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Those Who Rent Transform U.S. Housing Market
Industry News
Looking Closer at the Multifamily Housing Market
Flat Trends for Orange County Apartment Market
Apartment Rental Rates Continue to Rise in Albany Area
Drexel Announces Property Management Advisory Board
Building Boom for Seattle Apartments May Be Overdone
Apartment REIT Reveals Buyback Of Series B Preferred Units
Financing Deal Helps Midtown K.C. Apartment Renovations
Incomes Fail to Keep Up With Cost of Shelter in Florida
Delinquencies on Multifamily Loans Decline in November
Healthcare Is Hot Property Sector; Some Hospitals Even Add Apartments
Legislative/Legal News
Equity Taps in on Lehman's $1.3B Archstone Fight
Wis. City Downsizing Recycling Containers for Apartments
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Those Who Rent Transform U.S. Housing Market
Digested From "Renters Transform U.S. Housing Market"
National Post (Canada) (12/27/11) by Margaret Chadbourn
JHP Architecture is wrapping up work on a 300-unit apartment community in Dallas, one of a dozen projects the firm has on its hands -- a surge of business driven by an increase in demand in the United States for rental housing. The spike in demand has forced JHP to expand, and it expects to continue hiring at least through the first three months of the year. "We're seeing overall work come back and there's a backlog of contracts to go through," said Brian Keith, director of urban design and planning at JHP. "There's strong interest in multifamily units and plenty of pent-up demand." With U.S. unemployment still high at 8.6 percent, home foreclosures rising, and property values under pressure, more and more Americans have abandoned the dream of owning a house and are choosing instead to rent -- a transition that is changing the outlook of the U.S. housing sector. The percentage of Americans who own their home fell from an apex of 69.2 percent in late 2004 to a 13-year low of 65.9 percent between April and June 2011. It inched up to 66.3 percent in the third quarter of this year. Morgan Stanley analyst Oliver Chang dubbed 2012 as "The Year of the Landlord" in his recent report. He wrote: "Rents are rising, vacancies are falling, household formations are growing, and rental supply is limited. We believe the demand for rental properties will continue to grow."
Industry News
Looking Closer at the Multifamily Housing Market
Digested From "Looking Closer at the Multifamily Real Estate Market"
NuWire Investor (12/28/11) by Victor Calanog
Multifamily housing has performed more strongly than other commercial property types in the past two years, benefiting directly from the ongoing turbulence in the for-sale housing market. Occupancies and rents have been on a continuous upward trend, in seeming contrast to the slow economic growth and the snail-like pace of job creation. Signs of flagging have started to appear, however, for certain niches of the apartment sector. This would suggest that even the best performing property type in real estate these days is still mastered by fundamental economic principles. Nevertheless, multifamily housing will continue to benefit from a convergence of positive factors. First, as the for-sale housing market continues to flail, fewer households will make the move from renting to owning a home. Despite record-low mortgage prices, credit is still tight except for those with the strongest credit histories and capacity for hefty down payments. Although the pace of job creation remains dismal, the economy has created more than 2 million jobs in the past two years, and on-the-margin individuals are moving out of crowded households to rent their own apartments. While occupancies have improved notably, national effective rents have yet to grow at the speeds once projected. Reis was anticipating a 4.2 percent increase earlier in 2011, only to pare back its expectations to about 2.6 percent as of its third-quarter forecasts.
Flat Trends for Orange County Apartment Market
Digested From "Forecast: Flat Trends for Apartment Market"
Orange County Register (CA) (01/02/12) by Jeff Collins
JLE Property Management Inc. President Jerry L'Ecuyer is interviewed on where he thinks Orange County, Calif.'s apartment sector is headed in the new year. L'Ecuyer, a past president of the Apartment Association of Orange County, says he is most concerned with the region and the nation's employment outlook. "Without a sustained and meteoric job growth," he noted, "our part of the recession is not over. Apartment dwellers find it very hard to rent or keep an apartment without a job and in turn, apartment owners struggle to cover their mortgages with vacant units." L'Ecuyer says the market is still at least a few years away from a return to the "Good Old Days." However, he adds, "aspiring for 'those' old days may not be the best business solution, as they are what brought us today's problems. We need to learn from the 'Good Old Days' and not repeat those mistakes."
Apartment Rental Rates Continue to Rise in Albany Area
Digested From "Apartment Rental Rates Continue to Rise in Albany Area"
Albany Business Review (12/30/11) by Michael DeMasi
According to a Sunrise Management & Consulting survey, continued strong demand for apartments in the Albany, N.Y., area pushed the average asking rent up to $1,171 a month this past fall. The average increased 0.3 percent from the spring and 8.3 percent compared to fall 2008. Locally based Sunrise further notes that asking rents for apartments across the Northeast are at or above the levels of three years earlier. Sunrise President Jesse Holland states, "Another factor on rental growth found in several markets was that of unsold condo developments being converted to high-end rental inventory, driving significant rental rate increases. Developers found it easier to rent than sell, and with funding difficulties and economic conditions discouraging home purchases, families found it conducive to rent at the high end." Sunrise surveys 1,950 apartment communities throughout Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont, and all of New York except New York City.
Drexel Announces Property Management Advisory Board
Digested From "Drexel's Goodwin College Announces New Property Management Advisory Board"
Today's Facility Manager (12/11) by Heidi Schwartz
Drexel University reports that its Goodwin College of Professional Studies has established an advisory board to provide industry support to the Property Management program. Among the board's primary objectives will be to increase awareness of the program and boost its value. Members of the board include Campus Apartments President David J. Adelman; Pamela Bennett, director of the Apartment Association of Greater Philadelphia; Korman Residential President James S. Korman; Jean Maddalon, director of the New Jersey Apartment Association; and JoAnn McKay, director of the Institute of Real Estate Management (Phila., NJ). William F. Lynch, dean of Goodwin College of Professional Studies, comments, "The Property Management Advisory Board gathers some of the most accomplished industry professionals in the region. Their input will be instrumental to the continuing development and success of the Property Management program." Drexel holds the distinction of being the first accredited university in the country to offer residential and commercial property management degrees at both the graduate and undergraduate levels.
Building Boom for Seattle Apartments May Be Overdone
Digested From "Building Boom for Seattle Apartments May Be Overdone"
Seattle Times (12/25/11) by Eric Pryne
Apartment Insights Washington President Tom Cain warns that the market may be softening in Seattle even as the region undergoes its largest construction boom in decades. Some analysts are beginning to fear that the market is going to be overbuilt as the surge of young renters expected to fill the new communities wanes and those potential renters take advantage of low interest rates and falling house prices. The vacancy numbers in King and Snohomish counties have increased to 5.25 percent from 4.74 percent, according to recent data, and as a result average rents fell slightly after six consecutive quarterly increases. If building continues and demand falls, the area could become overbuilt, and Cain says that renters' aversion to homeownership is beginning to subside. Dupre + Scott Apartment Advisors has told developers to hit the pause button, though vacancy rates are projected to fall to 4 percent in the next 12 months. Land-Use Economist Matthew Gardner says that as homeownership provides apartment communities with greater competition, 2013 could spell trouble for the apartment market as regions near over development. However, there are some in the industry who suggest that some markets will hit negative vacancy, such as Seattle, with more renters than available apartments in 2013. Tom Parsons, who runs Holland Residential's Northwest development arm, says, "We've still got five to 10 years of growth in the rental market." Renting offers greater flexibility as more and more Americans change jobs frequently, and most affordable houses are not in neighborhoods where young renters want to live. Gardner says that 2012 will be a good year for apartment developers and owners, but some say that the high rents developers are expecting may not materialize if wages remain stagnant, though Gardner says that current projects under construction should be fine.
Apartment REIT Reveals Buyback Of Series B Preferred Units
Digested From "Colonial Properties Trust Reveals BuyBack Of Series B Preferred Units"
NASDAQ (12/29/11)
Colonial Properties Trust's operating partnership, Colonial Realty Limited Partnership (CRLP), completed the prior announced repurchase of its remaining 1.0 million outstanding 7.25 percent Series B cumulative Redeemable Preferred Units from the existing holders for $47.5 million. The Preferred Units were originally issued in a private placement back in the first quarter of 1999. To fund the repurchase, CRLP used funds from asset dispositions and its unsecured credit facility. The apartment REIT expects to register a gain of nearly $1.2 million in this year's fourth quarter with respect to the buyback.
Financing Deal Helps Midtown K.C. Apartment Renovations
Digested From "Financing Deal Helps More Midtown Apartment Building Renovations"
Kansas City Star (MO) (12/30/11) by Kevin Collison
The ongoing redevelopment of a stretch of prewar apartment buildings in Kansas City will resume in earnest now that the developer has closed on its financing. This month, New Jersey-based Antheus Capital expects to commence work on the next phase of the Commonwealth development, which includes nine buildings totaling approximately 600 apartments. The work got the green light because Antheus managed to convert tax-exempt bonds and historic tax credits approved by the city early last year into $45 million in cash. The conversion just before Christmas had been delayed in the still-tight national lending environment. Pete Cassel, an Antheus director, credited steadfast support by the city and the state-chartered Planned Industrial Expansion Authority in helping to overcome the hurdles. Cassel remarks, "I don't know if this deal would have happened in any of the other markets we work in around the country. It's a testimony to the economic development community and the Kansas City Council that this happened." City officials indeed recognized that Antheus' ambitious plan for redeveloping apartments is one of the biggest reinvestments in midtown in decades. Antheus has already spent $30 million redeveloping several local buildings to create 800 mostly market-rate rental apartments.
Incomes Fail to Keep Up With Cost of Shelter in Florida
Digested From "Incomes Fail to Keep Up With Cost of Shelter"
Sarasota Herald-Tribune (FL) (12/26/11) by Doug Sword
Floridians are spending more income on housing after the recession -- despite lower overall shelter costs -- due to unemployment and shrinking paychecks. The typical household earned $3,400 less in 2010 than in 2007 but spent 27.4 percent of that smaller income on housing last year compared to 26 percent three years earlier. Those who rent devoted even more to shelter between 2007 and 2010 -- 37.5 percent of their pay, up from 34.2 percent -- as demand eclipsed supply. The problem is most pronounced in Southwest Florida, where median annual incomes for a household are down between $700 and $1300 more than the statewide average drop. Though Southwest Florida saw rents decline, statewide they have risen since 2007 as apartment vacancies are filled by those who no longer own homes or have decided against owning. Construction, meanwhile, has remained slow. This is changing though, as South Florida has around 18,000 apartments announced or already under construction in Dade, Palm Beach, and Broward counties.
Delinquencies on Multifamily Loans Decline in November
Digested From "Freddie Single-Family Delinquency Rate Up 3.57 Percent in November"
Housing Wire (12/27/11) by Kerri Panchuk
Delinquencies on single-family mortgages held by Freddie Mac were slightly higher last month, moving up to 3.57 percent from 3.54 percent in October. Delinquencies on multifamily loans, however, slipped to 0.28 percent from 0.31 percent. Both rates are down from November 2010.
Healthcare Is Hot Property Sector; Some Hospitals Even Add Apartments
Digested From "Shifts in Health Care Delivery Stimulate a String of Property Deals"
The New York Times (12/27/11) by Julie Satow
As hospitals update how they deliver care and conduct business to comply with new government programs and meet the demands of an aging population, more and more healthcare properties are changing hands. In 2011, Cushman & Wakefield says that 42 deals in New York City alone, including new leases and renewals, have taken place totaling more than 1.2 million square feet. That is nearly double the number of transactions taking place in 2010. Some hospitals are even expanding their facilities to include rental apartments for physicians and others.
Legislative/Legal News
Equity Taps in on Lehman's $1.3B Archstone Fight
Digested From "Equity Taps in on Lehman's $1.3B Archstone Fight"
GlobeSt.com (12/29/11) by Robert Carr
Equity Residential filed a motion on Dec. 29 to join the lawsuit regarding the Chicago-based REIT's attempt to acquire a stake in Archstone for $1.3 billion. Lehman Bros., which owns 47 percent of Denver-based Archstone, has sued a couple of banks that own the majority shares, in order to prevent them from selling half of their stakes to Equity. The REIT had not been named in the lawsuit. Equity has stated that it does not believe its intervention in the case will create any delays in the ongoing proceedings. Archstone's portfolio currently contains 48,922 apartments, including around 14,000 in Germany. For its part, Equity owns or has investments in 417 apartment communities in 15 states and the nation's capital.
Wis. City Downsizing Recycling Containers for Apartments
Digested From "City Downsizing Recycling Containers"
Shawano Leader (12/28/11)
In Shawano, Wis., the city's plan to automate recycling collection in the coming year could leave some apartment communities searching for an alternative way to export their recyclables. The 96-gallon containers the city will be using can be automatically lifted into the new truck ordered by Shawano specifically for recyclable collection. However, neither that truck nor a similar one ordered earlier in the year for automated garbage collection has the ability to lift large Dumpsters, which are currently used by some apartment communities with more waste than a standard home. Shawano's Field Committee voted on Dec. 28 to limit recycling collection to 96-gallon containers, which the city is expected to order in the first quarter of 2012. Commercial businesses will be charged a $65 one-time rental fee.
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