NAA Industry Insider: MF: A Banner Year, But the Easy Ride May Be Over | National Apartment Association

NAA Industry Insider: MF: A Banner Year, But the Easy Ride May Be Over

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MF: A Banner Year, But the Easy Ride May Be Over
Digested From "MF: A Banner Year, But the Easy Ride May Be Over" (04/18/14) Bubny, Paul

Last year saw a growth in demand for multifamily properties, mainly due to secondary markets, according to the CBRE Group's annual report. CBRE defines the sector to include student housing, senior housing, and manufactured homes as well as apartment properties. Peter Donovan, senior managing director with CBRE Capital Markets’ Multi-Housing Group, notes that there is still an "abundant supply of equity and debt capital from all types of foreign and domestic players," but the report notes “a growing sense” that the “easy money” in the sector has already been made. Land values and construction prices have risen, and cap rates may have bottomed out. Capital is abundant and changing; more than half of the top 15 largest buyers of assets in the sector in 2013 made the list for the first time. Last year saw several trends that are expected to continue into 2014, including more pre-stabilization sales activity and an increased importance of scale for multifamily sellers and buyers, who are more focused on portfolio sales. The report also found that floating-rate debt is a more acceptable financing strategy.
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Market Trend Insights

Fannie, Freddie Cut Housing-Market Forecasts for 2014
Digested From "Fannie, Freddie Cut Housing-Market Forecasts for 2014"
MarketWatch (04/21/14) Mantell, Ruth

Fannie Mae and Freddie Mac have cut their forecasts for the U.S. housing market's performance in 2014. Citing constraints on credit and labor, Doug Duncan, Fannie's FNMA chief economist, now expects builders to start construction on 1.05 million housing units this year, down 50,000 from Fannie's forecast earlier this year. "We have downgraded our housing forecast slightly due to a lackluster sales picture, but the recent loss of momentum is likely a temporary one," says Duncan. Last week, Freddie cut its forecast for home sales in 2014 to 5.5 million from a prior estimate of 5.6 million. Meanwhile, Freddie Mac's FMCC Chief Economist Frank Nothaft says "tight inventory may pose a significant challenge for home buyers in many markets across the country, which may result in higher home prices and sales being lower than expected."
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States Selling Pot Legally Attract Renters in Their Droves
Digested From "States Selling Pot Legally Attract Renters in Their Droves"
RealtyBizNews (04/18/14) Wheatley, Mike

A growing number of recent college graduates are renting in Colorado and Washington state, where marijuana was legalized starting Jan. 1. Washington, D.C., and New York City are still the most popular destinations for recent college grads, but rental site Apartment Guide reports that searches for rental apartments in marijuana-friendly states have risen in the last five months. Searches for properties in Colorado saw an increase of 26.27 percent between November 2013 and March 2014 compared to the same time period a year earlier. Washington state saw an increase of 24.51 percent. Other factors that draw renters to the two states include quality of life, an average cost of living, and a developing tech scene full of startups and important technology hubs.
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Renters Feeling the Pain in Big U.S. Cities
Digested From "Renters Feeling the Pain in Big U.S. Cities"
CBS MoneyWatch (04/16/14) Picchi, Aimee

Residents of major cities such as Miami and San Francisco are spending as much as 40 percent of their income on rent, despite advice that suggests spending no more than 30 percent. Median household income is up by about one-quarter since 2000, but rents have risen more than 52 percent, according to real estate website Zillow. Renters faced with rising prices have two choices: buy a home, assuming that is an affordable option in their location, or move to a cheaper rental unit. In areas such as southern California and the Bay Area, unaffordable homes are driving renters to move further away from work or to seek employment in less expensive cities. About half of all New Yorkers spend more than 30 percent of their income on housing, and average Los Angeles renters spend nearly 47 percent of their income on rent. The Great Recession brought a spike in foreclosures and a slow recovery, which caused many former or potential homeowners to rent instead. Down payments for a house may be too much for many consumers, especially in cities that already have high rents. Because of a housing demand from high-income professionals, many developers are focusing on building expensive units, which means the problem of high rent may persist for years to come.
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Portland's Tough Apt. Market Persists, But Turnaround May Be Near
Digested From "Tough Apartment Market Persists for Renters, But Forecasters See Turnaround"
Oregon Live (04/16/2014) Njus, Elliot

An end to the Portland area's apartment crunch could be on the horizon, but that does not mean much for renters in the current market who will find few available apartments and rising rents. A survey of property managers released recently by Multifamily NW found the area's apartment vacancy rate rests at 3.46 percent, up slightly from 3.11 percent six months ago. Meanwhile, rents have gone up 11 percent over the past year. But that number is somewhat skewed by the influx of new apartments, many of which are built at the top of the market and therefore garner higher monthly rents. Despite the thousands of new units, demand continues to outpace supply. For apartment owners, the rebound has been a welcome change after "a few rough years," said Craig McConachie of C&R Real Estate Services, one of the authors of the report. "We're seeing a lot of our clients reinvesting and putting capital back into improvements."
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Deals and Transactions

Biggest New Apt. Building Yet Set for Downtown St. Petersburg
Digested From "Biggest New Apartment Building Yet Set for Construction in Downtown St. Petersburg"
Tampa Bay Times (04/16/14) Harwell, Drew

Builders will soon break ground on a downtown St. Petersburg apartment building the size of a city block, adding to a flood of new rental construction in an area developers are betting is a gold mind of young urbanites. Allen Morris Residential said it will begin construction in July on eight stories of apartments planned for First Ave., S. Called the Hermitage, the $65 million project, which is expected to open by the end of 2015, would feature 348 one- and two-bedroom apartments, according to the developer. Developers said the apartments would feature an "art gallery" in the lobby, a rooftop pool and space, a fitness center, and a bicycle storage and service center. Despite a significant amount of construction downtown, the Hermitage sticks out as the largest new apartment projected started here since the housing bust.
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Downtown Kansas City Apartment Buildings Win Approval
Digested From "Downtown Kansas City Apartment Buildings Win Approval"
Kansas City Star (04/17/14) Collison, Kevin

Two downtown Kansas City apartment projects totaling more than 300 units on April 17 won incentives necessary to begin work. The larger of the two apartment proposals is the biggest residential project to date in the West Bottoms area, a 251-unit redevelopment that includes a historic building at 933 Mulberry St. The smaller project is a new 56-unit building in the River Market area. The Planned Industrial Expansion Authority granted the Reeder Family Trust a 15-year abatement for its project called The View at the West Bottom II. The $30 million redevelopment plan calls for renovating the nine-story building on Mulberry Street into 189 apartments and two nearby smaller buildings at 1200 and 1218 Union St. into 62 apartments. The abatement is for 95 percent of the new value for 10 years and 50 percent for five. Bob Mayer, a consultant on the Reeder project, described the apartments as being designed to be a living and work space for artists in the West Bottoms. “This is by far the largest apartment project to date in the West Bottoms,” he said. Work is expected to begin in June and be completed in about a year. Mayer said the West Bottoms development also has been approved for $12.7 million in federal and state historic tax credits.
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$60 Million Apartment Project Planned for Franklin, Tennessee
Digested From "$60 Million Apartment Project Planned for Franklin, Tennessee"
Tennessean (04/17/14) Walter, Kevin

Six acres of land in Franklin, Tenn., are under contract to a Texas firm eyeing the site for a $60 million, 406-unit apartment complex. Meeks + Partners, who are also developing a 203-unit apartment community near downtown Nashville called City Lights on Rutledge Hill, will spell out details of their proposed Nichol Mill Lofts when they meet with city aldermen and planning commissioners soon. Firm principal Donald Meeks says the company hopes to break ground by late fall on the development, if approved by city officials. Like Nashville and cities across the U.S., Franklin has seen a boom of apartment starts in recent years. Meeks cites projected Williamson County job growth that is expected to bring more than 16,000 new jobs in the next few years as a reason for building more apartments now. Construction would take 18 months, if approved by aldermen.
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Kansas City's Newest Luxury Apartment Complex is Under Construction
Digested From "Kansas City's Newest Luxury Apartment Complex is Under Construction"
Kansas City Business Journal (04/17/14) Alonzo, Austin

Radd Way, executive vice president at The Weitz Co. LLC's Lenexa, Missouri, office, says work is underway on Mission 106, an addition to the successful mixed-use Mission Farms development in Leawood. The $30 million residential development, which includes 132 apartments, has been underway for about a month. The 206,000 square-feet of buildings — including the four-story tall apartment buildings, 6,000 square feet of speculative office space, a 16,000 square-foot podium deck, and a 206 stall, four-story parking garage — should be completed by around June 2015, he says. Mission 106 was announced in January by luxury apartment developers Terry O'Leary and Steve Coon. The development is the fourth luxury apartment project the pair have developed. Kansas City real estate and residential development company Hunt Midwest Real Estate Development Inc. is providing capital and construction management for the project.
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Industry Buzz

2014 Feb. Partner Sponsors
New Apartment Buildings are Geared for Millennials
Digested From "New Apartment Buildings are Geared for Millennials"
Washington Post (04/18/14) LaFrance, Adrienne

Developers and architects in the Washington, D.C., region are trying to entice the growing population of millennials with targeted amenities. Property companies like Avalon Bay are constructing high-tech buildings with customizable spaces and social environments. Ava H Street opened near Union Station in 2012. The core principals at the place have to do with creating spaces that are social and flexible, a goal Avalon Bay developed by having consumer groups tour mock units with a psychologist. "It's all geared toward this generation," says Jeff Wood, development director for Avalon Bay. "These millennials want to be socially connected. This demographic likes to customize their space." Ava H Street tenants get in-unit areas to hang bicycles and kayaks, and sliding doors within apartment units that can enable more opened or closed environments. A "Twitter wall" in the lobby features a word cloud showing the most-tweeted terms from around the neighborhood in real time. The nearby Avalon First and M, meanwhile, is designed to entice millennials with technologies and a variety of community spaces, including an indoor and outdoor movie theater, a test kitchen, two music studios, and a 5,000-square-foot gym that has green "oxygen walls" made of plants meant to keep the air oxygen rich. The building offers free WiFi to residents and a futuristic lobby. Owners of some older buildings are taking notice and making make major renovations. In Rockville, Md., the 10-year-old Crest at Congressional Plaza apartment complex is undergoing multi-million-dollar renovations. "Typically, a building of this age wouldn't go through an extensive renovation after 10 years, but we saw the changes in the demographics happening in the community," says Elaine De Lude, chief marketing officer for Ross Management Services, the property's management company. "In order for us to attract the millennials we really looked at what was important to them." De Lude says fitness centers and flexible outdoor space topped the list.
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AIM 2014 Executive Power Panel Announced
Digested From "AIM 2014 Executive Power Panel Announced"
Apartment Internet Marketing (04/16/14)

AIM 2014: Conspire announces this year's power panel line up of apartment industry executives set for an intimate look at the state of multifamily marketing. Addressing integration, changes in mobile and web strategy, you'll get the marketing low-down from the perspective of multifamily management and ownership leaders including Kettler Management president Cindy Clare, Related Management president Jeff Brodsky and Alliance Residential COO Brad Cribbins. Just prior to the AIM keynote on Tuesday, May 6, these industry thought leaders will join Joshua Tree Conference Group executive producer Steve Lefkovits for a no-holds barred discussion reflecting on the power of brand, the opportunities and challenges of online apartment marketing in the 21st century, and the evolving importance of the marketing department to executives and owners and presidents from leading multifamily firms.
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Smart Buildings Are Getting Smarter, More User-Friendly
Digested From "Smart Buildings Are Getting Smarter, More User-Friendly" (04/16/2014) Wasag, Brian

Advances in building and information technologies have brought a new Big Data analytics-based approach to facilities management -- one that ushers in a new era of operational control, reliability, and productivity for businesses and workers. According to Jones Lang LaSalle's (JLL's) latest report, titled "The Changing Face of Smart Buildings: The Op-Ex Advantage," smart buildings can increase employee comfort, engagement, and productivity. With more and more companies looking for healthy atmospheres for their workers, office buildings that have made adjustments to provide clean air, daylight, water saving fixtures, and energy management systems are able to meet potential clients' needs. Automated smart building systems generate reams of data that can be transmitted to a remote data center for analysis by facilities professionals. Using predictive analytics, facilities managers can anticipate and address user needs and requests related to heating, ventilation, lighting, way-finding, security, and more.
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Lego High-Rise: World's Tallest Modular Apt. Tower Getting Snapped Together in Brooklyn
Digested From "Lego High-Rise: World's Tallest Modular Apt. Tower Getting Snapped Together in Brooklyn"
Forbes (04/16/14) Carlyle, Erin

Inside a Brooklyn Navy Yard warehouse, steel beams and flat metal sheeting are on there way to becoming the world's tallest modular residential high-rise. Workers will configure the beams into walls, which will become the scaffolding of rooms, which link together to form entire apartment units. The "mods" will then be driven 2.5 miles away by truck, lifted by a crane, and snapped into position like Lincoln Logs at the Atlantic Yards complex being built next to Barclays Center. From the first cut of metal to placing a mod next to the home of the Brooklyn Nets, the entire process takes about 20 days. The first 32-story tower, which will include street-level storefronts and 363 rental units, is slated for completion in December. FCS Modular, a joint venture between New York City real estate developer Forest City Ratner and Swedish construction giant Skanska, is counting on the new factory approach to urban construction to save on costs and provide greater quality control.
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Retroficiency: Thermostat Tweaks in Big Buildings Can Save Millions
Digested From "Retroficiency: Thermostat Tweaks in Big Buildings Can Save Millions"
Xconomy (04/16/14) Woodward, Curt

A new analysis from Retroficiency, a developer of energy efficiency software, predicts that changes in building temperature as small as one degree could save millions of dollars in urban energy costs each year. The insight is one of several that came to light in a recent examination of commercial real estate in New York City, part of a broader effort that the firm is calling the Building Genome Project. The company says that by coupling of publicly available data about building design and energy use with its in-house analytics, it hopes to identify big opportunities for efficiency savings in the largest cities throughout the nation. In its analysis of more than 30,000 commercial buildings citywide, Retroficiency found that small, seasonal changes in building temperatures could save approximately $145,000, or about 2 percent of the energy consumed across the entire group being studied. Additionally, the company found that replacing all of the inefficient windows in the buildings could save about $227 million.
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Legal/Legislative Did You Know

2014 April Mission Sponsors
Those Who Rent in San Fran Are Fighting Economics
Digested From "Renters And Protesters In San Francisco Are Fighting Economics Not Google Employees"
Forbes (04/17/14) Dorfman, Jeffrey

San Francisco is experiencing a growing and intensifying set of protests against the gentrification which is occurring in a number of its neighborhoods due to a surge in high-earning tech-industry workers. The renters and the protesters supporting them believe that signing a lease gives them property rights to remain in that unit for as long as they choose. But the person who owns the property is entitled to decide that he wants to stop renting the property and sell it instead. For most rental apartments, the city/county Rent Board sets an annual cap on rent increases. But when rents rise slower than inflation, this law is guaranteed to make owning rental property a poor economic investment unless one is convinced the losses of renting the property can be made up in capital gains when the property is sold at a later date. In San Francisco, most tenants cannot be removed unless the owner decides to remove the units from the rental market or to move in a relative. This attempt to thwart economics delays the inevitable by requiring apartment owners to briefly move a relative in before renting the apartment at a higher rent or converting their rentals to condominiums to realize a profit.
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Marina Condo Owners File Lawsuit to Block High-Rise Apartment Building
Digested From "Marina Condo Owners File Lawsuit to Block High-Rise Apartment Building"
Wisconsin State Journal (04/18/14) Treleven, Ed

The owners of eight condominiums next door to a 14-story apartment building project approved last month by the Madison City, Wis., Council filed a lawsuit on April 16 asking a judge to reverse the council's approval of the project for safety and aesthetic reasons. Residents of the Marina condominium building asserted in their lawsuit that the building — which would be located just 29 feet east of the Marina — would create unsafe conditions because it fails to provide an adequate fire lane and off-street parking for loading and unloading, and would have a noisy ventilation system and destroy their privacy. On March 18, the City Council approved rezoning for the 121-apartment project, which is being developed by McGrath Property Group. The lawsuit was assigned to Dane County Circuit Judge John Albert. Project opponents have likened the building to having a 14-story wall next to their homes and have worried about the loss of property value, views of the water, and privacy. The property is now occupied by a vacant building that was used by the state Department of Corrections and is slated for demolition.
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NAA Announcements

2014 Diamond Sponsors-Use
Deadline Alert! Less Than Two Weeks Remain to Enter the Sink or Swim: NAA Innovation Tank Contest

All it takes is one great idea for a product or business to win $5,000 in the Sink or Swim: NAA Innovation Tank contest.

Okay, so it also takes submitting that idea by the contest deadline: May 2.

In this first-of-its-kind NAA event held in conjunction with the 2014 NAA Education Conference & Exposition, June 18-21 in Denver, the ABC reality hit TV show “Shark Tank” co-hosts (and NAA Friday General Session speakers) Barbara Corcoran and Daymond John, will judge live pitches from three innovative NAA attendees at the Friday General Session.

But it’s not just about The Sharks — the NAA audience is also able to cast their vote, too! After the three pitches have been made and the audience vote is done, Corcoran and John, who’ve personally invested in dozens of entrepreneurs, will award one lucky winner $5,000 for their idea!

What are you waiting for? Invest in your company and your career today. Visit the NAA Education Conference website and remember that the only thing separating you from a giant stack of cash is just one good idea!
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‘Maximize’ Your Multifamily Assets

Register now for the 2014 Maximize: The Multifamily Asset Management Conference—October 13-15 at the Amelia Island Plantation Resort in Amelia Island, Fla.—the industry’s only event dedicated to staying ahead of the ever-evolving operational curve. The new name for the hugely successful Apartment Revenue Management Conference reflects the important role that revenue management plays in professional apartment management.

Nowhere else but The Multifamily Asset Management Conference can you find world-class education and first-rate networking, as well as ideas and strategies for boosting net operating income. Maximize: The Multifamily Asset Management Conference focuses on five key areas: Expense Management Strategies; Revenue Enhancement and Pricing Strategies; Data Analytics and Performance Benchmarking; Capital Markets Financing Strategies; and Innovation.

Register today to and be first in line for the information, insight and answers to questions necessary to boost your bottom line.
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Earn CECs with 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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Deadline Extended: 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 Online


Chicagoland Apartment Association
May – June, 2014


Chicagoland Apartment Association
July, 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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April 22, 2014

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