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Average Apartment Cap Rate Jumps to 7.36 Percent
Industry News
New Mass. Senator Offers First Public Comments About Positions
Renter Hagglers: Coming to an Apartment Community Near You?
Apartment Developer Investing $100M in Indiana Projects
New Upscale Apartments on Tap for Colorado State Students
Baltimore's Apartment Sector Stirs From Slumber
Reno-Area Apartments Fill Up, Slowly
Equity Residential Appoints Mark Shapiro to Board of Trustees
Denver Apartment Vacancy Rates Little Changed From 2008
Apartment Owner Files for Bankruptcy Protection
Legislative/Legal News
California County Seeks to Ban Smoking in Apartments
New Law Requires Carbon Monoxide Alarms in NY Apartments
Utah Market Encouraged by Response to Good Landlord Program
Michigan Apartment Communities Work With Police
Apartment Inspection Blitz in Toronto Nets 10,000 Violations
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Average Apartment Cap Rate Jumps to 7.36 Percent
Digested From "Cap Rates Reach 6 1/2-Year High "
Wall Street Journal (01/27/10) P. C8
The average capitalization rate for apartment communities increased to 7.36 percent in December from 7.09 percent a month earlier. According to the Journal, the cap rate is rental income in the first year of ownership divided by the purchase price. The average cap rate for office properties in central business districts rose to 8.8 percent in December from 8.56 percent in November. December's number was the highest rate for that category since May 2003.
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Industry News
New Mass. Senator Offers First Public Comments About Positions
Digested From "'This Week' Transcript: Barbara Walters Exclusive with Massachusetts Senator-Elect Scott Brown"
ABC News (01/31/10)
Massachusetts Senator-Elect Scott Brown (R) stopped by ABC's "This Week" on Sunday to chat with guest host Barbara Walters. During the interview, he stated unequivocally that he is "a fiscal conservative. And when it comes to issues affecting people's pockets, pocketbooks and wallets, I'll be with the Republicans if they are in fact pushing those initiatives." Brown applauded President Obama's recent $33 billion proposal that calls for a $5,000 tax credit for each new employee added and tax relief for those companies that add to their payroll, stating that he would vote for such an initiative. He went on to say the current health-insurance plan making its way around Capitol Hill should be scrapped altogether and that discussions regarding universal health care should begin anew. He remarked, "It's just a question of if we're going to take a one-size-fits-all government plan or we're going to do something where the individual states can tailor their plans as we've done [in Massachusetts]." He went on to express his views on matters of national security; on President Obama's desire to end the "don't ask, don't tell policy;" and he received some good-natured chiding from Walters for posing nude in Cosmopolitan magazine back in 1982.
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Renter Hagglers: Coming to an Apartment Community Near You?
Digested From "In Tough Economic Times, Shoppers Take Haggling to New Heights"
Washington Post (01/31/10) by Michael S. Rosenwald
Columnist Michael S. Rosenwald cites a recent Consumer Reports study, which found that 66 percent of American consumers had haggled at least once in the preceding six months "with an 88 percent ka-ching rate on gadgets, clothes, furniture and steak." He observes that the recession has "popped the lid off" a consumer shift that has been brewing for a decade, starting with the rise of eBay. Rosenwald also cites the new ShopSavvy smart-phone app, which converts one's camera phone into a price scanner to deliver a live listing of competing retail prices. Retailers are playing along, paying the company responsible to advertise better prices if a shopper is about to make a purchase from a competitor. Rosenwald believes the high level of "haggling" going on in retail could seep down into other areas of American society.
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Apartment Developer Investing $100M in Indiana Projects
Digested From "Apartment Developer Investing $100M in Hamilton Projects"
Indianapolis Business Journal (01/30/10) by Cory Schouten
Developer J.C. Hart Co. plans to open more than 800 apartments over the next few years in Hamilton County, Ind., representing an approximately $100 million investment. The 33-year-old, privately held company already owns and manages nearly 700 rental apartments countywide, representing a substantial portion of its 3,000-unit portfolio. The $28 million, 287-unit Legacy Towns & Flats is on pace to open by the end of this month, while the $23 million, 269-unit District at Saxony community is set to open in May. Following those are two new apartment communities in suburban Westfield. The company also is adding 28 apartments at an existing apartment community in downtown Indianapolis and 125 units at its StoneBridge community next to Southport High School. Finally, it hopes to build more than 200 apartments as part of a redevelopment of the old Fort Benjamin Harrison. J.C. Hart Co. President John C. Hart Jr. comments, "Hamilton County is our platform, [and] we expect it to continue to be the center of growth." Looking ahead, a bullish sign for J.C. Hart Co. and other apartment developers is the falling homeownership rate. In Indianapolis, for instance, homeownership peaked in 2006 at about 76 percent and has since fallen to 71.8 percent. The under-35 set have registered the steepest homeownership drop, falling to 39.8 percent. J.C. Hart apartments are appealing to such residents because they feature contemporary layouts and include such on-site amenities as indoor basketball courts and clubrooms with pool tables.
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New Upscale Apartments on Tap for Colorado State Students
Digested From "Upscale Apartments for CSU"
Rocky Mountain Collegian (01/27/10) by Joe E. Goings
Brinkman Partners is now accepting lease applications for The Flats at the Oval, its newest apartments near the campus of Colorado State University (CSU). One-, two- and three-bedroom units range in rent from $800 to $1,575 a month. The $9 million project, which is being marketed heavily to CSU students, is on track for a June 2010 completion. Half of the rooms already have approved applications, with most of the leases to start on Aug. 1. When asked about this early success, Brinkman Partners President Paul Brinkman states, "It's location. It's right across the street from campus. Really it's [also] the amenities. Each unit has private bathrooms, private washer and dryer, private deck, private storage unit." It will also include restaurants on the main level along with reserved parking.
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Baltimore's Apartment Sector Stirs From Slumber
Digested From "Apartment Sector Stirs From Slumber"
Baltimore Sun (01/31/10) by Lorraine Mirabella
Housing officials believe the Baltimore metro area may be poised for an apartment resurgence. Despite an economy still in the initial stages of recovery, some apartment construction projects are securing previously hard-to-obtain loans and breaking ground. In these cases, developers are counting on apartment living coming back into favor after a decade in which homeownership was over-emphasized to the point where many ended up in foreclosure. John McIlwain, a senior resident fellow for housing at the Urban Land Institute. "Attitudes toward homeownership have been shifting. It's seen now as riskier and not as a path toward wealth unless you stay in the home 15 or 20 years." In and around Baltimore, a number of apartment communities are moving into the build phase. Less than a mile from suburban Ellicott City's historic downtown, crews have demolished an old house to make way for luxury apartments for at least 200 new residents. Near Fort Meade, a luxury apartment community is rising on the site where a trucking terminal once stood. In Baltimore's Locust Point, new apartments will be started this summer to appeal to urban dwellers who want to live near stores, restaurants and the amenities of the city. Average rents are down almost everywhere, but only slightly in the Baltimore metro area to an average $1,375 for Class A communities with amenities, reports Delta Associates. As of December, Class A vacancy rates average 7.4 percent in the Baltimore region. Among those most hopeful is Camden Property Trust CEO Ric Campo, who states, "Supply is so limited that demand, when it comes back, should have a pretty good snap back." Camden currently owns a half-dozen apartment communities throughout Maryland and one parcel on which it plans to soon build. The strength of future apartment demand, of course, hinges in large part on how quickly the unemployment rate drops. Once the job picture stabilizes, more young adult renters will likely leave their parents' homes or roommates to strike out on their own.
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Reno-Area Apartments Fill Up, Slowly
Digested From "Reno-Area Apartments Fill Up, Slowly"
RGJ.com (01/27/10) by Jason Hidalgo
Lower rents in Reno, Nev., helped increase apartment occupancy at the end of last year. Johnson-Perkins & Associates reported a Q4 2009 vacancy rate of 8.54 percent as compared to the 9.08 percent vacancy rate in the July-through-September period. This marked the second straight quarter in which vacancy rates fell, and Reno-area apartment owners are hopeful that it is a sign of things to come in the local rental housing market. Len Ramos, first vice president of CB Richard Ellis' Reno office, comments, "Occupancy has been stable for the first time in about six quarters, so we might be seeing the beginning of some settling of the dust with apartments. Hopefully, we see the same thing in the next few quarters." Incentives such as lowered rental rates and other concessions have helped to maintain and encourage occupancy during the tough economic times. However, Reno's unsteady job market continues to be unpredictable in relation to the industry.
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Equity Residential Appoints Mark Shapiro to Board of Trustees
Digested From "Equity Residential Appoints Mark Shapiro to Board of Trustees"
Business Wire (01/26/10)
Equity Residential has named Six Flags Inc. CEO Mark Shapiro to its board of trustees. Prior to joining the theme park operator in 2005, the 39-year-old spent more than a decade at ESPN where he played a key role in directing many of the sports and entertainment properties that rose the television network to global prominence. He also serves as a director of Live Nation and the Tribune Company. Equity Residential President and CEO David J. Neithercut comments, “We will benefit greatly from his background in marketing and branding, as well as his experience as a public company CEO.” Equity Residential has ownership interests in 494 apartment communities containing 136,843 rental units.
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Denver Apartment Vacancy Rates Little Changed From 2008
Digested From "Denver Apartment Vacancy Rates Little Changed From 2008"
Denver Business Journal (01/27/10) by Paula Moore
According to a new Colorado Division of Housing report, Metro Denver's apartment vacancy rate was basically flat during last year's fourth quarter compared to the same period a year earlier. Indeed, the research shows that apartment vacancies were 7.7 percent for the three-month period versus 7.9 percent for the previous October-through-December stretch. The fourth-quarter vacancy rate was also basically flat compared to 7.4 percent for the previous three months. Gordon Von Stroh, author of the report, remarks, "Apartment vacancies usually go up in the fourth quarter; it’s a seasonal increase. We had a slight increase in the fourth quarter last year; it's not significant." Denver County posted the highest apartment vacancy rate for last year's fourth quarter, increasing to 8.8 percent on a year-over-year basis. Meanwhile, Douglas County recorded the lowest apartment vacancy rate, decreasing to 5.5 percent from a year earlier. The apartment study gathers data from the seven-county Denver metro area, including Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas and Jefferson counties.
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Apartment Owner Files for Bankruptcy Protection
Digested From "Realvest Corp. Files for Bankruptcy Protection"
Columbian (WA) (01/28/10) by Julia Anderson
Realvest Corp., one of Vancouver's biggest property development and management firms, filed for Chapter 11 bankruptcy protection in Tacoma. Realvest currently operates nine apartment communities with 1,145 rental units and a half-dozen commercial properties. The company has vowed to continue operating as it works its way through a business reorganization. Realvest is owned by Realvest board chairman Paul Christensen and Greg Daniels. Christensen founded Realvest more than 40 years ago. He described the Chapter 11 filing as a "mixed blessing" due to the negative impact on the company's vendors, adding, "We promise that we will pay each and every dime we owe both to our vendors and banks."
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Legislative/Legal News
California County Seeks to Ban Smoking in Apartments
Digested From "Santa Clara County Wants to Ban Smoking in Apartment Buildings"
Mercury News (01/26/10) by Tracy Seipel
California's Santa Clara County has introduced a proposal to ban smoking in apartment communities. Ken Yeager, new president of the city's Board of Supervisors, proposed the bill during the recent annual "State of the County" address. The Santa Clara ban follows a similar one in Belmont, which became the first city in the Golden State to install such a measure. It should be noted that Yeager's proposal applies only to apartments and not to such other forms of multifamily housing as townhomes and condominiums. Yeager is also seeking to ban smoking in parks as well as the sale of cigarettes in pharmacies.
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New Law Requires Carbon Monoxide Alarms in NY Apartments
Digested From "Smoke Detectors No Longer Enough: New Law Requires Carbon Monoxide Alarms in Homes, Apartment Buildings"
WHAM-TV (Rochester, NY) (01/29/10) by Elizabeth Schubert
In August, New York state legislators passed "Amanda's Law," a measure aimed at strengthening New York's current requirements for carbon monoxide detectors. The legislation goes into effect on Feb. 22, 2010. Early last year, carbon monoxide gas killed 16-year-old Amanda Hansen. Jim Bailey, a building inspector for the Town of Perinton, notes, "She was sleeping over at a friend's house in West Seneca. She died from carbon monoxide poisoning due to a faulty boiler." Now, "Amanda's Law" will require all apartments, houses and office buildings with such "combustible units" as a gas stove or hot water heater to install a carbon monoxide detector. It's designed as a safety measure for people who weren't aware of the potential hazards. The Southeast Area Landlord Association has been working with its members to meet the new requirements. Association President Joe Hanna states, "We are getting bids for the bulk purchase of the detectors. They are somewhere in the neighborhood of $17 dollars a unit." Hanna and other apartment owners will spend the next several weeks installing the detectors in more than 2,500 apartments in Rochester's Park Avenue area.
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Utah Market Encouraged by Response to Good Landlord Program
Digested From "West Valley City Encouraged by Response to Good Landlord Program"
Salt Lake Tribune (01/20/10) by Jennifer W. Sanchez
Officials in West Valley City, Utah, created the Good Landlord Program in the summer of 2007. More than two years into it, they are calling it a success and hoping to see it grow further. The program encourages apartment owners to improve their communities and carefully screen residents. The results are clear. Local authorities note that the number of calls to police in Arlington Park plunged 73 percent from 2006 to 2009. In May 2008, there were about 40 area apartment owners enrolled in the program. By the end of last, that total had mushroomed past the 300 mark. To be a part of the program, owners must pay $55 for an eight-hour property management training every two years. In addition, they are required to have a city business license and pay reduced disproportionate fees. Apartment residents, meanwhile, must pass criminal background checks in order to be approved for housing. Owners who feel the program is working well are pleased with the lowered crime rate. Those who feel it could be better are requesting more help from and better communication with the city to fix specific problems that have lingered such as graffiti.
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Michigan Apartment Communities Work With Police
Digested From "Apartment Complexes Work With Police"
Morning Sun (MI) (01/27/10) by Susan Field
This past week in Michigan, several Union Township apartment community managers completed the initial phase of a community policing program. Isabella County Sheriff Leo Mioduszewski's Crime Free Multi Hosing program was launched six months ago. To date, its chief aim has been to keep area apartment communities safer for residents. The program's second stage will begin soon, focusing on sending deputies to various mulitfamily housing settings to do environmental assessments. Such assessments will include making sure exterior lighting is adequate, that foliage does not block views and that security checks are performed at each apartment. After this second phase wraps up, the final stage will entail deputies meeting with apartment community managers and residents to inform them about the program's results. According to Mioduszewski, apartment residents are more likely to call police when they see suspicious people or activities if they are familiar with police. He states, "I'm really excited about this program. . . . It really benefits the community."
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Apartment Inspection Blitz in Toronto Nets 10,000 Violations
Digested From "Apartment Building Inspection Blitz Nets 10,000 Violations"
CBC News (Canada) (01/29/10)
Toronto building inspectors found nearly 10,000 violations in about 200 apartment communities last year, a dramatic jump from just 47 in 2008. Problems ranging from balconies in disrepair to cracks in the foundation were spotted by the various inspections, which are part of the city's attempt to crack down on owners who have let on-site maintenance slide. The increase in inspections came after a wave of complaints by apartment residents in 2008 about owners who were neglecting their communities. Jim Hart, Toronto's executive director of licensing and standards, remarks, "We actually found that some of our most problematic buildings that we came across had the fewest complaints, historically. Sometimes, that is a result of the [residents] in those buildings [being] afraid to complain. Maybe they've come from different countries where if they complain, there were consequences. So . . . if we don't get out there on a proactive basis, we'll never know." The Greater Toronto Apartment Association has applauded the stepped-up inspections, preferring such targeted inspections over an across-the-board license fee on owners. Inspectors, though, have a tall order to fill. There are about 6,000 apartment communities in Toronto, with the majority of them being more than 40 years old.
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