NAA Industry Insider: Camden Property Benefits From Apartment Demand Boom

 

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TWCFEB13
Camden Property Benefits From Apartment Demand Boom
Digested From "Camden Property Benefits From Apartment Demand Boom"
Investor's Business Daily (03/21/14) Shreve, Ken

REITs came under fire following last week's Federal Reserve meeting after Fed chief Janet Yellen signaled that interest rates could be heading higher sooner rather than later. While selling was broad-based in the REIT group in the immediate aftermath, Camden Property Trust held up fairly well. The company is a leading buyer and developer of apartment communities, boasting a portfolio of 168 such properties throughout the United States containing more than 59,000 rental units. It also has another 14 communities in various stages of development. Analysts report that demand for apartments remains strong four years into the sector's recovery. Questions, though, linger about how long the apartment sector can sustain momentum as inventories increase. Of the 937,000 total housing starts in January of this year, approximately 309,000 were for multifamily units with five or more apartments, reports the U.S. Department of Commerce. When Camden posted October-through-December results in January, funds from operations climbed 11 percent from the year prior to $1.08 a share. Sales, meanwhile, increased 12 percent to $210.3 million. Over the last seven quarters, year-over-year sales growth at Camden Property Trust has ranged from 12 percent to 16 percent. As part of its fourth-quarter earnings release, Camden hiked its quarterly dividend to 66 cents a share, which is payable on April 17 to shareholders of record as of the end of this month.
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Market Trend Insights


RealPageMarch14
Will D.C. Developers Turn More Offices Into Apartments?
Digested From "Will D.C. Area Developers Turn More Office Buildings Into Apartments?"
Washington Post (03/23/14) O'Brien, D.J.

Many developers in such transit-oriented, urban residential areas as Baltimore, Chicago, New York City, and Philadelphia are taking advantage of the live-work-play lifestyle sought by young professionals by converting functionally obsolete office space into new apartments. One example is the Metropolitan Partnership's conversion of a 34-story office building in downtown Baltimore into a 445-unit apartment tower on schedule to open next year. The trend has been slower to catch on here in the nation's capital. Filled with a steady supply of government agencies, defense contractors, and law firms, the D.C. market has been relatively insulated from market swings. As such, it has had little incentive to remove office space. Net office absorption as a percentage of inventory is more than double that metro areas elsewhere, with year-over-year growth at 1.4 percent versus 0.6 percent for the other markets. That may be changing. Federal base closings coupled with the General Services Administration's "Freeze the Footprint" initiatives have sharply curtailed office leasing activity by federal tenants. At the same time, law firms are reducing the amount of office space they lease by as much as 30 percent and creating more multipurpose spaces that better fit the preferences of Millennial staffers. With apartments on the rise in the D.C. metro area (more than 23,000 apartment units are currently under construction) and the relatively weak recovery in the office market, momentum is shifting toward converting commercial space to multifamily housing. Since 2011, a flurry of office conversions has resulted in new apartment deliveries in the area. Projects such as the Sky House East and West in the Southwest/Waterfront area of D.C. converted approximately 460,000 square feet of office space in two buildings into 530 rental apartments at the beginning of this year. For its part, Vornado Realty Trust recently detailed plans to convert a 50-year-old office building in suburban Crystal City, Va., into 300 micro-apartments. Finally, developers are recasting projects formerly proposed as office complexes into apartment communities. While there are nagging concerns over the impact of all the new multifamily units in the region, converting older office buildings into other uses is expected to help office supply more closely match demand and reduce vacancy levels.
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Davis Apartment Market Gives It the Ol' College Try
Digested From "UC Davis Apartment Survey Shows 1.9 Percent Vacant"
Daily Democrat (CA) (03/21/14) Easley, Julia Ann

According to a fall survey commissioned by the University of California Davis, the apartment vacancy rate in the city of Davis is 1.9 percent for those rented by the unit and 3.5 percent for those rented by the bed. The survey, which is now nearing the end of its fourth decade, is designed to provide the UC campus and the Davis community with information for future planning purposes. BAE Urban Economics conducted the survey, which will now be done every other year. According to the research, 160 apartments of 8,206 leased by unit were vacant. The introduction of units rented out by beds is "one of the more complex dynamics of the local rental housing market," the report states. Among the 818 rental units leased by bed, 3.5 percent were empty. In 2013, 1.7 percent of about 7,800 rental units captured in the survey were vacant. Over the past 10 years, the apartment vacancy rate in Davis has varied from as low as 0.7 percent in 2007 to as high as 4.2 percent in 2005. The average rent for unfurnished two-bedroom apartments -- which account for 46 percent of apartments leased by unit in the survey -- was $1,275. BAE researchers initially surveyed apartment communities during the last two months of 2013 with follow-up in January. A total of 126 communities and property management firms responded. The survey includes apartments both in the city of Davis and privately managed apartments on the UC Davis campus.
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Center City Apartment Boom Creates Changes in Landscape
Digested From "Center City Apartment Boom Creates Changes in Landscape"
Philadelphia Inquirer (03/19/14) Panaritis, Maria

According to a new report by the Philadelphia Center City District, more than 1,700 new apartment units were added downtown last year -- the largest annual increase since the business-improvement district began tracking construction trends in 1998. The record-breaking tally was a reflection of a national trend as home buying has tightened and rental demand has risen in recent years. The report said that the next two years would reveal whether supply was outstripping demand. But rental rates did not evenly increase as new units came online in Center City, suggesting that the market had perhaps flattened even as additional units were in the pipeline. Rents for one-bedroom units in larger buildings were flat or fell slightly, while newer apartments commanded above-average rates.
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What N.C. City Is Seeing Apt. Construction at an All-Time High?
Digested From "Apartment Construction at an All-Time High in Charlotte"
Charlotte Business Journal (03/18/14) Boye, Will

Real Data is reporting that apartment construction in the Charlotte metro area has reached an all-time high, with the average vacancy rate expected to climb during the next year. There are a total of 10,067 rental units now in various stages of development across the region and an additional 11,003 units proposed. The majority of new communities are Class A in such neighborhoods as uptown, SouthPark, and Elizabeth. Real Data issues its research on the Charlotte apartment sector on a biannual basis, tracking data for the six-month periods that end in February and August. For the six-month period ending this past month, demand for rental apartments in and around the city weakened as just 269 units absorbed. Researchers assure that this is typical during the winter months, but the number was down from 401 units absorbed during the same period a year ago. The average rent for the Charlotte market is now $874 per month, an increase from $842 a year ago. The average vacancy rate, meanwhile, is 6.2 percent from 5 percent in August.
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Three Trends That Could Force a Rethink of Transportation Funding
Digested From "Fitch: U.S. Transportation Trends Demand New Funding Solutions"
Herald Online (03/12/14)

According to Fitch Ratings, trends in housing construction, driving behavior, and the use of public transit demand a rethink of the ways in which the U.S. funds transportation. As evidence that the nation's future transportation needs will differ greatly from the status quo, Fitch points to the steady increase in urban, multifamily housing over suburban, single-family homes; the stagnation of automobile use; and steadily increasing public transportation ridership. Fitch further argues that increased centralization of populations in urban areas and higher use of public transit will significantly impact traditional sources of funding for transportation, namely usage tolls. Failing to tailor transportation funding methods to these new realities, Fitch argues, will negatively impact the U.S. economy.
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Raleigh's Top-End Apartments Face Near-Term Challenges
Digested From "Raleigh's Top-End Apartments Face Near-Term Challenges"
Property Management Insider (03/18/14) Willett, Greg

The Raleigh-Durham, N.C., saw apartment completions surge to about 1,900 units in the last three months of 2013, which was good for nearly half of the calendar year's new supply. Developments slated to finish during the current year increase even more significantly to nearly 8,400 rental units. Those additions are projected to grow the existing stock by 6.6 percent in just 12 months. Raleigh thus ranks alongside Austin in terms of the markets where apartment inventory growth rates in 2014 will dramatically overshadow the expansion levels seen anywhere else. In all areas of the region except Chapel Hill/Carrboro -- where inventory growth should register at 2 percent -- stock expansion is set to come in at levels of roughly 4 percent or more. The two most extreme cases -- Northeast Raleigh and suburban South Cary/Apex -- are going to have to deal with annual inventory growth between 10 percent and 11 percent. Top-tier apartments in Raleigh-Durham presently post an occupancy rate of 93.9 percent. Deteriorating occupancy in the Class A apartment segment means rent growth has nearly stalled in this niche. Furthermore, the best apartment communities saw annual rent growth slow from more than 3 percent in 2012 to just 0.4 percent last year. For the rest of the market, pricing increases during last year held close to the 3 percent mark that has been established earlier.
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Deals and Transactions


Lowe'sFeb13
Apartment Deal Makes Center City the Center of Attention
Digested From "Center City Apartment Complex Sells for More Than $110M"
Philadelphia Business Journal (03/23/14) Kostelni, Natalie

The Edgewater apartment community and a companion development parcel in Philadelphia's Center City have changed hands for nearly $113 million. While 2014 began sluggish, analysts say this deal is one of what is expected to be many apartment sector sales this year in Philadelphia as investors look to get in on a thriving rental housing market that currently has a low vacancy rate and escalating rents. An entity affiliated with JPMorgan purchased Edgewater. The property was indeed packaged with an adjacent site that has been approved for the second phase of Edgewater entailing the construction of a 22-story, 240-unit apartment building on an existing surface parking lot. The first phase of Edgewater was erected in 2006. Realen Properties of Wayne, Pa., built the project with its finance partner Northwestern Mutual Life Insurance Co.
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Dewitt Carolinas Not Afraid to Build Apts on the Cape Fear River
Digested From "$50M Apartment Development Proposed for Northern Riverfront Downtown"
Greater Wilmington Business Journal (03/19/14) O'Neal, J. Elias

Raleigh-based Dewitt Carolinas Inc. is looking to construct a $50 million, riverside apartment community in downtown Wilmington, N.C., adding to a multitude of apartment counts being proposed in that area. The developer is proposing to erect a six-story, luxury apartment community on a five-acre site. If approved, it will be located in the Northern Riverfront Marina and Hotel development currently under construction along the banks of the Cape Fear River. Dewitt Carolinas officials want to begin construction this fall, with an estimated 16-month completion timeline. Dubbed Pier 33 Apartments, the proposed 300 rental units would incorporate a mix of studio, one-, two- and three-bedroom apartments along with roughly 32,000 square feet of ground-floor retail space. Resident amenities would range from a raised saltwater swimming pool and heated indoor lap pool to a dog washing station and yoga room. In addition, there would be a parking garage with 700 spaces for residential and retail use. "We are excited about the opportunity to bring life back to the pier along the new extension of the Riverwalk," stated Dewitt Carolinas President and CEO Todd Saieed. There could be additional development in the future as Dewitt Carolinas has an option to buy an additional two acres in the development.
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Industry Buzz


2014 Feb. Partner Sponsors
How to Stop Leaks from Flushing Your Money Away
Digested From "Stop Toilet Leaks from Flushing Your Money Away"
Property Management Insider (03/21/14) Blackwell, Tim

Building owners and managers need to be aware that a leak can add up over time and send the already steep price of water even higher. The United States Geological Survey notes that for every 15,140 drips, a gallon of water is wasted. A faucet that leaks five drips every minute would waste 173 gallons of water a year. Add that up across a portfolio of properties, and the numbers can become staggering. The Environmental Protection Agency (EPA) notes that leaky toilets are often a culprit for water loss. DeaAnne McClenahan, Greystar's senior director for procurement and sustainability, says her firm takes toilet flappers seriously -- enough that it monitors portfolio-wide purchases of flappers to determine if proper repairs and leak precautions are being taken by apartment community maintenance crews. Small, rubber flappers can save hundreds of gallons of water that seep away under the radar. To stay on top of leaks, Greystar monitors sub-metered properties for high water usage. It also requires maintenance workers to change toilet flappers every time a rental unit turns over. McClenahan remarks, "We look at sub-metered properties and find those outliers. [Residents] don't know they are using that much water. They don't know what their next door neighbors are paying. We tell the site to go check these units, and first you check the toilet. Eight times out of 10, the toilet is leaking."

According to McClenahan, the easiest way to check for a leaky toilet is to place a drop of food coloring in the toilet tank. The toilet is leaking if the color appears in the bowl within 15 minutes without flushing. She has found that this basic test is a good way for Greystar to keep tabs on water leaks, particularly at master-metered communities where apartment consumption data is not as readily available." The EPA recommends other ways to stop the unnecessary flow of water inside and outside. For instance, spot checking the water meter after two hours when no water is used will determine that a leak is likely. Faucets and showerheads can also be culprits of leaks inside apartment units. Leaky faucets can usually be fixed by replacing washers and gaskets that cost a few dollars or cents. Leaky showerheads can be repaired by tightening connections using pipe tape and a wrench.
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Walk Out of Your Apartment and Go to ... Macy's?!
Digested From "Out With the Old: Shopping Malls Manage Constant Turnover"
Stamford Advocate (CT) (03/14/14)

The constant turnover of retail tenants in shopping malls is a situation that has to be continually managed. The trick is to be ahead of the curve. In some cases, some portions of malls are being razed to make room for apartments, allowing their residents the convenience of retail shopping. Maureen McAvey, senior fellow for retail at the Urban Land Institute, sees more and more malls converting some of their retail footprints into residences, spas, fitness facilities, hair salons, and movie theaters along with full-scale restaurants. "People could spend five hours at the mall and never shop," she said. "We're seeing colleges and health care facilities move into malls."
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What's Driving Green Building Between Now and 2020?
Digested From "What's Driving Green Building Between Now and 2020?"
EcoBuilding Pulse (03/12/14) Weeks, Katie

Green building is a booming business. By 2016, green building is projected to represent 55 percent of all commercial and 33 percent of the residential building market. As part of the Vision 2020 program, the Hanley Wood Sustainability Council identified five key developments that will drive green building in the future. Chiefly, the multifamily housing market is going to be a hot market for green building as it encompasses both residential and commercial construction. The focus is shifting from singular structures to green community design, addressing issues such as how can buildings work together to achieve energy performance or how can a community achieve resource conservation with maximum participation. Although developing innovations in energy efficiency is important, it is equally important to fully capitalize on existing technology. Meanwhile, gathering data, such as energy benchmarking, will enable more measurement and verification of green building efforts so architects and builders can better understand the performance implications of their design decisions.
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Legal/Legislative Did You Know


2014 Feb. Mission Sponsors
Ill. Suburb Looks to Snuff Out Apartment Smoking
Digested From "Quincy Landlords Push for Smoke-Free Complexes"
WGEM (Illinois) (03/19/14) Dreasler, Jenny

A handful of apartment communities in Quincy, Ill., are going smoke-free to fight back against the effects of second-hand smoke. Annie Myers is one such property manager who is converting to a smoke-free establishment come this December. Of her Franklin Square Apartments, she states that the fire hazards of smoking coupled with the dangers of second-hand smoke were what ultimately led to her decision to make the community smoke-free. She states, "The walls are razor thin, like any other apartment complex, but you can smell it if someone is a heavy smoker so that obviously affects other people." Both Austin Properties and Four Courts Apartments in Quincy have already gone smoke-free. Not everyone is onboard, of course. Smoker Linda Will laments, "I've smoked for 50 years, we pay our own bills here. So why should they be able to tell us what to do in our own home?" Another reason local apartment owners and operators are going smoke-free is the cost. After a smoker moves out, management has to re-paint and get new carpet, among other renovations, which could cost as much as $2,500. Meanwhile, health officials in nearby Champaign, Ill., are helping owners amend leases in an effort to ban smoking in all apartment communities. Currently, there are no plan afoot for Quincy to implement an outright ban on smoking in apartment communities.
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Minn. Suburb Gives Apartment Plan the Cold Shoulder
Digested From "Blaine Nixes Apartment Plan, Says Developer Should've Aimed Higher"
Minneapolis/St. Paul Business Journal (03/18/14) Reilly, Mark

In Minnesota, the Blaine Planning Commission last week unanimously voted to block developer Kason Inc.'s bid to build 141 rental apartments in the Twin Cities suburb, despite an endorsement from city staff and the fact that the city's rental vacancy rate is currently less than 1 percent. Forest Lake-based Kason has been planning the Emberwood Apartments, which would have been constructed on a seven-acre site. Both the developer and Blaine officials agree on the reason: the project simply was not as upscale as Blaine was seeking. One unnamed official stated, "We think the market's higher than where they were shooting." However, with construction costs on the rise, industry observers lament that it might be difficult for Blaine, which hasn't had new apartment construction in decades, to get the kind of multifamily housing all concerned are hoping for.
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Madison Council Considers Apartment-Related Petition
Digested From "Madison Council to Decide on East Wilson Apartment Tower"
The Cap Times (03/08/14) Ivey, Mike

In Wisconsin, the Madison Common Council is considering a protest petition filed by opponents of a development from McGrath Properties that would remove a long-vacant state office building on East Wilson Street and replace it with a 120-unit apartment community. The McGrath development is sandwiched between a couple of upscale condominium projects built by developer Kenton Peters. Many residents have complained about loss of views, increased traffic congestion, and diminished property values if the apartment plan is allowed to go forward. One of the major issues is the potential snarls from an estimated 60 move in/move outs per year, based on a turnover rate of 50 percent. Opponents also say the site would be better served as a taking-off point for a discussed bicycle-pedestrian bridge over John Nolen Drive. But whether opponents can muster enough votes to block McGrath's plans is unclear at this point. It is rare for the City Council to block such a project once it has been approved by the Plan Commission and other advisory panels.
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NAA Announcements


2014 Diamond Sponsors
Act Now to Take Advantage of Member-Only Pricing for the 2014 NAA Student Housing Conference & Exposition REWIND Program

Now for a limited time: Professionals in the student housing industry seeking to enhance their careers and better prepare for housing the next generation of residents should act now to take advantage of the top-level insight delivered during the 2014 NAA Student Housing Conference & Exposition, all for just $149!

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 student residents to achieving a firmer grasp on the technology on which they rely, 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.

Order your REWIND sessions today!
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Come to Denver for the Education, Stay for the Excitement

The 2014 NAA Education Conference & Exposition, June 18-21 in Denver, is the rental housing industry’s leading forum for practical, take-home strategies to help your company and career “Reach New Heights.”

From UNSESSIONS to Property Tours to NAA Learning Zones to more than 40 breakout sessions, there is no lack of education opportunities—but knowledge gained doesn’t account for all the value of attendance, or the unforgettable experience that awaits.

Take advantage of the opportunity to connect with more than 7,000 like-minded multifamily housing professionals during networking events that span from the traditional favorites to newer get-togethers—all designed to build your network and foster idea exchange.

Take the NAA Opening Party, for one: Each year this fan-favorite event kicks the Conference off right, and this year’s is no different. The theme: “Festivals of Colorado,” sets the stage for the a night recreating some of Colorado’s most well-known festivals, including the Denver Chalk Art Festival, the Food & Wine Classic in Aspen, the Great American Beer Fest and Taste of Colorado.

Register today to avoid missing the coolest party in Denver and the opportunity to make all the right connections to enhance your future in the apartment industry.
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Perfect Learning Opportunity: Webinar Wednesdays

Join NAAEI, Apartment All Stars and Multifamily Insiders for Webinar Wednesdays, the largest premium webinar series in the industry to provide state and local association members with access to industry thought leaders to discuss innovative ideas, best practices and emerging industry trends. These webinars will give participants the tools they need to become industry superstars in their own right.

Upcoming Events:

March 26, 2014
The Five Keys to Increasing Sales with Tech-Savvy Prospects
Presenter: Donald Davidoff

April 9, 2014
Think You Know Fair Housing? Guess Again!
Presenter: Anne Sadovsky

Register today!
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Participate in the 2014 NAA Survey of Income and Expenses

It’s a win-win when your company participates in the 2014 NAA Survey of Income & Expenses in Rental Apartment Communities.

All participants receive a complimentary copy (a $599 value) of the final report which contains:

•Valuable information your staff needs to prepare for the upcoming budget season.
•Detailed local market and national economic analysis that will help ensure accurate financial and benchmarking information for your company.
•Data that will help you compare your community’s performance against your peers.

There are two methods for your company to complete the survey including using our designated Excel file to download data directly from your internal data systems or using our secure survey website.

Contact Janet Gora of CEL at 310-207-7328 to determine the best response method for your company (via Excel or Online). If your company has previously participated, be sure to contact Janet via email before you get started as she can also assist in pre-loading base property data for you.

If you missed last year’s 2013 NAA Income & Expense Survey—here’s the 2013 IES Executive Summary. To purchase your copy today, visit the NAA Bookstore.
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NAAEI Designation Courses Offered Near You!

CAM:

Apartment Association of Greater Omaha & Lincoln
April, 2014

Connecticut Apartment Association
March, 2014

CAM Online

CAS:

Apartment Association of Greater Omaha & Lincoln
April, 2014

CAMT:

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

CAPS:

Chicagoland Apartment Association
July, 2014

NALP:

Apartment and Office Building Association of Metropolitan Washington
February, 2014

NALP Online

Find more courses in your area on the NAA website.

For more information about any of the classes listed, please contact Kimberly McCrossen at 703/518-6141 ext. 121.
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March 25, 2014

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