Homeownership Rate Falls to Mid-1990s Level
Digested From "Homeownership Rate Falls to Mid-1990s Level"
Wall Street Journal (04/30/14) P. A5 Dougherty, Conor
According to U.S. Census data, the share of Americans who own their homes settled at about 64.8 percent in the first three months of this year -- down from 65.2 percent in the fourth quarter of 2013. The rate has fallen steadily since peaking at 68.9 percent in 2006, due in part to the foreclosure crisis. But even after two years of housing recovery, the pace of homeownership has not returned to pre-recession levels and is, in fact, the lowest it has been since 1995. Economists suspect the owner-occupancy rate is being skewed by the growing number of young adults who are leaving the family home and striking out on their own. They primarily are leasing apartments, which is raising the renter rate and dropping the homeownership rate, but will contribute to higher homeownership levels down the road.
Market Trend Insights
Two Reasons Why Chattanooga Ranks Ahead of NYC for Rent Growth
Digested From "Chattanooga Ranks Seventh in Nation for Fastest-Growing Rents, Ahead of Even NYC"
Chattanooga Times Free Press (05/01/14) Bradbury, Shelly
Chattanooga currently boasts some of the country's fastest-growing rents. Of 200 cities tracked between 2007 and 2012 by online finance adviser NerdWallet, the Scenic City ranked seventh for fastest-rising median rents. In fact, rents rose 26 percent during the five-year time span -- faster than in New York City even, which saw 22 percent rent growth from '07 to '12. Divya Raghavan, senior analyst at NerdWallet, says there are two main reasons for Chattanooga's success in this regard. The city is attracting such heavyweight companies as Amazon and Volkswagen, and it is attracting workers. The concern moving forward is how many long-term residents are being priced out of the market.
Most Chattanooga apartment communities are 100 percent occupied or very close to it. The city's average occupancy rate is about 95 percent, notes Rock Apartment Advisors. Its researchers found no apartment communities citywide that were less than 80 percent full and only five that are less than 90 percent full. Justin Uffinger, an associate at Rock Apartment Advisors, forecasts that Chattanooga's consistently high occupancy rates coupled with the city's growing popularity among young workers will continue to drive rents higher. His firm's annual survey found that Chattanooga's average rent rose by 21 percent between 2008 and last year. "It's the people you're attracting to your market," Uffinger concluded. "You have all these incubators downtown that are attracting all these young technology companies. Between age 25 and 30, those are your prime young renters, the ones who are willing to pay more to live in the hip and up-and-coming areas."
Which Urban Cores Are Seeing the Most Decay in Apt. Occupancy?
Digested From "MF Occupancy Erodes in Urban Cores"
GlobeSt.com (04/28/14) Bubny, Paul
Axiometrics Inc. are forecasting the erosion of apartment occupancies in urban core submarkets will continue throughout the remainder of 2014. Jay Denton, vice president of research with Axiometrics, states, "These submarkets will likely continue to see occupancy drop throughout 2014 in the face of increasing supply." Among urban core submarkets analyzed by Axiometrics, Chicago's Gold Coast/River North submarket weathered the biggest year-over-year drop in occupancy at 320 basis points. Builders added 1,905 rental apartments to the submarket in 2013. In second place was the Capitol Hill/Southwest submarket of Washington, DC, with a 2.4 percent year-over-year decline in occupancy. Chicago's Loop was third at -1.4 percent. Even in the face of eroding occupancy rates, few of these urban submarkets are cutting back on supply. Some locations, most notably Houston’s Montrose/River Oaks submarket, are boosting supply as a result of continued strong annual effective rent growth. Atlanta’s Fulton and Nashville's downtown submarkets exhibited positive year-over-year occupancy changes, increasing by 0.7 percent and 1.0 percent, respectively.
The Two Florida Counties Where Studio Apts. Are the Best Bet
Digested From "Business Briefs: Apartment Rents on the Rise"
Bradenton Herald (FL) (04/29/14)
Apartment rents are on the rise in Florida's Manatee and Sarasota counties. But there remains some good deals to be had as long as those renting keep their expectations in check. In Manatee County, studio vacancies hitting nearly 9 percent, while average rental rates only inching up to just under $700, statistics compiled by Coldwell Banker Commercial NRT show. The rest of the market witnessed not only higher rents, but also less availability. One-, two- and three-bedroom apartment vacancies fell to nearly 3 percent throughout Manatee County. Meanwhile, the average monthly rent for a three-bedroom unit topped $1,225. Apartment rents were even higher in Sarasota County as the vacancy rate for one-, two- and three-bedroom units was around 2.5 percent as of March 31. Coldwell Banker Commercial NRT researchers report that the county's supply of studio apartments showed an average vacancy rate of 3.5 percent. Meanwhile, a three-bedroom unit rented for an average of around $1,300 a month. One-bedroom apartments were actually a better deal than studios, pricing at an average of $830 a month compared to $850 for the no-bedroom units.
Those Who Rent in Central Ore. Are Getting Priced Further Out
Digested From "Central Oregon Rental Costs Outpace Minimum Wage"
Bend Bulletin (OR) (04/28/14) Clevenger, Andrew
According to a recent study of affordable housing from the National Low Income Housing Coalition, people throughout Central Oregon earning minimum wage cannot afford a one-bedroom apartment without working more than 40 hours a week. Oregon hiked its minimum wage to $9.10 an hour earlier in the year, a result of an annual adjustment for inflation. To afford a one-bedroom apartment in Deschutes County, for example, a worker would have to make $12.40 an hour -- also known as the "housing wage," which is based on a 40-hour work week and the assumption that one should spend no more than 30 percent of income on housing. In nearby Crook County, the housing wage is $10.58. Over in Jefferson County, it is $9.73. Making matters worse is the fact that there are very few vacancies in the area. According to the annual housing survey by the Central Oregon Rental Owners Association, the overall vacancy rate is 0.7 percent. That is down from 1 percent a year earlier. By contrast, the vacancy rate was 12.4 percent in 2009. Kenny LaPoint, Housing Works' housing and resident services director, comments, "It's tough on everyone right now, but we're seeing a lot of our voucher clients [who receive federal aid for housing] be priced out of the market." Still, more people who rent are living farther and farther from the Bend metro area. "People get priced out of Bend, they start to go to Redmond, then La Pine," LaPoint concluded. "Then as you get priced out of those markets, you go even further out."
Deals and Transactions
Oakwood Worldwide Inks Mega-Deal
Digested From "Oakwood Worldwide in $4-Billion Deal"
Los Angeles Times (04/30/14) Reckard, E. Scott
Oakwood Worldwide is looking to triple its pioneering extended-stay housing brand via a new joint venture that will spend $4 billion to purchase and develop furnished apartment communities worldwide. The Los Angeles-based company has struck a partnership with Mapletree Group, the Singapore-based real estate developer. Together, they expect to open at least 100 buildings -- complete with maid, concierge, and gym services -- over the next three to five years. Mapletree is set to provide the funding, half of which will be devoted to expanding in the United States. Oakwood Worldwide CFO Bill Foltz said the deal is eventually expected to increase revenue from "the higher nine-figure range" to more than $1 billion a year. The typical traveler spends an average of 75 days in an Oakwood apartment. Multinational corporations and their growing global payrolls have created considerable demand for such units in the U.S. and abroad. Oakwood's main rivals in this niche include Bridgestreet Worldwide and National Corporate Housing. Oakwood manages approximately 25,000 apartments around the globe, many of them leased and operated without the Oakwood brand. Mapletree owns and operates about $20 billion in real-estate holdings of many kinds in Asia, including residential, office, retail, and industrial properties.
Equity Residential Hopes New SF Apartments Will Be Giant Success
Digested From "Sam Zell's Equity Residential Starts Construction of $224 Million Development Project in San Francsisco"
Jewish Business News (05/04/14)
Equity Residential has started construction of a major new $224 million apartment development in San Francisco's Potrero Hill neighborhood. Once completed, it will boast comprises 453 apartments, along with nearly 26,000 square feet of retail space. Designed by David Baker of David Baker Architects, the low-rise development will offer a myriad of amenities to attract the upscale demographic that Equity Residential is increasingly targeting. Among them will be a one-acre urban park, a gym, a rooftop deck, a clubhouse, spa, and pool. Jim Kelly, head of Northern California development for Chicago-based Equity Residential, is especially excited about the park element. "Given that outdoor park space is a coveted commodity in any urban environment," he states, "the park will not only be a great amenity for the residents within our development, but will also be a great addition for the entire Potrero neighborhood to enjoy." Equity Residential acquired the site when it purchased part of Archstone Inc.'s assets in the first quarter of last year. The new apartment community is on pace to be finished by 2016.
Why Did Associated Estates Miss Its Q1 Mark?
Digested From "Associated Estates Misses Q1 Mark, as Rough Winter Leads to Higher Apartment Expenses"
Cleveland Plain Dealer (OH) (04/30/14) McFee, Michelle Jarboe
This past winter's long stretches of harsh weather resulted in higher expenses for Associated Estates Realty Corp., an Ohio-based apartment owner that posted mixed financial results for the first quarter as a result. Funds from operations were 30 cents per share for the January-through-March period, which was down a penny from the same three months a year earlier. Associated Estates currently owns 50 apartment communities in nine states. Operating expenses for those assets climbed 5.2 percent during the first quarter due to the brutal cold and snow. Company officials had been projecting a 2.4 percent increase in expenses. President and CEO Jeffrey Friedman assured, "Revenue growth continues to be solid throughout our portfolio, and average occupancy for the quarter remained strong at over 96 percent."
How Apts Affected Latest Construction Spending Numbers
Digested From "US Construction Spending Rises 0.2 Pct in March"
Associated Press (05/01/14) Boak, Josh
Construction spending bounced back from a 0.2 percent decline in February, improving by the same margin in March, reports the Commerce Department. Outlays are now running at a seasonally adjusted annual pace of $942.5 billion, up 8.4 percent from March 2013. The latest gains reflect higher spending on apartment and single-family construction -- which increased 4.3 percent and 0.2 percent, respectively -- as well as growth in the office, industrial, and healthcare property niches. At the same time, spending on government projects -- including schools and educational real estate -- slipped 0.6 percent.
How Aimco Beat Q1 FFO Estimates
Digested From "Aimco Beats Estimates on Q1 FFO"
GlobeSt.com (05/02/14) Bubny, Paul
Apartment Investment and Management Co. (Aimco) reports that its first-quarter pro forma funds from operations topped analysts' consensus estimates. Pro forma FFO for the three months ended March 31 was 50 cents per share, a 4 percent year-over-year increase. Zacks Investment Research had earlier reported a consensus estimate of 49 cents per share. Average monthly revenue per rental unit climbed 9.9 percent year-over-year to $1,505 due to two factors -- rent growth and the sale of underperforming apartment communities. In total, the REIT is projecting a net investment of approximately $670 million in redevelopment projects, including those now under way and those that were completed during the past 12 months. Meanwhile, analysts have been taking note of Aimco's strong quarterly performance. In late April, Barclays upgraded its stock from an underweight rating to an equal weight rating ahead of the company's quarterly results. Just this past Thursday, Standard & Poor's upgraded its rating of Aimco's balance sheet.
ETS's Energy Savings Program a True Cornerstone
Digested From "Cornerstone Taps Energy Technology Savings (ETS) To Provide Energy Management Services For Manhattan Highrise"
Digital Journal (04/30/14)
Energy Technology Savings (ETS) recently signed a contract with Cornerstone Real Estate Advisors to implement its Fast Trak Energy Savings Program at a 44-story, 418-unit luxury multifamily rental building in Midtown Manhattan. ETS engineered systems using smart sensors and mobile applications, enabling buildings to proactively talk to building managers regarding temperature, humidity, water detection, and occupancy. "With our continuous concierge service we determine each building's unique Energy Signature, and develop Scorecards and Playbooks to implement energy efficiency and peak demand reduction technology solutions tailored to minimize each building's energy cost structure," said ETS Chief Executive Jeff Hendler. As part of the agreement with Cornerstone, ETS will deliver a custom-tailored program to the luxury apartment building, which is expected to achieve a substantial reduction of energy costs as a result.
Legal/Legislative Did You Know
Liability for Quake Losses a Big Concern for L.A. Property Owners
Digested From "Liability for Quake Losses a Big Concern for L.A. Property Owners"
Los Angeles Times (05/04/14) Lin II, Rong-Gong; Xia, Rosanna; Smith, Doug
The question of whether building owners can be held liable for earthquake losses bears heavily on the Los Angeles metro area. So much so that L.A. officials are now considering an ambitious plan to publicly identify and require retrofits of potentially dangerous structures. Some owners are concerned that assessing the seismic risks of their buildings will create legal liability in the event of a destructive quake. A recent case in which a jury awarded nearly $2 million to the families of two women crushed to death during a 2003 quake as they were trying to escape an old building in historic Paso Robles, concluding that the property owners were negligent for not making the building safer. A state appeals court subsequently upheld the verdict, finding that the building's compliance with city law "did not insulate owners of unreinforced building from negligence in failing to retrofit building." The case establishes a legal precedent that if a landlord has a building in an earthquake zone that is susceptible to collapsing or suffering serious damage and the owner is aware that it requires retrofitting, that owner could be held liable. The Paso Robles case has drawn much more attention from seismic safety officials and policymakers because a jury found negligence and it created case law.
Minn. Apartments Are Fretting Over New Water Rules. Why?
Digested From "Apartment Complexes Voice Concerns Over New Water Rules"
KEYC TV (MN) (05/01/2014) Gustafson, Ryan
Owners of some of the biggest apartment communities in Mankato, Minn., told city council members last week that proposed changes to how the city charges for water could have a fairly substantial negative impact on their bottom lines. They are particularly concerned about the first year of implementation. Specifically, apartment owners and managers are opposed to a new cost-of-service fee for each individual rental unit rather than for each community as a whole. The changes will kick in next year. Some owners could work the increased costs into their asking rents. But the August-to-July contracts many of them sign with Mankato's fairly sizable college student population will leaves the owners holding the bill for this first year.
Why Is Freddie Mac Hanging Out in Trailer Parks?
Digested From "Freddie Mac Packaging Loans for Trailer Parks"
Wall Street Journal (05/01/14) P. C4 Yoon, Al
Freddie Mac is now financing developers of manufactured home parks. On April 30, it kicked off a program to purchase loans made to owners of manufactured housing communities and then pool them into securities to be sold to investors. David Brickman, an executive vice president in the company's multifamily lending group, explains that the loans are primarily backed by rents paid by the people who occupy the manufactured homes that sit on the property. He says Freddie sees an opportunity to increase its role in the affordable housing market at a time when it is doing less funding for other types of multifamily housing, chiefly apartment communities. Freddie Mac's participation in the manufactured housing niche is "a step in the right direction," remarks Jason Boehlert, senior vice president of government affairs at the Manufactured Housing Institute, which also is campaigning for greater access to funding for manufactured home buyers. Meanwhile, banks and other lenders, including Deutsche Bank and Barclays, also are stepping up their financing of manufactured housing developers. According to Trepp LLC, the share of U.S. commercial-backed mortgage securities underpinned by manufactured-home loans is up from zero in 2009 to 4 percent this year.
How Many Fayetteville (Ark.) Apts Are Getting New Recycling Bins?
Digested From "Fayetteville to Distribute Indoor Recycling Bins to Five Apartment Complexes"
Fayetteville Flyer (04/24/14) Bartholomew, Dustin
In Arkansas, Fayetteville's Recycling and Trash Collection Division last week debuted a new program designed to encourage recycling at local apartment communities. City workers and volunteers have initially distributed six-gallon indoor recycling bins to residents at North Creekside Apartments. The bins were bought with a $30,000 grant the agency received from the Arkansas Department of Environmental Quality earlier in the year with the goal of making apartment recycling more convenient. Bins will be distributed at four additional participating apartment communities in the coming months. Big outdoor receptacles are already in place at all five properties. Once the bins are distributed, each site's management team will take on the responsibility of ensuring residents return them when they move out. If they are not returned, the communities will buy new bins from the city using funds from their residents' security deposits. City officials hope to eventually expand the program to more apartment communities.
ROI for Owners and Employers: 2014 NAA Education Conference & Exposition Attendance
With regard to return on investment, nowhere else can you get so much for one small fee as you can by attending (and sending your staff to) the 2014 NAA Education Conference & Exposition, June 18-21 in San Diego.
The practical know-how, classroom education and industry networking offered to attendees will no doubt have a positive effect on your company’s bottom line.
For NAA members, consider that full conference registration includes:
** Three general sessions led by world-renowned speakers, the value of which alone covers the price of admission: International T.V. and film star Michael J. Fox; Barbara Corcoran and Daymond John, hosts of the hit ABC T.V. show “Shark Tank”; and Alex Sheen, founder of because I said I would.
** More than 40 breakout sessions covering the gamut of multifamily housing operations and ownership, including marketing, sales, technology, industry trends, executive issues and so much more.
** Two days of Exposition
exploration featuring the newest, most innovative products and services from the nearly 400 supplier partners.
** Receptions, meetings and interactive education sessions where attendees can share ideas and build their network of professional colleagues and potential service partners.
** Six available continuing-education credits offer NAA designates the chance to reach their designation renewal goal (not to mention the career investment) in one place and at one time, saving time and money.
What are you waiting for? Invest in your company and your career today. Visit the NAA Education Conference website.
Take Your Apartment Assets to the Max
Register today for Maximize: The 2014 Multifamily Asset Management Conference—October 13-15 at the Amelia Island Plantation Resort in Amelia Island, Fla.—the industry’s only event dedicated to asset management and long-term value creation in multifamily housing communities.
Combining both the Apartment Revenue Management Conference and the NAA Green Conference into a comprehensive retreat for asset managers charged with creating new value for their investors, the new name 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.
2014 NAA Survey of Income and Expenses Deadline May 16
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.
Stay in the Know with the New Apartment Advocate!
Know what’s going on policy issues that affect the industry by reading the new Apartment Advocate e-newsletter. NAA Government Affairs’ flagship publication merges the AIMS Update and the HotSheet plus adds new content to give you an insider’s look at what’s happening in apartment industry advocacy.
If you received the AIMS Update or the HotSheet, you are already subscribed. If you wish to subscribe, contact NAA’s Carole Roper.
NAAEI Designation Courses Offered Near You!
Nevada State Apartment Association
Roanoke Valley Apartment Association
Chicagoland Apartment Association
May – June, 2014
South Dakota Multi-Housing Association
September – October, 2014
Apartment Association of Greater Omaha & Lincoln
September – November, 2014
Lubbock Apartment Association
October – December, 2014
Connecticut Apartment Association
October – December, 2014
Roanoke Valley Apartment Association
October – November, 2014
Chicagoland Apartment Association
Roanoke Valley Apartment Association
Nevada State Apartment Association
Roanoke Valley Apartment Association
NAAEI Leadership Experience: Powered by Dale Carnegie:
Greater Cincinnati Northern Kentucky Apartment Association
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.
Did You Know?
The NAA Education Conference is super social! Stay informed on Facebook, Twitter and Instagram by following #NAAEduConf.
Apartment Internet Marketing (AIM) Conference
May 5-7, 2014
Huntington Beach Hyatt
Huntington Beach, Calif.
2014 NAA Education Conference & Exposition
Colorado Convention Center
2014 Multifamily Asset Management Conference
October 13-15, 2014
Amelia Island Plantation Resort
Amelia Island, Fla.
Don't forget to check out Lauren Boston's weekly blog for a humorous take on all the latest trends in the multifamily housing industry. Check out Lauren's latest blog!
||The National Apartment Association (NAA) is America's leading advocate for quality rental housing. NAA's mission is to serve the interests of multifamily housing owners, managers, developers and suppliers and maintain a high level of professionalism in the multifamily housing industry to better serve the rental housing needs of the public.
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