NAA Industry Insider: How to Avoid the Pitfalls of a First Lease | National Apartment Association

NAA Industry Insider: How to Avoid the Pitfalls of a First Lease

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How to Avoid the Pitfalls of a First Lease
Digested From "Avoiding the Pitfalls of a First Lease"
Wall Street Journal (10/27/13) Gellman, Lindsay

For many young apartment seekers, signing a first lease is a milestone that comes with some daunting challenges. Scot Haislip, counsel to the National Apartment Association, advises prospective residents to ask about any policies relating to living with roommates. When move-in day comes, Haislip says a good rule of thumb is to first scan the unit for any damage, such as nicked appliances or scratched floors. Take photos, Haislip recommends, then have the owner/manager put in writing that the damage existed before occupancy so that there will be no surprise charge later on. The key is for potential residents to do their homework at the earliest stages and ask questions throughout the search process to avoid making a decision they will later regret. Online tools will help kick-start the search process and help residents rule out communities that will not work due to budgetary or lifestyle needs. Among the most popular websites in this regard are and Each allows users to sort listings by monthly rent, neighborhood, and unit type. When it comes time to tour a unit, owners and managers should be prepared that many would-be residents will check pipes for leaks, turn on faucets, and flush toilets. It is the owner/manager's responsibility as well as the resident to make sure the community's policy regarding repairs is clearly understood. Pet policies are another consideration. Even if animals are permitted, some apartment communities specify weight or breed restrictions. There might also be a fee.
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Market Trend Insights

Why Are Apartment Rents Mile High in Denver?
Digested From "Apartment Rents in Metro Denver Continue to Rise Despite More Availability"
Denver Post (10/24/13) Pankratz, Howard

Ryan McMaken, an economist for the Colorado Division of Housing, reports that apartment rents in the Denver metro area continued their rapid climb in this year's July-through-September period. The average monthly rent locally in the third quarter was $1,048, up 6.3 percent from the same period in 2012. McMaken notes that the average rent in this year's third quarter, adjusted for inflation, was 2.2 percent below that peak, said McMaken. He remarks, "Rent levels are hurrying back to their former peak period and are basically back to what they were when they peaked right before the 2002 dot-com bust." The rise in monthly rent occurred even though slightly more rental units were available. Indeed, metro Denver's apartment vacancy rate climbed to 4.4 percent by the end of last month -- an increase from 2012's third-quarter rate of 4.3 percent. McMaken and other experts anticipate a slight moderation in rent growth in the next couple of years as new apartment communities are completed.
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One Big Reason Why Rents Are Sinking in Boston's Seaport District
Digested From "Apartment Rates Plummet in Boston's Seaport as New Supply Hits the Market"
Boston Business Journal (10/22/13) Grillo, Thomas

A new CoStar Group report shows that apartment rents in Boston's Seaport District fell by nearly 9 percent in the third quarter due to one big reason -- competition from a couple of new towers is putting downward pressure on prices. Analysts say the dip in rents stems from leasing that is underway for nearly 450 apartments in the Drew Co.'s 236-unit Waterside Place and the 202-unit 315 on A property being built by Gerding Edlen. Mark Hickey, a real estate economist at CoStar, remarks, "The threat of the newer buildings coming to the Seaport was enough that landlords wanted to have lower rents there to maintain their tenant base." Growth fell to a more modest 1.9 percent in the third quarter, according to CoStar Group. In the Seaport District, average rents fell to $1,952 from July through September, down from $2,136 for the same three-month period a year ago. CoStar researchers went on to note that Boston's highest apartment rent levels were in Chinatown and the Financial District, where the average monthly rent was $2,961.
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Triad Apartment Vacancy Rate Lowest in a Decade
Digested From "Triad Apartment Vacancy Rate Lowest in a Decade"
Business Journal of the Greater Triad Area (10/23/13) Carlock, Catherine

Real Data reports that North Carolina's Triad region continues to boast one of the hottest apartment markets in the country. The region's average apartment vacancy rate is the lowest in a decade, with total occupancy reaching almost 93 percent as of the end of the third quarter. According to the Charlotte-based research firm, Triad apartment vacancies were 7.3 percent in September -- a decrease of 1.4 percentage points from a year-earlier rate of 8.7 percent. Factoring in current levels of demand, the Triad's average apartment vacancy rate could approach 6 percent next year. Meanwhile, average monthly rents rose from $689 a year ago to $705. As of Sept. 30, the region had 1,105 rental units under construction and another 3,458 apartments proposed. Downtown Winston-Salem is presently the most active market, with 365 apartments currently under construction and another 695 proposed.
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In More Homes, The Roof Overhead Is Rented
Digested From "In More Homes, The Roof Overhead Is Rented"
USA Today (10/21/13) P. 1B Schmit, Julie; Hansen, Barbara

Rented single-family homes are on the rise in communities nationwide in the aftermath of the housing meltdown. In 32 of the country's top metropolitan regions, at least 20 percent of all occupied single-family homes were rentals in 2012. According to a USA Today analysis of U.S. Census Bureau data, that is up from just seven metros in 2006. Researchers say the growth reflects changes brought by the housing bust and the enduring financial hardships ushered in by the Great Recession. Nationwide last year, 18 percent of occupied single-family homes were rentals -- an increase from almost 15 percent in 2006. The metro areas with the most growth in single-family rentals are those where foreclosures were most prevalent, including Las Vegas, Florida's Cape Coral area, and Stockton, Calif. Metros outside the top foreclosure hot spots have also seen bigger growth in single-family rentals than the national average -- including Memphis, Dallas, and Denver.
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NMHC: Apartment Market Weakens a Little
Digested From "NMHC: Apartment Market Weakens a Little"
Commercial Property Executive (10/22/13) Stribling, Dees

For the first time since July 2009, all four indexes of the National Multi Housing Council's October Survey of Apartment Market Conditions fell under 50. The measures for Market Tightness and Sales Volume both dropped to 46, while Debt Financing slipped to 41 and Equity Financing to 39. NMHC Chief Economist Mark Obrinsky says, "After four years of almost continuous improvement across all indicators, apartment markets have taken a small step back."
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Deals and Transactions

Greystar Enters U.K. Market With Student Housing Buy
Digested From "Greystar Enters UK Market With Student Housing Buy"
Law360 (10/04/13) Ugolik, Kaitlyn

Greystar Real Estate Partners has joined with Goldman Sachs Group Inc. to buy a portfolio of student housing properties in the United Kingdom out of Opal Property Group Ltd.'s bankruptcy proceedings. Terms of the deal were not disclosed. The portfolio is comprised of 21 apartment communities, most of which are located in London, Manchester, Leeds, and Liverpool. This marks Greystar's first venture in the U.K. The agreement was actually signed late last month. The acquisition is on track to be completed by the end of this week.
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More Downtown Minneapolis Apartments Planned
Digested From "Another Downtown Minneapolis Apartment Tower Planned" (MN) (10/23/13) Gilyard, Burl

Hines is currently floating plans for a new 25-story apartment tower with 291 rental units. The tower would be the second phase of the Dock Street Flats project in the city's North Loop area. The Houston-based developer is nearing the completion of the 185-unit Dock Street Flats, which is on track for a December grand opening. Minneapolis-based Marquette Advisors recently issued a report, which indicated that the vacancy rate for downtown Minneapolis apartments was 3 percent as of June 30 versus a rate of 2.3 percent for the Twin Cities. While the vacancy rate remains low and completed apartments have enjoyed brisk leasing activity, some market watchers expects that will begin to change as the volume of new apartments hitting the market increases. Tom Melchior, director of market research for Minneapolis-based CliftonLarsonAllen, states, "My sense is that the early projects are leasing very well." Melchior, though, thinks that the pace of leasing will begin to slow for apartment communities that are slated to open in 2014 and the following year. He concludes, "You'll see an elevated vacancy rate. Is it going to take six months for a new building to fill, or is it going to take two years?"
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Industry Buzz

National Exemption Service Inc.
Which Apartment REIT Posted a Loss on Acquisition Costs?
Digested From "Avalon Bay Reports Loss on Acquisition Costs"
Washington Business Journal (10/28/13) Clabaugh, Jeff

AvalonBay Communities Inc., one of the nation's largest owners of rental apartments, has registered a quarterly loss on charges related to its Archstone Enterprise LLC acquisition back in August. The Virginia-based REIT recorded a third-quarter net loss of $10.7 million versus net income of $86.8 million in the same three-month period a year earlier. In addition, AvalonBay saw average monthly rents fall in all regions, led by a drop of 0.7 percent in metro New York and 0.4 percent in the mid-Atlantic states and Northern California. AvalonBay is now projecting full-year funds from operations of $5.09 to $5.15 per share. AvalonBay began building four new apartment communities last quarter, completed two others, bought land for three future developments, and sold two existing communities.
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Four Reasons Why Apartment REIT's Stock Was Downgraded
Digested From "Preferred Apartment Communities Inc Stock Downgraded" (10/28/13) Baker, Kevin

Preferred Apartment Communities has been downgraded by TheStreet Ratings from "hold" to "sell." The REIT's weaknesses can be seen in four main areas: deteriorating net income, disappointing return on equity, generally underwhelming historical performance in the stock itself, and scant growth in its earnings per share. On the basis of change in net income from the same quarter one year ago, the company has significantly underperformed when compared to that of the S&P 500 and the REITs industry. Preferred Apartment Communities, Inc. was launched and is managed by Preferred Apartment Advisors LLC. It has a market cap of $90.1 million.
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In Which Fla. Market Is Colliers Launching Multifamily Group?
Digested From "With Another Apartment Boom Coming, Colliers Launches Multifamily Group in Jacksonville"
Jacksonville Business Journal (FL) (10/28/13) Kritzer, Ashley Gurbal

Colliers International Northeast Florida is in the process of launching a new multifamily services group in Jacksonville, expecting more apartment communities to change hands in the year to come. Bradley Coe, who has been active in Jacksonville's apartment sector since 1996, joined Colliers' Jacksonville office a week ago and will work with Doug Blair to sell and acquire investment-grade properties. Together, they plan to work with both private and institutional capital markets. Colliers has a strong rental apartment presence in other cities across the Sunshine State. Coe's group, though, is entering an already crowded pool of multifamily housing brokerage in Jacksonville. Four major firms -- CBRE Group Inc., Apartment Realty Advisors, Walchle Lear Multifamily Advisers, and Cushman & Wakefield of Florida Inc. -- all have strong apartment platforms in the city. Coe believes there is enough to go around. Since Jan. 1, 40 apartment communities have traded for a total of $620 million. More are sure to come as new communities from 2012's construction boom are brought to market. Coe concludes, "Generally, the sales take place as the product is delivered to market and at a point of stabilization. Institutional investors love that product type."
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Leitner Takes Reins at Berkshire Group
Digested From "Leitner Takes Reins at Berkshire Group" (10/25/13) Bubny, Paul

Industry veteran Charles B. Leitner has been named president of Boston-based Berkshire Group, which owns and manages more than 30,000 apartments in its nationwide portfolios. In addition, it manages a trio of multifamily funds for over 50 pension funds and other institutional clients. Its venture capital group holds stakes in medical office, senior living, and hospitality companies. It also owns Berkshire Income Realty, an externally advised multifamily REIT. Formerly global head at RREEF, Leitner helped build it into a top-drawer property investment advisor with $80 billion in assets under management. In his new position, he be in charge of the day-to-day operations of Berkshire's funds management business as well as its entity-level investment activities. Leitner has also headed the ULI Greenprint Center, a nonprofit global alliance of real estate investors committed to reducing greenhouse gas emissions and reducing energy consumption while enhancing value in commercial property portfolios.
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Legal/Legislative Did You Know

2013 Diamond Sponsors with correct Azuma logo
Student Housing Deal Far From Ducky Near Univ. of Oregon
Digested From "Firm Sued Over Student Housing Deal in Eugene"
Statesman Journal (Oregon) (10/26/13)

A lawsuit filed in Eugene, Ore., accuses Harrison Street Real Estate Capital LLC of improperly trying to back out of a deal to purchase four recently erected apartment communities near the University of Oregon. Dan Neal, a local developer of student housing, wants a U.S. District Court judge to either force the real estate firm to buy the communities or let him keep the nearly $2 million in earnest money the Chicago-based firm put down earlier in the spring. As of late last week, Harrison Street had yet to file a reply in court. The lawsuit does not list the proposed sale price, but the Lane County assessor's database has put their combined market value at around $35 million. The lawsuit comes as multifamily developers nationwide are piling into the Eugene market with plans to build new student housing despite the fact that enrollment has flattened after years of explosive growth. Harrison Street's specialties include buying and managing collections of income-generating properties on behalf of pension funds, insurance firms, foundations, and wealthy families. However, the company is trying to sell off some its student housing inventory and is currently seeking buyers for 2,670 such units in 14 states.
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Earthquake Risk: L.A. Formally Requests List of Concrete Buildings
Digested From "Earthquake Risk: L.A. Formally Requests List of Concrete Buildings"
Los Angeles Times (10/24/13) Smith, Doug; Xia, Rosanna; Lin II, Rong-Gong

Last week, the city of Los Angeles sent a request formally asking Jack Moehle, a University of California Berkeley engineering professor, for a list of concrete buildings that could be at risk of collapsing in the event of a major earthquake. Moehle and his team of researchers have compiled a database of approximately 1,500 concrete structures in L.A.. So far, though, they have refused to release it. According to seismic experts, obtaining the list is crucial for the city to begin adequately addressing the problem. They warn that the collapse of a single concrete building "has the potential for more loss of life than any other catastrophe in California" since the famed 1906 San Francisco earthquake. The request definitely ratchets up the pressure on the publicly funded researchers to disclose their data. In the letter to Moehle, L.A.'s top building official, Raymond Chan, asked for any and all available lists of properties or structures that "may assist the city in evaluating its building inventory." Chan acknowledged the Berkeley team's research may not be complete and did not evaluate each building's structural integrity, but he added "the information may be useful to our department and the city."
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NAA Announcements

Save Big by Registering Now for the 2014 NAA Student Housing Conference

Act fast because this deal won’t last: For a limited time, save $300 on the cost of registration to the 2014 Student Housing Conference & Exposition, March 3-5, 2014 in Las Vegas at the ARIA Resort.

Plan to learn everything there is to know about housing the next generation, and make it a team effort—groups of five or more have the opportunity to another $400 by registering together.

And, new this year, NAA is excited to announce “Unsessions.” In addition to the keynotes and 14 breakout sessions, NAA Unsessions are hyper-interactive education sessions that will maximize the brilliant insights of both speakers and attendees. Be sure to check back often for more details.

Visit the 2014 NAA Student Housing Conference & Epxosition for registration, schedule and the latest announcements, and remember to use the official hashtag #NAAStudentConf to engage, discuss and follow the exciting news from this conference.
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Registration Now Open 2014 NAA Education Conference & Exposition, the Largest, Most Exciting Event in the Multifamily Housing Industry

Don't miss out on the opportunity to “Reach New Heights” as more than 6,600 multifamily professionals convene in Denver June 18-21 for the 2014 NAA Education Conference & Exposition.

From world-famous speakers to the latest and greatest from multifamily supplier partners, if career enhancement is what you seek, then this is the one event you can’t afford to miss. Don’t delay—the largest discounts go to those who register early.

And, make sure to book your housing as soon as you register—rooms will go fast and you will be unable to book without first registering. Visit the Education Conference website for information and reservations for all official NAA Education Conference hotels.
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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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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


Columbus Apartment Association
January – February, 2014

El Paso Apartment Association
January – April, 2014

Austin Apartment Association
February – March, 2014

Roanoke Valley Apartment Association
February-March 2014


Roanoke Valley Apartment Association
November, 2013


Apartment and Office Building Association of Metropolitan Washington
February, 2014

NALP Online

Find more courses in your area on the NAA website.

For more information about any of the classes listed, please contact Kimberly McCrossen at 703/518-6141 ext. 121.
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October 29, 2013

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