Apartment and Condo Production Shows Growth in Q1
Digested From "Apartment and Condo Production Shows Growth in Q1"
National Mortgage Professional Magazine (05/30/14)
Production of apartments and condominiums registered gains in the first three months of the year, according to the National Association of Home Builders. The group's Multifamily Production Index (MPI) bumped up three points to 53. Any reading of 50 or higher signifies that builders see market conditions improving rather than worsening, and the latest score represents the ninth quarter in a row that the index has held above this threshold. Among the three MPI components, sentiment regarding for-sale condominiums climbed eight points to 54; the outlook for market-rate apartment rentals retreated by one point to 59; and optimism related to low-rent units gained a point to 48. "Developer confidence in market-rate and low-rent units has been pretty stable for quite some time," remarked W. Dean Henry, who chairs NAHB's Multifamily Leadership Board. "Now we're really starting to see confidence in the condo market start to catch up -- a segment that had been delayed in its recovery -- along with the single-family market."
Market Trend Insights
Which City Leads Florida in Occupancies? Which Has the Highest Rents?
Digested From "Fort Myers Leads State in Apartment Occupancy Rates"
News-Press (FL) (05/28/14) Hogan, Dick
According to ALN Apartment Data Inc., the Fort Myers metro area led Florida in terms of apartment occupancy rates during April at 96.6 percent -- an increase of 1.7 percent from the month a year ago. ALN researchers survey statistical data from communities of 100 rental units or more in major metro markets nationwide. The average monthly rent in the Fort Myers area climbed 9 percent from $848 to $924 over the same period. Palm Beach led the Sunshine State in this regard with an average apartment rent of $1,235 per month, while Melbourne ranked the lowest at $772. The state average was $918, a 4.8 percent gain from $873 year over year.
When New Apartment Construction Outpaces Demand
Digested From "New Apartment Construction Outpaces Renter Demand, Vacancy Rising"
Triangle Business Journal (05/29/14) Hoyle, Amanda Jones
According to a semi-annual report by the Karnes research firm and the Triangle Apartment Association, apartment communities across North Carolina's Triangle region are feeling the pinch from all the newly completed multifamily developments. Indeed, new unit deliveries are starting to outpace new resident demand. The vacancy rate for the Triangle apartment market rose to 7.6 percent as of March 31 from a vacancy rate of 5.6 percent in late September. The vacancy rate is projected to increase even more over the next year when an additional 6,600 new apartments are set to open -- possibly to the 9 percent to 10 percent range by the end of this year's third quarter. In the six-month period between September 2013 and March 2014, developers throughout the Triangle completed 2,863 new rental units. Another 4,000 or so apartments are on pace to be completed before September. Furthermore, researchers state that the 9,712 rental units that were under construction as of the end of March was the highest level reported during any period since 1997. At the same time, net absorption for the six-month period ended March 31 was 795 units. Nearly all of the new demand was in Wake County, which boasted a net absorption of 1,013 apartments. The report concluded: "Stringent mortgage loan requirements may help to increase apartment demand. However, the increase in single-family housing permits indicates demand for single-family housing is returning."
Deals and Transactions
Las Vegas Garden Apartment Sells for Highest Price-Per-Unit Since 2007
Digested From "Plots & Ploys: Vegas Venture"
Wall Street Journal (05/28/14) Hudson, Kris
Hamilton Zanze Real Estate Investments has paid $26 million for the 164-unit Elysian Parc apartments, located in the Las Vegas suburb of Henderson. The deal is notable because the purchase price is the highest for a wooden-framed, garden-apartment community in the Vegas market since 2007 in terms of price per square foot ($152) and price per unit ($158,536). According to Newmark Grubb Knight Frank broker Doug Schuster, "People are coming back to Las Vegas and spending money. There is a sense that the town really is in recovery mode." Indeed, sales of commercial real estate in the Las Vegas metro area soared 44 percent in the first three months of 2014 over a year ago to $847 million, states Real Capital Analytics. The Elysian Parc's vacancy rate now stands at 6 percent, with an average monthly rent of $1,040. San Francisco-based Hamilton Zanze reports that wooden-framed structures currently account for the bulk of Las Vegas' apartment stock, although the city's steel-framed apartment towers typically sell for significantly higher sums.
Steadfast Continues Its Tennessee Apartment Buying Spree
Digested From "Steadfast Buys Nashville Apartments for $35.2M"
Multi-Housing News (05/14) Theiss, Eliza
California-based Steadfast Income REIT has continued its Tennessee apartment buying spree with the fourth acquisition in the Volunteer State and the third in the Nashville metro area in the last eight months. Its latest acquisition is the 176-unit Village at Spring Hill, which it bought from Villages at Spring Hill LP for $14.2 million. The community's amenities include a 24-hour fitness facility, a lighted tennis court, a pet park, playground, and picnic area with grills. "Steadfast Income REIT's acquisition focus has been to focus on properties in flourishing markets," explains Steadfast Income REIT President Ella Shaw Neyland. "Murfreesboro and the Nashville area are high on national rankings for economic strength, attractiveness to business, population growth and job growth." Steadfast now owns 67 apartment communities in 11 Southern and Midwestern states.
Up North, True North Inks a Major Apartment Deal
Digested From "True North to Buy 29 Apartment Properties"
Durham Region (05/29/14)
True North Apartment REIT has inked a C$289 million deal to acquire 29 apartment communities containing nearly 3,000 rental units. The portfolio includes a variety of low-rise, mid-rise, and high-rise apartment communities and townhouses throughout Alberta and Ontario. The proposed deal requires approval by a majority of the REIT's unitholders, excluding those controlled by True North Chairman Daniel Drimmer. True North plans to issue nearly C$80 million worth of equity to the vendors as part of the purchase. The rest of the transaction will be funded by a combination of $12.9 million in cash raised through a convertible debt offering, $65.6 million of assumed existing mortgage debt, and $127.5 million of new mortgage debt. A vote by True North's unitholders is currently set for June 27.
Which Balt. Neighborhood Is Seeing an Apartment Fire Sale?
Digested From "Five Bolton Hill Apartment Buildings Going on Auction Block"
Baltimore Business Journal (05/28/14) Sullivan, Joanna
Those investors who are looking to claim a chunk of Baltimore's sizzling apartment sector have an opportunity to purchase five such communities in the city's historic Bolton Hill neighborhood. Alex Cooper Auctioneers Inc. is selling the five properties, all of which are owned by Jeffrey Epstein, in separate auctions on June 6. Auction agent Matthew Cooper said this is a rare collection of apartments in the desirable neighborhood and can't recall such a block of buildings coming onto the market at one time in recent memory. Of Epstein, Cooper says, "He's been doing this since 1987 and he just kind of feels that he would like to move onto somewhere else." All concerned expect demand to be high for the five assets.
Apartment Owner, NAA Member Wins The Amazing Race
Digested From "Amazing Race Winners Dave and Connor: "It's An Out-of-Body Experience""
Seattle Post-Intelligencer (05/18/14) Eng, Joyce
Apartment owner and NAA member Dave O'Leary and his son, Connor, won the $1 million prize on CBS's "The Amazing Race" last month -- the first time a parent-child team managed to accomplish this. At 58, the elder O'Leary is also the show's oldest winner. When asked what will he do with the prize money, he replied, "I'm in the real estate business and I close apartment deals, and I always wait for the check to clear before I can really say I closed the deal. That's kind of how I feel about this! I still haven't even seen [the check]!"
10 Reasons It's Better to Rent
Digested From "10 Reasons It's Better to Be a Renter"
U.S. News & World Report (05/28/14) Schreck, Niccole
Owning a home may be an aspiration for many Americans. However, it is often less expensive and more convenient to rent. The article's author gives 10 reasons. One, you generally spend less on utilities as such services as water and trash pickup are included in one's rent. Two, those who rent are not responsible for most maintenance or repairs. Three, and some think this is most important, people who live in rental housing do not have to pay property taxes. Four, those who rent are likely to have less debt. NerdWallet calculates that the average household has more than $154,000 in mortgage debt. Five, renters insurance is less expensive than homeowners insurance. Six, renting gives people more freedom and mobility to pursue work in other markets. Seven, many people may not be able to afford a home in their dream neighborhood, but it may be attainable to rent there. Other reasons range from the modern amenities and luxuries that many apartment communities offer to the fact that rental apartments are often easier to redecorate.
Two Moves That Will Win the Resident Retention Chess Game
Digested From "Check Mate: Win the Chess Match of Resident Retention in 2 Moves"
Property Management Insider (05/29/14) Smith, Lia
Property Management Insider columnist Lia Smith likens the apartment resident renewal process to a chess match. Management makes the first move in the form of the renewal notice, and residents respond accordingly. As strategic as chess matches go, she writes, it is important for owners and managers to think three or even four moves ahead of their "opponent." This entails anticipating the various "what ifs" such as "What if the increase is too aggressive?" or possibly "What if this resident is still upset about us dropping the ball on that service request?" The article lists a couple of easy moves management teams can execute to "ensure the resident retention chess match ends in their favor." Move 1 entails affirming your community's greatness "with a job well done." Simply stated, the more times you can get residents to confirm a job well done -- whether it be a repair request promptly answered or a preventive maintenance task executed without the resident even requesting -- the better off you will be at renewal time. Move 2 is to "Claim the Win." Smith writes: "Many times, management teams forfeit the win because they think a resident is not going to renew because of the increase." But the 2014 SatisFacts Index for Annual Surveys shows that, when asked "What can be done to improve the community?" 0 percent of respondents answered "lower rent."
New Jersey Apartment Owner Cuts Energy Costs with Spray Foam Insulation
Digested From "Bergen County Landlord Aims to Cut Energy Costs at His and Others' Buildings"
NorthJersey.com (05/29/14) Lynn, Kathleen
A decade ago, apartment magnate Richard Kurtz of the Kamson Corp. decided to get proactive in addressing high energy costs at his company's approximately 14,000 apartments throughout the Northeast. He became a majority shareholder in Lapolla Industries Inc., a Houston-based company that makes spray foam insulation and other energy-saving products. Through Lapolla's AirTight division, he has managed to slash energy costs by 50 percent at his apartment communities in such markets as Lodi and Garfield, N.J., by adding spray foam insulation, more efficient boilers and water heaters, and wireless thermostats. Now, Kurtz is reaching out to other apartment owners. Lapolla's AirTight division recently inked a $1 million-plus deal to improve the energy efficiency at Jacob Ford Village. This 270-unit apartment community is located in Morristown, N.J., and is owned by Rochester, N.Y.-based Home Properties. Kurtz comments, "I feel saving on energy offers the greatest upside and success for property owners."
In addition, it is better for the environment. While the AirTight program costs between $3,000 and $4,000 per apartment, the savings on utility bills will allow apartment owners to recover those costs in five to eight years. The majority of Kamson's portfolio is comprised of two-and three-story garden apartment communities. The firm pays heating costs in roughly 90 percent of them. Brent Kohere, regional vice president for Home Properties, said he was drawn to AirTight's program because it is a turnkey solution and has helped his company get state rebates for the improvements. Kohere observes that, between the rebates and the energy savings, "it essentially pays for itself over a few years." The New Jersey Apartment Association (NJAA) is also among Kamson's advocates. "Conservation of energy and resources has always been important to our members, and technology is starting to make it more affordable to do it," reports Jean Maddalon, executive director of the NJAA. For years, the apartment association has been petitioning state officials for permission to bill apartment residents individually for their utility use on the theory that it would encourage more to conserve. Opposition has been fierce, though, and this type of billing is allowed only with water use in new construction.
Grayco Wants You to Live Close to Shopping ... Really Close!
Digested From "Grayco Looks to Redevelop Buckhead Shopping Center With Apartments"
Atlanta Business Chronicle (05/30/14) Sams, Douglas; Wenk, Amy
Grayco Partners LLC filed plans with Atlanta city officials to redevelop a portion of the Brookwood Square shopping center and transform the space into 249 apartments. The project would tear down at least 24,000 square feet of the shopping center, causing such tenants as Cafe Sunflower to relocate within the mall. The site would then be redeveloped to offer 132 one-bedroom apartments and 101 two-bedroom rental units. Niles Bolton Associates has agreed to serve as the architect. Grayco, which is known for its projects in Texas, will be entering Atlanta's white-hot apartment market for the first time.
Legal/Legislative Did You Know
HUD's $104 Million in Grants to Help Owners with Lead Removal
Digested From "HUD to Clean Up Housing With $100-Plus Million in Grants"
National Mortgage Professional Magazine (05/30/14)
HUD is now offering $104 million in grants to clean up lead-based paint hazards and correct other housing-related health and safety hazards in privately owned, low-income housing. The funding is provided via the agency's Lead-Based Paint Hazard Control and Lead Hazard Reduction Demonstration grant programs. To broaden the reach of HUD's lead grant funding, HUD is also providing over $12 million to help communities transform their lead hazard control programs to address multiple housing-related risks. HUD Secretary Shaun Donovan comments, "We know that housing conditions directly affect the health of its residents. These grants will help communities around the nation protect families from lead exposure and other significant health and safety hazards."
Cities Ask, 'To Park or Not to Park?'
Digested From "Parking Drives Young People Away"
Miami Herald (06/01/14) Matson, Malone; Fort, Ray
Miami commissioners are now considering whether to proceed with an amendment to the city's zoning code that would eliminate parking requirements for buildings under 10,000 square feet located within close proximity to public transit. The amendment definitely has the potential to draw more Millennials to Miami as residents. This demographic has been hampered due to a lack of affordable housing and walkability. "Required parking is a major contributor to these conditions," the article's authors note. "A single parking space in a garage can cost more than $20,000 to construct." The city's current zoning code requires residential buildings to provide a whopping 1.5 parking spaces per unit despite such a steep price tag. Consequently, apartment developers offset this cost through higher rents. To reduce the number of required parking spaces, developers will often build fewer, bigger, and more expensive luxury apartments rather than the smaller, affordable rental units that would house significantly more people. Studies shows that rent eats up 43 percent of the average Miami household's income.
Some are baffled as to why housing targeted to the younger generation should be required to have parking at all. Generation Y generally doesn't have the same love affair with automobiles that previous generations had. Indeed, none of the cities that are now attracting the highest numbers of young, top Millennials -- namely New York, San Francisco, Chicago -- require owning a car. With limited parking requirements, the hip neighborhoods of these three cities are typified by compact apartment buildings and brownstones. The results of such density are quiet streets with cafes and cyclists riding past rather than the myriad of faceless parking garages dotting downtown Miami and the nearby Brickell area.
Three Reasons Why More Apartments Are Allowing Animals
Digested From "Why Apartments Ban Pets, Allow Service Animals"
Fox Business (05/29/14) Geffner, Marcie
Apartment owners and managers used to ban dogs, cats, and other pets because of potential damage, odor, noise, liability risk, and other concerns. These days, however, more and more apartment communities seem to be housing more animals than humans. Three trends largely explain why: one, some pets are there with permission; two, some "pets" are actually service or assistance animals for people with disabilities, and owners are required to accommodate them; and, three, some pets are disguised as service animals, even though they're not. A 2013 Apartments.com survey suggests the population of apartment-dwelling animals has indeed risen. Of the apartment residents polled, 75 percent said they had a pet versus only 43 percent in 2012. Some apartment communities allow pets if the resident complies with all other rules. Typically this entails signing an addendum to the lease or rental accord, paying an extra deposit for any damage their pet might cause and paying extra "pet rent" for the animal occupant.
A study by Firepaw, an animal welfare research foundation, concluded that apartment pet-friendly policies give owners and managers multiple benefits. These range from more loyal residents to a bottom-line boost of $2,731, on average, per apartment a year. Meanwhile, at least two federal laws and some state and local laws require owners to bend their rules and make certain accommodations for residents with disabilities. The federal Americans With Disabilities Act, for instance, requires public businesses and other entities to make reasonable accommodations for service pets that have been trained to perform specific tasks that aid an individual who has a disability. The federal Fair Housing Act, though, contains an exception that says no accommodation is required if an animal poses a threat to people or property. Managers need to be aware of those animal lovers who live in a no-pets apartment and might feel miffed if a neighbor with a disability is allowed to have a service or assistance animal. They also need to recognize that some pet owners will purchase vests, patches, meaningless registration certificates, or other paraphernalia to try and help their pet masquerade as a legitimate service or assistance animal. Jeanne Delgado, vice president of business operations and risk management policy for the National Multifamily Housing Council, laments, "If people who don't need this type of assistance take advantage of the law for their own personal gain, it ultimately hurts people who really need it. It makes it more difficult for those who are truly handicapped and in need of such animals."
Why San Antonio Apt. Residents Are Complaining About the Mail
Digested From "Apartment Dwellers Complain About Mail Problems"
KSAT.com (TX) (05/26/14)
San Antonio residents at two different apartment communities are complaining about mail delivery. One is having an issue with broken mailboxes, while the other is reporting problems with stray and mis-delivered mail lying around for anyone to open or steal. In both cases, identity theft becomes a very real concern. One resident recommends, for the time being, that any residents who see mail lying about to put it in the one box marked outgoing mail to let the postal carrier know that it did not get to the correct apartment resident's box. As for the broken mailboxes, the U.S. Postal Service says the responsibility will ultimately fall on whomever owns the boxes. Local inspector Michael Martinez Partida says those who commit mail theft are "looking for anything that is going to give them some financial benefit -- credit card applications, blank checks, checks that have been written out." The key is report mail theft as soon as possible. The report did not specifically name the two apartment communities where the suspected criminal activity has been taking place.
Seattle Planners Look to Improve Apartments, Townhouses
Digested From "Seattle Planners Look to Improve Townhouses, Apartments"
Seattle Post-Intelligencer (05/29/14) Cohen, Aubrey
Rules that Seattle enacted four years ago to promote better-looking apartment communities, townhouses, and row houses have backfired, city officials lament. In response, the Department of Planning and Development proposed changes late last week. Back in the fall, after hearing from irate Capitol Hill residents, then-City Council President Sally Clark called on Planning and Development Director Diane Sugimura to review rules permitting developers to combine incentives that allow extra building height and not count certain features toward building size limits. Specifically, the height limit in "Lowrise 3" zones is 30 feet (40 for apartment buildings in urban villages and urban centers not within 50 feet of a single-family home). Developers, though, can add four feet if they have a floor partially below ground level and five feet if they have a pitched roof. In addition, partially below-grade levels do not count toward limits on floor-area ratio, which is a way to limit building size while allowing flexibility in form. The idea behind promoting a partially below-grade level is that it raises the first floor above street level, providing privacy while encouraging below-grade parking and more-affordable basement apartments. The proposed rule changes would eliminate a rule allowing four feet of extra height for apartment buildings with a floor partially below street level and count such floors toward floor area ratio limits. They would also cap the height of buildings to four feet above the zone's height limit within 12 feet of property lines facing streets, including any parapets and rooftop structures.
Heads Up! Last Chance to Save on Registration for the 2014 NAA Education Conference & Exposition Is This Friday
The 2014 NAA Education Conference & Exposition, June 18-21 in Denver, continues getting bigger and better every year. As the annual event—the largest event in the rental housing industry—continues to grow, NAA wants to remind you of another increase: the registration fee.
After June 6, registration rates increase $150 across the board. Register by June 6 to take advantage on this key investment in your company and your career.
And remember to consider group discounts: register five or more attendees and save your organization up to $400!
Read more about what to expect in Denver
and invest in your company and your career today.
Follow these steps to prepare to Reach New Heights in Denver.
This Friday Is Your Final Chance To Submit a Speaking Proposal for the 2014 Multifamily Asset Management Conference
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—is accepting speaker applications through Friday, June 6.
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.
Have something to say? Visit the conference website for full details on submitting your proposal. Then, make sure to register today and be first in line for the information, insight and answers to questions necessary to boost your bottom line.
2013 NAA Annual Report Available
NAA enjoyed another outstanding year in 2013. We invite you to enjoy this digital recap of our highlights. View the report in it's entirety on the NAA website.
Supplier Success Course will be offered at the 2014 NAA Education Conference & Exposition in Denver
The Supplier Success course is designed to offer an overview of the apartment industry and recommends ways that suppliers can maximize partnerships with apartment owners, apartment management companies and apartment association members. It has been written by successful apartment industry suppliers with years of professional experience.
Wednesday, June 18, 10:30 a.m. – 4:30 p.m.
This course is limited to 50 suppliers and is not included in the conference registration. The price is $99 for members and $129 for non-members. To register, contact Shana Treger.
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?
Each month we have a units Magazine exclusive come out before the magazine hits your mailbox! This month's exclusive is "We're Family. Multifamily." Check out the story today.
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.
Please visit us for a list of our upcoming conferences.
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