units, a project that could commence as early as November. MetroPlains co-President Rob McCready remarks, "Within most apartment buildings around Wausau, there is a range of household sizes and there is a range of incomes." Other WHEDA projects throughout the city involve renovating already-existing apartments, such as the Kannenberg Plaza that houses elderly residents and people with disabilities.
CO Detector Law Takes Effect in California
Digested From "CO Detector Law Takes Effect"
San Diego Reader (06/30/11) by Dave Rice
In California, a key part of SB 183 went into effect July 1, requiring all single-family homes statewide to be equipped with a carbon monoxide detector. Apartment communities and hotels, meanwhile, have until January 2013 to comply. The bill, officially known as the Carbon Monoxide Poisoning Prevention Act of 2010, is expected to reduce avoidable deaths by 30 to 40 people a year and cut down on the number of emergency room visits by as many as 700 annually.
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