NAA Industry Insider: Are There Too Many Apartments in the U.S.? | National Apartment Association

NAA Industry Insider: Are There Too Many Apartments in the U.S.?

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Are There Too Many Apartments in the US?
Digested From "Are There Too Many Apartments in US?"
World Property Channel (10/09/13) Brass, Kevin

A surge in apartment construction in the United States is making investors and builders wary as concerns grow that the market may become overbuilt. Jim Costello, managing director of America research for CBRE, warned a recent multi-housing conference in Miami that the current pace of construction cannot be maintained. He also predicted that the multifamily housing development boom should wane by the end of 2014. "We see a little more construction in 2014, but that's the peak," Costello said. He went on to predict that the national apartment vacancy rate should stabilize at about 5.2 percent.
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Market Trend Insights

Is the End of Suburbia Almost Upon Us?
Digested From "'End of Suburbia' May Nearly Be Upon Us: Sam Zell"
CNBC News (10/08/13) Belvedere, Matthew J.

REIT mogul Sam Zell told CNBC News earlier this week that more and more young people are showing an inclination toward urban living over the suburban lifestyle. The Equity Residential chairman says this demographic is leading the charge in the "reurbanization of America." One of the byproducts of people moving to cities in such big numbers is skyrocketing demand for apartments. "We are seeing 96 percent occupancy," stated Zell. Furthermore, of the approximately 18,000 rental units his REIT manages in New York City, an estimated 45 percent are occupied by just one person. Zell predicts, "You're going to see 300-square-foot apartments, directly related to that one person wanting to live alone-- and saying, 'I'll give up space for privacy.'"
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What Manhattan Rents Did for the 1st Time in Two Years
Digested From "Manhattan Rents Decline for the First Time in Two Years"
Bloomberg BusinessWeek (10/10/13) Carmiel, Oshrat

For the first time in two years, Manhattan apartment rents fell last month as residents were lured to the homebuying market and those who remained pushed back on landlord increases. According to a new report by Miller Samuel and Douglas Elliman Real Estate, the median monthly rent fell 3.1 percent from a year earlier to $3,095 -- the first annual decline since June 2011. Additionally, the vacancy rate increased to 2.66 percent from 1.85 percent in Sept. 2012. Miller said the number of new leases signed in September jumped 36 percent from a year earlier to 3,445 as some residents sought less expensive places to live. Apartments available for rent in the city took an average of 45 days, or 16 percent longer, to find residents than they did a year earlier. Meanwhile, the study found that owners and managers agreed to discounts of 3.9 percent -- up from 2.3 percent a year ago.
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Apt. Supply May Outpace Demand in ... Jersey?!
Digested From "Apartment Market in New Jersey: Supply May Outpace Demand" (10/09/13) De Poto, Tom

The number of apartment units in northern New Jersey built through the third quarter rose by 70 percent over the same period in 2012, posing a new challenge for owners as supply is outpacing demand. A quarterly report from Marcus & Millichap said developers completed 1,700 rental units over the past year, up from 1,000 over the previous period. While jobs are up, the report found that vacancy rates increased by 3.5 percent from last year, but still came in below the national average of 4.3 percent. Marcus & Millichap said rents rose 4.3 percent to an average of $1,810 per month year-over-year.
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Older Americans on the Move
Digested From "Older Americans on the Move"
Wall Street Journal (09/27/13) Shah, Neil; Dougherty, Conor

The number of Americans making interstate moves rose to its highest level in four years, according to new data from the Census Bureau's American Community Survey. The share of Americans aged 35 to 44 moving between states has risen for two straight years, while the rate for Americans 18 to 34 fell in 2012. Preliminary data for 2013, based on a separate Census survey, indicates that the share of people aged 35 to 54 who made either long-distance or local moves between March 2012 and March 2013 rose to 9.9 percent from 9.5 percent, while the figure edged down for people 18 to 34, according to an analysis of the data by Trulia chief economist Jed Kolko. The numbers indicate that more middle-age and older Americans are benefiting from the recovery and the rally in stock and real estate prices.
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Midstate Georgia Looks Tops in Apartments
Digested From "Apartment Market Strong in Midstate (Georgia)"
Macon Telegraph (10/07/13) Morris, Linda S.

While the housing market in midstate Georgia has taken a fall since the recession, apartments continue to provide a bright spot throughout the region. "The apartment market is strong," confirms Bob Lewis, owner of Bob Lewis & Associates, a commercial real estate sales and management company in Macon. "It was probably one of the most stable sectors of the real estate market through the recession." Lewis said the sector's strength is due, in part, to the high occupancy rates and the low interest rates for loans to build apartments. Developers say that the Middle Georgia market can handle new apartment construction. "We had a market study done that gave a very positive outlook for the Macon market," said Jim Daws, president of Sierra Development Group. Recent college graduates are flocking to area apartments, and an increasing number of people are choosing apartment living over owning a home.
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Deals and Transactions

Kayne Is Able to Follow the Aging Population in Florida
Digested From "Plots & Ploys: Kaynesian Economics"
Wall Street Journal (10/09/13) Wotapka, Dawn

Boca Raton-based Kayne Anderson Real Estate Advisors recently paid an entity controlled by GE Capital Partners $404 million for its controlling interest in the Aston Gardens portfolio, a half-dozen Florida apartment communities for seniors. This marks the first senior-housing investment for the private-equity firm, which also owns student housing, self-storage facilites, and medical office space. Managing Partner Al Rabil reasons that millions of Baby Boomers are nearing or have hit retirement age, and there has not been much senior housing developed since the economic meltdown. He adds, "I don't think most people need to be convinced of the demographic trends." The Aston Gardens communities include almost 2,000 rental units in such cities as Naples and Tampa. They offer different levels of care, so residents do not have to move when they require more advanced care. Average monthly rents are around $3,000, and the communities are 97 percent leased.
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REIT Remains Steadfast in Houston and Elsewhere
Digested From "Hot Multifamily Market Continues: Investors Snatch up Houston Apartment Communities"
Houston Business Journal (10/08/13) Pulsinelli, Olivia

Steadfast Income REIT Inc. recently acquired three apartment communities -- including one in the Houston metro area -- for a combined sum of $96.9 million. The California-based REIT bought The Heights Apartments, a 504-unit property at 2100 Tannehill Drive that marked Steadfast's entry into the Houston market. The average rent for the community's collection of one- and two-bedroom apartments is $865 a month. About 80 percent of the units have been renovated, and Steadfast plans to continue to renovate the remaining apartments as they turn over between residents. Steadfast also recently bought apartment communities in Nashville and Dallas, boosting its portfolio to 51 total apartment communities in 11 Midwestern and Southern states.
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Industry Buzz

National Exemption Service Inc.
Why L.A. Is Following San Fran's Lead in Quake Retrofitting
Digested From "San Francisco Offers Lessons to L.A. on Quake Retrofitting"
Los Angeles Times (10/07/13) Lin, Rong-Gong II; Xia, Rosanna; Smith, Doug

Los Angeles city officials are considering following in San Francisco's footsteps by requiring owners of "soft-story" wood apartments to make the structures safer. City officials are expected to provide details about a proposed census of wood soft-story buildings across Los Angeles at an upcoming Buildings and Risk Conference. Later, L.A. officials will meet with San Francisco's earthquake team, who implemented similar measures, to get advice on how to proceed in addressing the risks associated with these buildings. Councilman Tom LaBonge called for the census, which seismic safety experts hope is the first step in regulations to make the structures safer. But if San Francisco can teach the city anything, it's that it could take many years for such regulations to be approved. After a 24-year fight, San Francisco decided to keep the retrofitting to apartment communities' ground story, costing between $60,000 and $130,000 per building. The approach kept the price tag down, while giving residents the ability to keep living in the structures after a quake.
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MAA Sets Price for Notes for Repayment
Digested From "MAA Sets Price for Notes for Repayment"
Memphis Business Journal (10/08/13) Ashby, Andy

The operating partnership of Mid-America Apartment Communities, Mid-America Apartments, is pricing notes to repay borrowings from its revolving credit facility. The firm this past week priced a $350 million offering at 4.3 percent of its senior unsecured notes due in 2023. The closing of the offering is expected to happen on Oct. 16. The notes were priced at 99.047 percent of the principal amount. The multifamily REIT plans to use the proceeds to repay outstanding borrowings from its $500 million revolving credit facility.
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Legal/Legislative Did You Know

2013 Diamond Sponsors with correct Azuma logo
NAA/NMHC Take to the Hill for Multifamily Reform
Digested From "The Debate on Multifamily Housing Reform Continues" (10/10/2013) Ferreras, Alex

According to critics, Capitol Hill legislators considering the future of the U.S. housing finance system have to realize that a "one-size-fits-all" approach will not be successful. The differences between the single-family and multifamily housing sectors -- both in how they operate and how they have performed -- require different solutions to avoid putting the 35 million Americans who depend on the apartment sector and the $862 billion multifamily debt market at risk. That was the core message from the National Apartment Association (NAA) and the National Multi Housing Council (NMHC) in Oct. 10 testimony before the Senate Committee on Banking, Housing and Urban Affairs. Bozzuto Group Chairman and CEO Tom Bozzuto, representing the NAA and NMHC, stated, "We strongly urge policymakers to retain the successful elements of the government-sponsored enterprises' multifamily programs in whatever replaces them. . . . When credit markets have been impaired for reasons that have nothing to do with multifamily property operating performance, the federally backed secondary market has ensured the continued flow of capital to apartments." He went on to call for a reformed housing finance system that retains a federal backstop for multifamily housing.
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Madison Apt. Owners Hope Their Vote Counts on SB 179
Digested From "Madison Landlords May No Longer Have to Provide Voter Registration Forms to Tenants"
Capital Times (WI) (10/07/13) Vanegeren, Jessica

In Wisconsin, a bill that would supersede a Madison city effort to require property owners to provide voter registration forms to new tenants will likely be one step closer to becoming state law. Such owners are currently required to provide tenants with a voter registration form when they move on to their property. But the Wisconsin Assembly is expected to vote soon on Senate Bill (SB) 179, known as the "tenant-landlord bill," which recently passed the Senate along party lines. The bill is supported by the Wisconsin Realtors Association, the Apartment Association of South Central Wisconsin, the Apartment Association of Southeastern Wisconsin, and the Wisconsin Housing Alliance. Alderman Scott Resnick, one of the measure's most vocal advocates, said the ordnance is a nice way to welcome new residents to the neighborhood at a cost almost entirely covered by the city.
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NAA Announcements

Understand Your Future Residents Today at the 2014 NAA Student Housing Conference & Exposition

Plan to learn everything there is to know about housing the next generation—and make it a team effort—March 3-5, 2014, as NAA convenes the 2014 Student Housing Conference & Exposition in Las Vegas at the ARIA Resort.

For a limited time, save $300 on the cost of registration and, to sweeten the deal, groups of five or more have the opportunity to save another $100 each by registering together.

Join more than 900 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. Position yourself at the top of this expanding sector of rental housing and better understand the next generation of residents—how they communicate, where to find them and what amenities will bring them to your community and keep them happy.

Visit the conference website for registration, schedule and the latest announcements. Breathe easy—no admissions essay required!

Remember to use the official hashtag #NAAStudentConf to engage, discuss and follow the exciting news from this conference.
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Dallas Is the Place to Be for the 2013 NAA Assembly of Delegates, NAA’s Largest Business Meeting of the Year

The Assembly of Delegates (AOD), Nov. 6-8 at the Adolphus Hotel in Dallas, is NAA’s largest business meeting of the year, where all NAA and NAAEI Boards, Committees and Task Forces meet and the new incoming volunteer leadership is installed.

Pre-Registration to the 2013 Assembly of Delegates is complimentary for all attendees. There is a $50 registration fee for registrations received after Oct. 31.
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Are You A Regional Supervisor or Corporate Department Head?

NAAEI has partnered with Dale Carnegie Training to deliver a world-class pilot program called the NAAEI Leadership Experience. Are you looking to lead effectively across generations, delegate tasks to develop and train others and most importantly, find time to work on future business growth? The NAAEI Leadership Experience is an investment you cannot afford to pass up! This course will be held Nov. 19-21, 2013, in Atlanta at a one-time discounted rate. For information or to register contact Kim McCrossen at 703-797-0610.
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Calendar Alert: The Deadline to Participate in The 2014 NAA Education Conference & Exposition Call For Presentations is Oct. 18

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.

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 October 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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NAAEI's "CAMnesty" Program 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!


Roanoke Valley Apartment Association
November, 2013

CAM Online


Apartment Association of Greater Los Angeles
November - December, 2013

El Paso Apartment Association
January – April, 2014

Austin Apartment Association
February – March, 2014

Columbus Apartment Association
January – February, 2014

Lubbock Apartment Association
January – February, 2014


Roanoke Valley Apartment Association
November, 2013

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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October 15, 2013

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