Apartments to Continue Leading the Way in '14, NAR Predicts
Digested From "Commercial Real Estate Expected to Progress Slowly in 2014"
Birmingham Business Journal (Alabama) (02/24/14) Davis, Bryan
According to the latest National Association of Realtors report, commercial real estate should continue to enjoy positive momentum in 2014. Expected to remain the hottest sector is multifamily housing. NAR economist Lawrence Yun wrote: "Of course, the apartment market fundamentals are the strongest, as nearly all of the new household formation in the past 10 years has come from renters, and not homeowners." He concluded that many people still feel like the country is in a recession due to the fact that growth has been marginal versus other post-recession eras in history.
Market Trend Insights
Apartment Developers Say 'Yes!' to D.C.'s NoMa Neighborhood
Digested From "Flurry of Apartment Development Leaves NoMa With High Vacancy Rate"
Washington Post (03/02/14) Gallagher, Maeve
The apartment sector in Washington, D.C.'s NoMa neighborhood -- a stretch of the nation's capital that runs north of Massachusetts Avenue and east of Union Station -- has come a long way since the opening of the NoMa-Gallaudet University Metro station a decade ago. Once the station opened, crumbling old industrial buildings and parking lots were soon replaced by new construction containing a mix of apartment, office, and retail space concentrated around the station. Government agencies were among the first to venture into the NoMa area, which is now home to the Justice Department, the Department of Veterans Affairs, and the SEC. NoMa has also attracted the headquarters of National Public Radio, Kaiser Permanente, and Mathematica Policy Research. NoMa is now nearly 50 percent built out or under construction, reports the NoMa Business Improvement District. The area currently holds nearly 5,000 residential units, two hotels, 16 million square feet of offices, and 200,000 square feet of retail space. NoMa was rated as the fastest-growing neighborhood in the D.C. metro area in 2013 for new multifamily housing development. More than 1,500 apartments were constructed, increasing the number of rental units locally by more than 60 percent. Even more apartments are on the way, with nearly 1,500 units expected this year alone. Apartment vacancies hovered in the 30 percent range throughout last year and will likely remain elevated due to the glut of new supply. To entice residents, developers are adding a number of "bells and whistles" to new apartments and common spaces. For instance, the new 77H apartment community includes retail shops above two levels of underground parking and a 76,000-square-foot Wal-Mart. Residents also have access to a game room that features billiards, foosball and Xbox. Meanwhile, Camden NoMa is attempting to appeal to residents with pets, offering a "paw spa" and an outdoor pet area. Finally, Trilogy NoMa has a movie screening room with a 110-inch big screen and theater-style seating.
The Ownership Generation Is Aging
Digested From "The Ownership Generation Is Aging"
Americans aged 50 and older are more likely to be homeowners, based on a new report from the Employee Benefit Research Institute. The analysis is based on 1998-2010 data culled from the University of Michigan's Health and Retirement Study, sponsored by the National Institute on Aging. At age 65, according to the research, a peak 81.2 percent of U.S. seniors own their homes. The rate declines to 77.7 percent by age 75, falling steadily thereafter to hit just 54 percent for 95-year-olds. Rental trends for seniors move in the opposite direction, according to the paper, with renting peaking at 23.7 percent for the 50-year-old age bracket. The share of senior renters dips to 15.5 percent among 65-year-olds but then rises steadily for those aged 75 and older. Additionally, the percentage of seniors living with relatives or friends climbs after age 80, at about 8.7 percent, to as nearly 18 percent by age 95.
Metro Des Moines Rents Up; Demand Still Strong
Digested From "Hubbell Report: Metro Apartment Rents Up; Demand Still Strong"
Business Record (02/28/14)
According to CBRE|Hubbell Commercial's Des Moines Metro Apartment Survey 2014, the average apartment vacancy rate in the Greater Des Moines area rose slightly to 4.6 percent as of January. Overall, apartment vacancy rates in this Iowa market have been on the decline since 2005, when the average vacancy rate peaked at 9.5 percent. Rents have risen for all market-rate units during the last year, with average rent hikes ranging from 3 percent for one- and two-bedroom apartments to 5.8 percent for three-bedroom units. For the last four yearly surveys, the rental rates have been adjusted for any concessions offered. Approximately 9 percent of the market-rate projects surveyed offered some type of rental concessions to new residents -- a decrease from nearly 14 percent in each of the previous two years. Approximately 931 new apartments of a planned 2,039 rental units were added to the market last year versus 756 units in 2012, according to CBRE|Hubbell Commercial. Pent-up demand for rental housing and shifts in lifestyle habits should continue to work in favor of the apartment sector to maintain occupancies, concludes Kyle Gamble, managing director of CBRE|Hubbell Commercial.
Three Reasons Why There Wasn't Much Spring in CO Town's Q4
Digested From "Colorado Springs Apartment Rents Rise in Fourth Quarter, Although Not as Dramatically as in the Past"
Colorado Springs Gazette (02/28/14) Laden, Rich
A new Colorado Division of Housing report shows that apartment rents continued to increase in the Colorado Springs metro area in 2013's fourth quarter, although not quite as fast as they have in prior months. Rents averaged $799.67 a month from October through December, a 1.1 percent increase year over year. It marked the 16th straight quarter in which average rents rose on a year-over-year basis. Three reasons were cited for the slowdown. Ryan McMaken, a Housing Division economist, said it probably reflects that more newly erected apartment communities are coming on line, which gives those who rent more choices on where to reside. About 570 apartments were added last year. While that number is a fraction of the overall apartment inventory of nearly 46,000 units, it still represents the biggest number of apartments added in a decade. A flat employment picture is a second factor that also probably helped hold down the increase in rents. Finally, researchers theorize, more single-family housing choices might have also contributed to the slowdown in the demand for apartments. The Colorado Springs area's apartment vacancy rate was 7.1 percent as of the end of the year, unchanged from a year earlier, but up from 5.4 percent in the third quarter. Vacancy rates traditionally rise during the last three months of the year as fewer people move into rental housing because the weather turns so much colder.
Rising House Payments Make Renting Look Even Better
Digested From "RealtyTrac: Average House Payment Has Risen 21 Percent in Past Year"
Mortgage Orb (02/24/14)
Homeownership became less affordable over the past year, RealtyTrac reports. The firm estimates that the monthly house payment for a median-priced, three-bedroom home purchased in the fourth quarter of 2013 was $865, a 21 percent jump from $714 in the fourth quarter of 2012. The figure includes mortgage, insurance, taxes, and maintenance minus the estimated income tax benefit. The analysis assumes a 20 percent down payment, a 30-year fixed interest rate of 4.46 percent for homes purchased in the fourth quarter of 2013, and a 3.35 percent 30-year fixed interest rate for home purchased in the fourth quarter of 2012. Home payments increased due to rising property prices and higher interest rates. The average minimum household income needed to qualify for a median-priced home was $41,544, up from $34,262 in the fourth quarter of 2012.
Nashville Sings a New Song With Apartment and Office Sales
Digested From "Nashville Leading as Office Deals Beat U.S. Average: Real Estate"
Bloomberg (02/18/14) Levy, Dan
Commercial real estate investors are flocking to Nashville, drawn primarily by rising rents. Real Capital Analytics Inc. (RCA) state that both apartment and office sales in the state capital skyrocketed to all-time highs in 2013, combining for $1.7 billion in transactions. In 2013, Nashville office deals soared 50 percent, while apartment transactions gained 35 percent. Jay Turner, managing director of MarketStreet Enterprises LLC, comments, "Nashville today is young and vibrant. We predicted the Millennial generation wanted to live in an urban setting, and went way out on the risk curve to make that bet." His firm is the master developer of the Gulch, a 30-acre development of loft-style apartments, stores, and eateries just outside of downtown. In terms of jobs, Nashville continues to be the epicenter of the country music industry and is also booming with an expanding knowledge-based economy. Green Street Advisors Inc. analyst Jed Reagan notes that a cluster of health-care companies and spinoffs, related service firms, and medical research at Vanderbilt University are at the center of local growth. Citywide, office vacancies plummeted to 10.4 percent in the fourth quarter from 12.3 percent a year ago, confirms CBRE Group Inc.
Deals and Transactions
First Market Properties Closes on Big D.C.-Area Portfolio
Digested From "First Market Properties Closes on a REO Portfolio of 1,188 Units in the Washington DC Metro Area"
First Market Properties (FMP) confirms that it has closed on a loan portfolio of five apartment communities in the Washington, D.C., metro area. The purchase was completed on Feb. 25 and includes 1,188 rental units. This acquisition was FMP's second major portfolio buy in the D.C.-Maryland area in the last year. Back in April, FMP closed on another REO portfolio consisting of 1,082 Class C apartments in the Hyattsville, Md., submarket. FMP principal Aaron Kurlansky comments, "The deal fundamentals were strong, and the portfolio characteristics are in line with our other assets. In addition, this transaction has allowed us to gain economies of scale in a market with a high barrier of entry and a strong upside potential." All five communities are situated in suburban Prince George's County, Md., which is home to 5.6 million residents. FMP is a full-service, vertically integrated property firm.
What Apt. Property Firm Has Bought and Sold $1B in Recent Deals?
Digested From "Local Real Estate Investment Firm Reports $1B in Recent Deals"
Dayton Daily News (02/25/14)
The Connor Group confirms that it has purchased and sold more than $1 billion in luxury apartment communities over the past 24 months. During that time, the Ohio-based company registered property sales of $570 million and $513 million in acquisitions. Managing partner Larry Connor states, "It's been a sellers' market, but we've been able to find things to buy while staying disciplined. Sooner or later, markets will change and we feel we've positioned ourselves well for any changes." By 2016, Connor Group aims to do $1 billion in transactions every year. Founded in 1991, the Connor Group now owns $1.5 billion in assets.
REIT Continues to Vote Against Its D.C.-Area Portfolio
Digested From "Home Properties Sells Apartment Property"
Home Properties this past week announced the Feb. 26 sale of Cider Mill, an 864-unit apartment community strategically located in the Washington, D.C., suburb of Montgomery Village, Md.. The total purchase price was $110 million, or approximately $127,000 per unit. Home Properties Preisdent and CEO Edward J. Pettinella remarks, "The sale of Cider Mill is consistent with our strategy to lighten our Washington, D.C., region geographic concentration. We now have 28 percent of our units in the D.C. region. We believe that is an appropriate level of concentration and expect to remain at roughly that level going forward." The New York-based REIT owns, manages, develops, acquires, and rehabilitates apartment communities mainly in the suburbs of major metro areas in select Northeast and Mid-Atlantic markets. It currently owns and manages 119 communities containing 41,494 rental units.
O, Say Can You See ... Who's Coming to America?
Digested From "Coming to America: More People Moved to U.S. From International Locations in 2013"
According to the International Migration Study recently released by UniGroup Relocation, 2013 saw more household moves made into the United States than moves out of the country. As it has been for seven out of the past eight years, the United Kingdom ranked as the top country of origin for moves to the United States. Several Western European countries -- most notably Germany, the U.K., France, and Switzerland -- continue to top the list of destinations for U.S. residents moving abroad. Malaysia made the list as a top destination country for American citizens for the first time ever. In addition, there were more moves from China to America than moves from the United States to China. That trend had not been seen in four years.
Legal/Legislative Did You Know
Why Madison Postponed Proposal to Make Owners Report Energy Use
Digested From "Madison Postpones Controversial Proposal to Make Owners of Big Buildings Report Energy Use"
Wisconsin State Journal (02/25/14) Mosiman, Dean
In Wisconsin, the Madison City Council has agreed to postpone a final vote on a controversial law to make owners of larger commercial and apartment buildings publicly report energy performance or face fines. Instead, Alderman David Ahrens has petitioned Council President Chris Schmidt to name a special ad hoc committee of energy conservation experts and commercial real estate representatives to study how to reach the goals of the so-called benchmarking ordinance, which was set for a Council vote on March 4. Schmidt is expected to name a committee in the coming weeks. The goal of the ordinance was to help building owners understand electric, gas, and water use so they would invest to improve performance and save money.
Such cities as Chicago and Minneapolis have requirements, and states including Wisconsin use them for state-owned buildings. However, the Greater Madison Chamber of Commerce and several development-related organizations mounted opposition, arguing that forcing owners to publicly report energy use is costly, cumbersome, and ultimately ineffective. The version moving to the Council required benchmarking for city-owned buildings bigger than 15,000 square feet; commercial buildings larger than 25,000 square feet; and, finally, apartment communities with more than 35 rental units.
DOJ Settles Suit Over Disability-Based Discrimination at Apts
Digested From "Justice Department Settles Lawsuit Over Disability-Based Discrimination at Apartment Complexes"
Columbus Republic (IN) (02/24/14)
A federal judge in Jackson, Miss., last week approved a settlement of the Department of Justice's (DOJ's) lawsuit against the original owners and developers of nine apartment communities located in three states -- Mississippi, Louisiana, and Tennessee. The suit charged the defendants with failing to include accessible features at the various communities. The defendants included The Bryan Company, Bryan Construction Company Inc., Steve Bryan, Mid-South Houston Partners, Mid-South Development LLC, The Vineyards Apartments LLC, Windsor Lake Apartment LP, and Cypress Lake Development LLC. The settlement requires extensive renovations at 800 rental units and nine leasing offices to meet Federal Housing Act requirements. As part of the same lawsuit, a settlement resolved the DOJ's claims against nine architects and civil engineers involved with the properties last spring. The defendants paid $865,000 to make each community accessible.
Three Reasons Why Some Wichita Apts. Volunteer to Go Smoke-Free
Digested From "Some Wichita Apartment Buildings Go Smoke-Free"
Kansas City Star (03/02/14) Stumpe, Joe
Now that smoking is banned in businesses, restaurants, and many other public spaces throughout Kansas, tobacco opponents in Sedgwick County are targeting apartment communities. This time around, though, they are taking a voluntary approach. The first apartment community in the state to voluntarily go smoke-free was the 194-unit Quarters at Cambridge. John Shaft, its operations manager, surveyed residents prior to making the move and found "the overwhelming majority of our residents were in lockstep with it. We didn't enter into it [ill-advisedly]." Management ended up having three reasons for making the move. One, it would eliminate the risk of second-hand smoke. Second, it would make an important social statement. And three, it would save the apartment community a substantial amount of money refurbishing rental units that had been rented by smokers.
Since the Tobacco Free Wichita Coalition launched its smoke-free-housing initiative three years ago, a total of 17 apartment communities countywide have opted to go smoke-free in at least one of their residential buildings. While that represents a small percentage of the overall number, the coalition confirms that it continues to be contacted by apartment owners, managers, and their support staffs who have heard about the initiative. Shaft concludes, "When you have to renovate a unit that has been smoked in for a given length of time, you virtually have to strip that unit down and go to the bare walls. You repaint everything. You get rid of all your carpets. The labor is intensified dramatically, [and] the materials required to refurbish are quite a bit more." Shaft says it helped in the conversion that a number of residents are medical professionals who work in the area.
Group Targeting Ariz. Apartments for Obamacare Enrollment
Digested From "Group Targeting Apartment Complexes for Obamacare Enrollment"
KTAR (02/28/14) Haros, Sandra
Arizona Multihousing Association (AMA) President and CEO Tom Simplot this past week detailed a targeted effort to get more people signed up for health insurance under the Affordable Healthcare Act. He notes, "Forty-five percent of all the people who reside in this state live in an apartment." To this end, the AMA has partnered with Blue Cross Blue Shield and will kick off an aggressive marketing campaign to educate residents of apartment communities in and around the state. New and existing residents will receive educational materials. Meanwhile, informative literature will be disseminated throughout apartment communities, and residents will have access to an exchange portal on the AMA website beginning March 6 along with a toll-free phone number for expert assistance.
What’s Happens In Vegas (at the 2014 NAA Student Housing Conference & Exposition) Doesn’t Need To Stay There
Anyone worried about missing a minute of the top-level insight into the student housing business offered during the 2014 NAA Student Housing Conference & Exposition can rest assured now that it’s all just a couple clicks away thanks to NAAEI’s REWIND Program.
NAAEI invites you to enjoy actionable intelligence and turnkey solutions perfect for helping you achieve your personal and professional goals—and earn continuing education credits while you’re at it—with REWIND’s 11 PowerPoint-synced audio sessions from the 2014 NAA Student Housing Conference & Exposition.
Take advantage of thought-provoking sessions on critical student housing issues—from better understanding the next generation of residents to how gaining a firmer grasp on their technology can improve marketing and communications efforts, to name just a few—and make sure to stay tuned for more on the REWIND Program and other strategic takeaways from the 2014 NAA Student Housing Conference & Exposition.
The 2014 NAA Capitol Conference Is Next Week
Learn how to invest in your political capital and advocate to Congress by attending the 2014 NAA Capitol Conference and Lobby Day. You can save time and money on travel and lodging with this year’s customizable schedule: Attend only the Capitol Conference on March 11 and Lobby Day on March 12, or also attend the spring Board of Directors and committee meetings on March 9 and 10.
Help Your Company—and Your Career—Reach New Heights This Summer
The 2014 NAA Education Conference & Exposition, June 18-21 in Denver, is more than just the largest and most important rental housing event of the year, it’s your opportunity to leverage the leading education, cutting-edge multifamily housing products and services and unbeatable networking opportunities only an event like this can provide.
From the incredible cast of Keynote Speakers and Thought Leaders (not to mention the phenomenal presenters of more than 40 breakout sessions) that cement NAA’s reputation as a world-class provider of education, to the latest and greatest offerings from service providers on a trade show floor looming larger than the eye can see to the countless gatherings and get-togethers designed for you to make quality industry contacts, if you can only attend one event this year, make sure it’s the 2014 NAA Education Conference & Exposition.
Have a look at the online Conference brochure and <ahref="http://www.naahq.org/%20educonf.naahq.org%3D"" attend="" register="" "="">register today. Remember: The largest discounts go to those who sign-up early. Have four friends? Register as a group to take advantage of even more savings!
And, make sure to book your housing as soon as you register—rooms will go fast and you will be unable to book without first registering. Visit the Education Conference website for information and reservations for all official NAA Education Conference hotels.
Encore Presentation of NAA on Designing Spaces™ - March 7
Did you watch NAA on Designing Spaces™? The Feb. 20th episode of Designing Spaces™ aired on Lifetime Television and featured NAA President and CEO Doug Culkin, CAE, touring Hills Properties’ Palmera Apartments—NAA’s 2013 PARAGON Community of the Year—and discussed the rise in rental housing.
Culkin was joined by Jordanna Paciorek, CPM, Asset Manager for Edward Rose & Sons, who offered insight into the luxury amenities that many residents enjoy at high-end communities such as Mason, Ohio’s Palmera Apartments. The segment also featured a property tour led by Tessa Braun, Property Manager for Palmera Apartments, showcasing Palmera’s most desired amenities and floor plans.
This episode of Designing Spaces will re-air on March 7 at the same time. Program your DVRs now!
2013 Industry Data Available For Purchase
The 2013 NAA Survey of Income & Expenses is now available. The survey provides some of the most valuable industry trend information.
The survey includes an executive summary, detailed market analysis, reports and charts about rental communities, as well as national economic analysis. A total of 4,500 properties containing over 1 million units from 45 U.S. states are represented in this year’s report. Data was reported from more than 4,100 market rent properties and 400 subsidized properties. To order, please visit the NAA Store, click on the link for Income & Expense Surveys.
NAAEI Offers Two New Leadership Programs
NAAEI will be offering two new Leadership programs in April 2014. The NAAEI Leadership Experience: Powered by Dale Carnegie targets regional professionals and corporate department heads who are interested in learning how to lead effectively across generations, delegate tasks to develop and train others and most importantly, find time to work on future business growth. This course will be offered in Dallas, April 1-2 and in Baltimore, April 30-May 1. Learn more and register for this course. Scholarships are available.
The NAAEI Leadership NOW program: Powered by Gallup Consulting targets high-potential corporate executives. Participants will learn how to solve current business challenges by driving employee engagement. The NAAEI Leadership NOW program focuses on tactics for building engagement in a fast-paced work environment and is designed to introduce concepts, strategies, and tools that assist Leaders in building their leadership brand, maximizing strengths and unleashing the human potential within their
workplace. This course will be offered in Washington, D.C., April 8-10, 2014. Learn more and register for this course.
For more information on either of these leadership courses, please contact Kimberly McCrossen at 703-797-0610703-797-0610.
NAAEI Designation Courses Offered Near You!
Apartment Association of Greater Omaha & Lincoln
March – April, 2014
Connecticut Apartment Association
Apartment Association of Greater Omaha & Lincoln
March – April, 2014
Austin Apartment Association
February – March, 2014
Rental Housing Association of Boston
April – May, 2014
Chicagoland Apartment Association
May – June, 2014
Apartment Association of Southeast Texas
May – June, 2014
Chicagoland Apartment Association
Apartment and Office Building Association of Metropolitan Washington
Find more courses in your area on the NAA website.
For more information about any of the classes listed, please contact Kimberly McCrossen at 703/518-6141703/518-6141 ext. 121.
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