NAA Industry Insider: Why the Yuppies of the 21st Century Rent | National Apartment Association

NAA Industry Insider: Why the Yuppies of the 21st Century Rent


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Why the Yuppies of the 21st Century Rent
Digested From "Millennials Are Not Big Homebuyers Near Term"
USA Today (09/16/13) Malcolm, Hadley

Among Millennials, the recession coupled with large student loan debts has made renting for the long term more appealing. Real estate experts say that Millennials will be among a growing number of "career renters" who find that apartments offer living spaces with built-in amenities without the costs of a mortgage or maintenance. According to a USA TODAY analysis of Census Bureau data, among households headed by 25- to 34-year-olds, those who rent increased by more than 1 million from 2006 to 2011, while the number who own fell nearly 1.4 million. Apartment developers typically offer units in locations that cater to young professionals and that include such high-end amenities as swimming pools, on-site fitness facilities, and brand-new kitchen appliances. Equity Residential CEO David Neithercut says, "I think that they believe that whatever their American dream is, it can be fulfilled without owning a house."
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Market Trend Insights

U.S. Apartment Construction and Demand to Remain Brisk
Digested From "Multifamily Construction Remains Brisk"
National Real Estate Investor (09/21/13) Anderson, Bendix

While developers are building a lot of new apartments, Marcus & Millichap says demand is more than strong enough to absorb the new supply. Developers will finish an estimated 145,000 new rental units this year. But Marcus & Millichap said the percentage of vacant units hovers at just 4.7 percent. As the recovery continues to strengthen, experts predict that more and more college graduates who moved home during the recession will likely move out on their own, adding to the current demand. Analysts in Seattle expected a slew of new apartments to flood the market this year, as the metro area continues to have high occupancies and rent growth of 7.6 percent. Austin is poised to report the steepest inventory gains this year with inventory rising 4.8 percent, but experts say exceptional employment growth will support strong demand. Washington, D.C., is due to add 12,000 new units this year.
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Is Birmingham's Apartment Market Healthy?
Digested From "CRE Roundup: Is Bham Apartment Market Healthy?"
Birmingham Business Journal (Alabama) (09/20/13) Poe, Ryan

Reis Inc. reports that the Birmingham metro area's apartment vacancy rate was 5.6 percent at the end of this year' second quarter -- a decrease from 6.2 percent in the same three-month period a year earlier. That is a big improvement over its peak rate of 10.4 percent in 2010. However, Birmingham still has the 13th highest vacancy rate of the 82 primary markets the research firm reports on. The question now is: "Can demand keep up with all of the new development underway now in such hot spots as downtown Birmingham?" Reis senior analyst Brad Doremus is among those who believe so. He forecasts, "Over the next two years, demand will outpace or keep up with new completions."
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You Might Be Forced to Buy Renters Insurance
Digested From "You Might Be Forced to Buy Renters Insurance"
NASDAQ (09/16/13)

An increasing number of apartment communities are requiring residents to have renters' insurance. A survey of large apartment owners by the National Multi Housing Council in Washington, D.C., revealed that 84 percent said they required their residents in at least some of their properties to have insurance -- up from 62 percent in 2012. Renters' insurance covers a resident's personal belongings if they are stolen or damaged and provides liability protection, if the resident causes someone else to suffer injuries or property damage. Such insurance also covers living expenses if an apartment is uninhabitable due to certain disasters, such as fires.
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Apartment Rents Go South in Northern Virginia City
Digested From "In Tysons Corner, Rents Are Down for Offices and Apartments"
Washington Post (09/15/13) Donnelly, Michael

The Washington, D.C., suburb of Tysons Corner, Va., is in the initial stages of a transformation to a 21st century urban center. The Tysons Land Use Task Force has formulated a plan that, by the year 2050, would result in as many as 100,000 residents and 200,000 employees in Tysons Corner compared with around 17,000 residents and 126,400 employees currently. Multifamily housing will, of course, play a major role. During the last 12 months, the Class A apartment sector in Tysons Corner/Merrifield recorded a 3.3 percent decrease in average effective rent, while the overall vacancy rate climbed to 8.6 percent from 3.8 percent a year ago. The overall vacancy rate increased partially because of the arrival of a new community, Avalon Park Crest, which added 354 apartments to the market. Monthly effective rents for Class A high-rise apartments averaged $1,995 versus $2,062 per month a year earlier. Observers note that the pipeline of new rental units in Tysons Corner is substantial. In this year's April-through-June period, there were three communities with 983 rental units under construction, but not yet being marketed. There are an additional seven apartment communities with over 2,100 units on pace to be delivered within the next three years. With more than 3,000 new apartments in the 36-month cycle, it is likely that Tysons Corner's multifamily sector will become increasingly competitive during the last three months of this year and beyond. However, once new Metrorail subway stations open locally, the general consensus is there will be a significant uptick in apartment demand. It should be noted that there are presently no condominium-specific projects being marketed or planned to start within the next three years.
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Apt. Starts Drop in Aug. Even as Overall Housing Starts Rise
Digested From "Housing Starts Rise 0.9 Percent to 891,000 Rate in August"
MarketWatch (09/18/13) Mantell, Ruth

Construction on new U.S. homes increased by 0.9 percent in August to a seasonally adjusted annual rate of 891,000, as starts for single-family homes rose, while volatile apartment starts dropped, the U.S. Department of Commerce estimated Wednesday. In August, starts for single-family homes rose 7 percent, while starts in buildings with at least five units fell 9.4 percent. Overall starts in August were up 19 percent from the same period in the prior year, pointing to a continuing rebound. However, there are concerns that rising mortgage rates are slowing down the housing market's recovery.
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Deals and Transactions

Orbach Takes Bite Out of Big Apple With $240M Apartment Buy
Digested From "Orbach Bulks Up Portfolio With $240M Apartment Buy"
Real Estate Weekly (09/12/13)

The Orbach Group last week completed a two-part transaction in the Columbia South neighborhood of New York's Upper West Side, further positioning the firm as one of the city's biggest apartment owners. In the first phase, the firm acquired a 33-building apartment portfolio, totaling 1,031 high-end rental units, for approximately $250 million. A joint venture of Heritage Real Estate Partners and Dune Capital was the seller. The Orbach Group then sold off 11 of those buildings, totaling 499 apartments, to a couple of private buyers for approximately $100 million. The Orbach Group now owns and manages 54 buildings in Columbia South between 101st Street and 114th Street alone, having netted 22 buildings totaling 532 units from this latest transaction. Meyer Orbach, president of The Orbach Group, remarks, "Manhattan’s rental market is at an all-time high and Columbia South in particular continues to be a vibrant, in-demand community among residents interested in luxury apartments. This large acquisition further expands our multifamily portfolio, which is now one of the largest in the Upper West Side of New York City." The Orbach Group now owns and manages over 1,500 apartments throughout New York City and more than 5,500 rental units across its entire East Coast portfolio.
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Industry Buzz

Apartments on Long Island ... NIMBY? How About in Your CBD?
Digested From "Confronting Long Island's Rental Shortage"
New York Times (09/22/13) Hughes, C.J.

A new Regional Plan Association study shows that 55 percent of all 20- to 34-year-olds on Long Island still live with their parents -- an 11 percent increase in the last 10 years. Part of the problem is a lack of rental housing. Nassau and Suffolk Counties currently suffer from an acute shortage of apartments, notes the "Long Island's Rental Housing Crisis" report. The Regional Plan Association study warns: "The shortage of affordable rental homes is already straining Long Island's economy and will make it much harder to compete for jobs in the years ahead." Based on Census data, 21 percent of Long Island's households live in rental homes versus 34 percent in the Hudson Valley and 37 percent in Northern New Jersey. Blame for the problem can be shared by many of Long Island's nearly 100 village governments, whose zoning bans have severely restricted multifamily housing. Christopher Jones, vice president of research for the Regional Plan Association, stressed that tweaking the zoning on Long Island to allow more apartments doesn't have to mean that the spread-out look of the island would disappear. Rental apartments could be added in compact central business districts (CBDs) that would revive retail stores and restaurants in those areas. Jones remarks, "You will still have the same single-family neighborhoods that people think of when they think of Long Island. There will just be more choices." Progress is being made. The village of Patchogue in Suffolk County has added or is erecting more than 600 apartments in its downtown in the last decade. The additions have come despite criticism that parking lots would be lost and that the units would attract undesirable welfare recipients. AvalonBay Communities, meanwhile, now has 10 apartment communities in Nassau and Suffolk counties. The Greater Huntington Civic Group recently sued to try to stop an 11th development in Huntington Station, but was unsuccessful. The 303-unit community is now being built.
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Albuquerque Apts Take Center Stage Amid Market Changes
Digested From "Cover Story: Apartments Take Center Stage Amid Housing Market Changes"
Albuquerque Business First (09/24/13) Scott, Damon

The Albuquerque metro area's apartment sector benefited greatly when the housing boom went bust and the recession hit hard in 2009. Multifamily housing subsequently ranked as the top-performing commercial real estate sector in the downturn. Even before the recession hit, though, attitudes were changing about apartment living. Echo boomers, empty nesters, and retirees alike were already on their way to preferring smaller rental spaces -- specifically studios and one-bedroom units -- with upscale amenities in prime locations. The difficult times just accelerated these attitude and preference changes.
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Is Suburban Sprawl on Its Way Back?
Digested From "Is Suburban Sprawl on Its Way Back?"
New York Times (09/14/13) Dewan, Shaila

Opinion is mixed concerning whether traction for suburban sprawl will build again with the housing market rebound, with some experts expecting it to while others anticipate continuing shrinkage. Leigh Gallagher, author of "The End of the Suburbs: Where the American Dream Is Moving," says couples are marrying later and having fewer children, with most suburban households expected to be childless by 2025. Other factors include economically strapped Millennials' preference for urban residence, while the cost of sprawl and lack of transportation options also are contributing. Although cities are clearly bouncing back and are making bike lanes, car-sharing, mixed-use rezoning, and luxury rentals increasingly popular, there is skepticism as to how wide-ranging the change has been. Bringing sprawl under control also is a balancing act. For example, Minneapolis' Metropolitan Council has established density goals for both new and already developed areas that some deem to be unrealistic. "It is politically not feasible and it is physically not feasible unless everybody is going to live in high-rise condominiums," argues former council member Rick Packer. Nevertheless, advocates of smart growth cite market data as evidence of an expanding mix of housing options. More value was retained in housing closer to the urban core in the last recession compared to earlier busts, while large homebuilders are constructing fewer big homes on large lots and more communities that promote walkability and efficiency as advantages.
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Legal/Legislative Did You Know

2013 Diamond Sponsors with correct Azuma logo
Indiana Apartment Owners Say 'No!' to Registries
Digested From "Homeowners Fight Moratorium on Landlord Registries" (09/19/13) Keil, Ann

A group of Indianapolis homeowners has teamed up with state representatives to fight a moratorium on landlord registries in the state, claiming they want to take back their neighborhoods. The Indiana Apartment Association is working on a law that would prohibit the creation of registries, arguing that they hurt affordable housing options. But the homeowners and legislators friendly to them want the right to create such registries so that contact information for responsible parties is easily accessible. The registries typically require apartment owners to pay a fee, which both owners and managers oppose. Critics say the registry fees range anywhere from $50 to $250 per unit. The Economic Development Committee is scheduled to meet at the statehouse on Sept. 25 to try and determine how effective such registries really are.
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Which Two Midwest Apt. Markets Lead in Putting Out Smokes?
Digested From "Omaha Noticed for Listings of Smoke-Free Apartments" (09/17/2013) Gonzalez, Cindy

The National Apartment Association (NAA) has dubbed the Omaha metro area a leader in the national trend for smoke-free apartment listings. Based on listings in a recent Apartment Guide, Omaha ranked No. 2, trailing only Chicago, for the highest percentage of smoke-free apartments. According to the Douglas County Health Department, its "Putting Prevention to Work" unit has joined forces with the Metro Omaha Tobacco Action Coalition to increase the number of apartments offering smoke-free options. The NAA's magazine said Oklahoma City, Charlotte, and Raleigh followed Omaha in the trend.
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Colorado Apartment Residents Face a Flood of Trouble
Digested From "Despite Assistance, Renters Still Face Hardships in Colorado's Floods"
Denver Post (09/20/13) Illescas, Carlos

Despite government assistance, apartment residents who are out of a place to live due to the Colorado floods could go days without a home as they wait for their rental units to be fixed. While the Red Cross has stepped in to provide emergency housing to many, when the aid stops and the apartments are still not ready, many are left without anywhere to go. Real estate attorney Fred Skillern said once an apartment community becomes uninhabitable, a resident must notify the apartment's owner in writing. The owner then has five business days to fix the problem or the resident can legally break the lease. For many, though, this is not an option. Some individuals say the money they are spending on short-term, emergency housing means they will not have enough money to pay rent next month.
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Wisc. Senate Passes Bill Giving Owners More Power
Digested From "Senate Passes Bill Giving Landlords More Power in Tenant Dealings"
Milwaukee Journal Sentinel (09/18/13) Stein, Jason

Under a bill approved by the Wisconsin Senate last week, apartment owners statewide would gain more leverage and flexibility in their dealings with residents. The Senate passed the bill by an 18-15 party-line margin, with all Republicans voting unanimously in favor. The bill now heads to the Assembly, which passed similar legislation 57-37 earlier this summer. The measure has received the backing of the Apartment Association of South Central Wisconsin, the Wisconsin Realtors Association, and the Wisconsin Housing Alliance. The bill would allow owners to: one, dispose of evicted residents' property if the owner has notified the residents that he or she could do so; two, evict residents if a crime is committed on the rental property, even if the resident could not have prevented the crime; and, three, require courts to hand over apartments to owners immediately once the court has ruled in their favor.
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FHFA Asks for Ideas on GSEs' Future
Digested From "FHFA Asks for Ideas on GSEs' Future, Industry Puzzled"
Apartment Finance Today (09/13) Machak, Lindsay

The Federal Housing Finance Agency (FHFA) is seeking public comment on alternative solutions for reducing the role of Fannie Mae and Freddie Mac's multifamily presence in the upcoming year. National Multi Housing Council Vice President of Capital Markets David Cardwell says, "We favor having as liquid a market as you possibly can. The demand for apartments over the next decade is going to be huge. It's costly to build and they're expensive to maintain, and we need to reinvest in the stock that is there, not take away from it." One FHFA proposal would limit or eliminate short-term financing options, but push for longer term permanent financing. FHFA also is looking for feedback on what would happen if it simplified and standardized loan products. Cardwell suggests that limiting business activity could enable alternative sources of capital to provide financing to developers, and FHFA officials already ordered the GSEs to reduce their loan volume by at least 10 percent before the end of 2013. "Borrowers are indicating concern over whether the GSE programs will be ramped back every year to a point where they are not going to be a viable source anymore," he says.
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NAA Announcements

Follow Along with the 2013 Apartment Revenue Management Conference

Keep pace with the goings on at the 2013 Apartment Revenue Management Conference, September 23-25 at the Turnberry Isle Resort in Miami, by following the conversation on twitter using the hashtag #AptReveue. Not following NAA? Make sure to find us at @naahq.
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Deadline Alert: Call for Presentations for the 2014 NAA Student Housing Conference Are Due Next Monday

It’s time to polish off those PowerPoints: The deadline for 2014 NAA Student Housing Conference Presentations is next Monday, Sept. 30, by Midnight ET.
The 2014 NAA Student Housing Conference, March 3-5, 2014 at the ARIA Resort in Las Vegas, is the premier destination for rental housing operations and management professionals involved in this important and niche industry.
Submit your proposal or get instructions online.

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Registration for the 2014 NAA Student Housing Conference Opens This Thursday 26

Plan to be at the head of the class from March 3-5, 2014, as NAA convenes the 2014 Student Housing Conference & Exposition in Las Vegas at the ARIA Resort.
Join other star pupils for two days chock-full of education and networking opportunities, from general and breakout sessions led by recognized experts in the student housing business, to reception and time spent interacting with exhibitors on the trade show floor.
Beginning Sept. 26, visit the Student Housing Conference website for registration, schedule and the latest announcements. Breathe easy—no admissions essay required!
And don’t forget to use the official hashtag #NAAStudentConf to engage, discuss and follow the exciting news from this conference.
Join other star pupils for two days chock-full of education and networking opportunities, from general and breakout sessions led by recognized experts in the student housing business, to reception and time spent interacting with exhibitors on the trade show floor.

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2014 NAA Education Conference & Exposition Seeking Your Presentation

Convinced you have a fantastic session idea for the 2014 NAA Education Conference & Exposition? Don’t keep it to yourself! The online Call for Presentations for the 2014 NAA Education Conference, June 18-21, 2014 in Denver, is now open for education session submissions education session submissions.
A few notes: Education session proposal submissions are limited to four per individual and/or company (including subsidiaries); no paper documents accepted; you will be required to submit all requested information, and incomplete submissions will not be accepted or reviewed; and the deadline to submit is Oct. 18, 2013.
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2013 NAA Survey of Income & Expenses Data Now Available

The 2013 NAA Survey of Income & Expenses is now available. The survey includes an executive summary, detailed data, reports and charts about rental communities.
A total of 4,526 properties containing 1,138,056 units are represented in this year's report. Data was reported for 4,117 market rent properties containing 1,077,468 units and 409 subsidized properties containing 60,588 units. The executive summary appeared in the Sept. issue of units magazine. To order, please visit the NAA Store.
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"CAMnesty" Gives CAM Students a Second Chance

CAMnesty is a new program that offers individuals who have started but may not have completed their Certified Apartment Manager (CAM) designation the opportunity to pick up where they left off and earn the CAM designation. Learn more about the CAMnesty program.
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NAAEI Designation Courses Offered Near You!


Nevada State Apartment Association
September, 2013

Roanoke Valley Apartment Association
November, 2013

CAM Online


Central Iowa Apartment Alliance
September - October, 2013

Hampton Roads Apartment Council
October - December, 2013

Greater Charlotte Apartment Association
October - November, 2013

Apartment Association of Greater Los Angeles
November - December, 2013


Nevada State Apartment Association
September, 2013

Roanoke Valley Apartment Association
November, 2013

NALP Online


Roanoke Valley Apartment Association
September, 2013

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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September 24, 2013

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