Market Trend Insights
Guess Who's Driving the Demand for Apartments?
Digested From "Guess Who's Driving the Demand for Rental Apartments?"
CNBC News (01/29/13) by Diana Olick
While the housing market has seen its largest annual gains since 2006, those who rent do not appear to be in a major rush to buy a house. Demographic trends are changing in favor of the apartment market, with many young, single women opting to rent because it provides them with the flexibility, amenities, and location they desire. Buck Horne, a housing analyst at Raymond James, observes that there are shifts in female education, marriage, and fertility rates that are driving apartment demand and will continue to do so for some time. He adds, "Women leave college with good income prospects and are not finding suitable husbands and fathers," which causes them to delay marriage and motherhood. Moreover, single mothers prefer living closer to cities and staying in full amenity apartments, which Horne says "points to more structural, long-term demand for rental housing." A recent Raymond James report says renter household formation remains at the strongest level in decades, with 1.32 million forming in the last year alone. The study also notes that nearly 23 million young adults now living with parents are likely to move to rental apartments as the job market improves.
Market Trend Insights
Five Things Apartment Residents Should Not Overlook
Digested From "Five Things Renters Should Not Overlook"
With many rental leases calling for a year-long commitment, apartment residents are urged to consider five things that could ultimately add to or detract from the renting experience. One, residents need to be sure about the laundry situation as it can vary from community to community. Some properties with several units can offer coin-operated shared washing facilities. Others tout that they have washers and dryers within each apartment. Two, refrigerators are another big appliance that is not always included in a rental agreement. Some potential residents may see the lack of this appliance as a deal breaker. Three, residents should be aware that the materials separating the units can make or break a tranquil home environment. The great majority of rental apartments will involve neighbors next door and possible even on other floors. More and more communities are touting that they use noise cancelling materials and firewalls between apartments that make for quieter living. Four, storage can be another major issue, especially for single residents looking for a modest-sized place. Finally, owners and managers need to know that outdated decor can send many residents running for more stylish apartment communities.
San Fran's Apartment Market: Has It Finally Plateaued?
Digested From "S.F. Apartment Market is Hot"
San Francisco Chronicle (01/31/13) by Carolyn Said
According to a new report by RealFacts, apartment rents in San Francisco have jumped so high that they they appear to have plateaued. "San Francisco leads the nation in terms of setting rents," said Sarah Bridge, owner of the RealFacts apartment data service. "San Francisco seems to have reached a peak in the market at least for the moment." She notes that monthly rents were actually down $27 on average for all apartment sizes citywide from the third quarter to the last three months of 2012. But the fall comes after several steep increases. RealFacts shows that the average monthly asking rent across all size rental units in the city was $2,741 in the fourth quarter, up 22 percent from two years earlier. "At a certain point, landlords encounter some price resistance," said Bridge.
Which Home Builders Are Becoming Apartment Builders?
Digested From "Home Builders Turn to Rental Apartments"
CNBC.com (01/25/13) by Diana Olick
With the U.S. Census Bureau reporting that every new household formed since 2005 has been a rental household, new construction has increased to meet that pent up demand. The multihousing market has been underbuilt since 2004. As a result, house builders are joining the ranks of those building in the rental apartment sector. Lennar CEO Stuart Miller states, "There is always a need for construction of multi-family, and it has always been an important part of the housing picture." The company has more than $1 billion earmarked for multifamily housing construction, and it hopes to build as many as 6,500 rental units. Construction on the first 3,000 of these units is set to begin this year. Toll Brothers also is expanding into the rental market. Reis Inc.'s Ryan Severino urges, "You've got to be very selective about your locations. We stay pretty thoughtful about where there are imbalances and too much building going on. This is not a market where you can start building any place."
The One Big Factor Behind REO-to-Rental's Emergence
Digested From "REO-to-Rental Model Becomes 'Hottest' Emerging Asset Class"
Housing Wire (01/28/13) by Christina Mlynski
Panelists at last week's American Securitization Forum in Las Vegas generally agreed that the REO-to-rental model will rank as the "hottest emerging asset class" 2013. A wide array of factors is expected to stimulate rental housing growth moving forward, most notably the large supply of housing supply that is now transitioning into the rental space. Thomas Hiner, a partner with the firm of Hunton & Williams, notes that challenges continue to loom in the REO-to-rental sector such as knowing how to structure the assets and understanding the rental-asset class as being very different from traditional mortgage servicing. According to Hiner, rental demand is on pace to grow by approximately 6.6 million units through 2016. In that time, about 4.2 million new renters will expand the marketplace.
Essex's Q4 Earnings Jump on Highest Growth in a Decade
Digested From "Essex's Earnings Jump in Q4 on Highest Growth in a Decade"
Silicon Valley/San Jose Business Journal (02/01/13) by Nathan Donato-Weinstein
Essex Property Trust's 2012 earnings grew in the fourth quarter, with net operating income for the REIT's Northern California communities increasing 11.2 percent year over year. Fourth-quarter funds from operations totaled $65.5 million -- an 18 percent increase from the same period a year ago. Net income totaled $43.8 million, more than double the totals of fourth-quarter 2011. Essex President and CEO Michael J. Schall states, "We achieved the highest level of same-property [net operating income] growth and FFO per diluted share growth in over a decade." Schall said the company does not expect same-property net operating income to be quite as strong in 2013.
Why Atlanta Was Chosen Best Airport in the U.S.
Digested From "Best U.S. Airport? Travel Agents Choose Atlanta"
USA Today (01/31/13) by Charisse Jones
Atlanta's Hartsfield-Jackson International ranked as the best airport in the United States, according to a new survey of more than 900 travel agents by the Travel Leaders Group. It also ranks No. 1 when it comes to connecting to another flight and finding amenities such to while away the time prior to takeoff. The various agents based their responses on their own experiences and feedback they get from the business and leisure travelers they work with. Chicago's O'Hare also received high marks for business traveler services, amenities, and places to eat. However, it was rated the worst hub in the country for having to connect to another flight. Other top vote-getters included Charlotte, ranked the second-best hub for making connections; Dallas/Fort Worth, for making business travelers' travels easier; Minneapolis-St. Paul, a favorite for restaurants and amenities; and Orlando, which is tops for entertaining families with kids.
What Was the Cause of AvalonBay's Big Q4 Profit Plunge?
Digested From "AvalonBay Communities 4th-Quarter Profit Down 62 Percent on Lower Asset Sales"
Dow Jones Newswires (01/30/13)
AvalonBay Communities Inc.'s fourth-quarter income plunged 62 percent as the apartment REIT recorded a decrease in real-estate asset sales and costs related to its acquisition of Archstone Enterprise. AvalonBay recently reported that for the current quarter, it expects a per-share loss between $1.27 and $1.31. The company had seen its profits surge in recent quarters as a lackluster housing market made renting increasingly attractive, driving up occupancy rates and monthly rents. "Our fourth-quarter results capped a year of solid performance marked by our second consecutive year of double-digit FFO growth," said AvalonBay President and CEO Tim Naughton. "We expect apartment fundamentals to remain healthy in 2013 and in anticipation of continued growth in 2013 from our development platform, our current communities and the addition of the Archstone portfolio, our board approved a 10.3 percent increase to our quarterly dividend."
Boulder's Apartment Market Keeps Rolling; So Does Broomfield's
Digested From "Apartment Scene: High Rents, Few Empty"
Boulder County Business Report (01/31/13) by Michael Davidson
In Colorado, apartment communities in both Boulder and Broomfield counties are enjoying a boom time. According to the latest Denver Metro Apartment Vacancy and Rent Survey by the Apartment Association of Metro Denver and the Colorado Division of Housing, the two counties have the lowest vacancy rates and highest rents per square foot in the Denver metro area. The report stated that the quarterly vacancy rate in the combined market was 3.7 percent, with an average monthly rent of $1,103.61. The vacancy rate remained flat from the previous three months, but bucked the seasonal trend that typically sees more vacancies in the final months of each year.
These San Diego Apartments Have Been (Wood) Framed!
Digested From "Case Study: AMCAL's Mission Apartments in San Diego Provide LEED Gold Workforce House"
Multi-Housing News (01/13) by Nancy Egan
Wood frame construction played a major role in the development of an affordable and environmentally friendly apartment community in the form of Mission Apartments in San Diego. Mission Apartments is a LEED Gold-certified 1.5 acre development featuring 85 family living units of varying size. To quality for LEED certification and affordable housing status, wood-frame construction was indeed employed in the design. The low-rise apartment community incorporated a wood podium design for their semi-subterranean parking. It is estimated that the use of wood-frame construction for these parking levels helped the project to save millions of dollars.
Two Factors in Killeen (Tex.) Getting High-End Apartments
Digested From "High-End Complex Targets Soldiers, Young Professionals"
Killeen Daily Herald (TX) (01/31/13) by Mason Lerner
Reasons abound as to why a group of local investors in the Killeen, Texas, area are betting big that military personnel and health care professionals are hungry for high-end apartments. Dorel Holding Group, an investment group spearheaded by Dennis Young, is erecting a 200-unit apartment community geared specifically toward the area's changing demographics. The community is expected to thrive for two major reasons: its close proximity to Fort Hood and the growing medical center nearby. Greater Killeen Chamber of Commerce CEO John Crutchfield said the local economy has matured sufficiently to where it should be able to support both a thriving housing and rental apartment market. The first 36 units will be ready for occupancy by April. The remainder are on track to be completed by the end of this year's third quarter, with rents ranging from $810 for a one-bedroom/one-bathroom unit to $1,259 for a three-bedroom/three-bathroom apartment. The new community will offer two swimming pools, two fitness facilities, and a washer/dryer in every unit.
Obama Questions 'Carried Interest' Tax Break
Digested From "Obama Questions 'Carried Interest' Tax Break"
CNBC News (02/03/13)
On Sunday, President Obama said more tax revenue would be needed in order to reduce the U.S. deficit. To that end, he signaled he would push hard to get rid of loopholes such as the "carried interest" tax break enjoyed by private equity and hedge fund managers. Obama stated that he would seek to end deductions that are not available to all Americans, singling out "carried interest." That refers to the tax rate paid by many private equity managers, venture capital, and real estate partnerships. The White House and many Democrats have repeatedly criticized the tax break as "unfair" and called for carried interest to be taxed as ordinary income. Obama remarked, "We just want to make sure that the whole system is fair, that it's transparent, and that we're reducing our deficit in a way that doesn't hamper growth."
Four Reasons Why Ohio Apartment Owners Are Going Smoke-Free
Digested From "Ohio Apartment Landlords Look to Go Smoke-Free"
Two major apartment owners in central Ohio -- T&R Properties and Crawford Hoying -- are implementing smoke-free policies in 2013. The biggest reason for doing so, they say, is the share of the population that lights up has been on a steady decline. The former manages more than 20 central Ohio apartment communities, while the latter's portfolio in the region consists of 25 such properties. Both are banning smoking in certain buildings, including on terraces and patios. Dave Carline, president of Crawford Hoying's multifamily division, and Sandi Schmitt, operations facilitator for T&R Properties, cited three other reasons for the policies. They range from the risk of fire to the health risks of secondhand smoke to resident preference for smoke-free buildings. Residents will be required to either move to a building where smoking is permitted or agree not to smoke at home. Violating the pact would be treated like breaking any community rule, such as no pets, and could lead to eviction. Smokers currently account for nearly 19 percent of the U.S. population, a decrease from nearly 40 percent in the 1970s. Laura Swanson, executive director of the Columbus Apartment Association, concludes, "The trend toward smoke-free rental housing tracks the trend we see in making other facilities smoke-free. The rental-housing market is driven by consumer demand."
Broward Apt. Residents Say DON'T Smoke 'Em If You Got 'Em
Digested From "Broward Survey Finds Smokers Want Smoke-Free Housing"
South Florida Sun-Sentinel (01/25/13) by Larry Barszewski
A survey by the Broward Regional Health Planning Council in Florida found that 60 percent of smokers in multifamily housing communities want policies that prohibit smoking in their buildings and common areas. Nearly half of these respondents said the smell of smoke through vents, balcony windows, and walls is either "extremely" or "moderately bothersome." Around 33 percent of smokers and 80 percent of nonsmokers say they would be OK with a total ban on smoking in their apartment communities, according to the poll.
Freddie Mac's Multifamily Business Hits New Record
Digested From "Freddie Mac Sets New Record for Multifamily Loan Purchase and Guarantee Volume"
Housing Wire (01/30/13) by Christina Mlynski
Freddie Mac's multifamily business volume soared 42 percent in 2012 to an all-time high of $28.8 billion versus $20.3 billion the year before. The previous multifamily business activity record was $24 billion measured in 2008. David Brickman, senior vice president of Freddie Mac Multifamily, remarked, "We achieved record volume while maintaining strong credit discipline and providing essential liquidity to the growing multifamily mortgage market. In the fourth quarter we completed about 33 percent of our yearly volume -- approximately $10 billion in multifamily mortgages." Additionally, Freddie Mac settled nearly $3 billion in targeted affordable housing products. Of that total, $2.4 billion were multifamily bond credit enhancements. Since Freddie Mac launched its multifamily business in 1993, it has provided more than $290 billion in financing for approximately 60,000 multifamily housing properties.
Graduate to the Next Level of Management with Education From the 2013 NAA Student Housing Conference & Exposition
With 14 sessions specifically crafted for multifamily housing professionals focused on campus housing, there will be no shortage of opportunities for attendees of the 2013 NAA Student Housing Conference & Exposition at the ARIA Resort in Las Vegas, Feb. 25-27, to step up their student housing game.
Better understand your market with “Youth Truths: The Millennial State of Mind,” Michael Wood’s Wednesday’s keynote session. Wood, Senior Vice President at Tru, one of the world’s leading research firms specializing in teens and 20-somethings, says understanding teens’ attitudes and expectations is critical when preparing to meet their housing needs in college (and beyond). Want to know why? Read “Millennial State of Mind” in the January issue of units.
Wood's presentation is just one of many learning opportunities during two days full of education and networking, from general and breakout sessions to receptions and time spent interacting with exhibitors on the trade show floor.
Want insight into marketing and leasing from some of the student housing industry’s most successful companies? Don’t miss your chance to hear from top-tier executives during Tuesday’s Exchange and Engage with Executives session.
Back by popular demand, thought leaders from some of student housing’s largest companies will offer attendees candid feedback touching on a wide-range of topics, including a discussion of 2012 lease up issues, overview of traditional operating costs by specific property type, the top three concerns facing the student housing industry as well as hosting an open Q and A.
Visit www.naahq.org/shc for registration, schedule, housing and the latest announcements. And remember to use the official hashtag #NAAStudentConf to engage, discuss and follow the conference.
And, while you’re booking your hotel, don’t forget to bring a group and save! NAA is offering discounts for groups of five or more attendees. Visit the NAA Student Housing Conference website for further details.
Brookings Institution Names 2013 NAA Education Conference & Exposition Host City One of the Most Innovative in The Country
Attendees in search of innovation at the 2013 NAA Education Conference & Exposition, June 19-22 in San Diego, should rest assured that their quest takes place in a fitting locale: San Diego, of course known for Shamu, USS Midway and Balboa Park, can add another accolade to its list—one of the most innovative cities in the U.S., according to Brookings Institution.
Averaging 3,165 patents per year, and 1,041 patents per million residents, San Diego is the 17th-most innovative city in modern America and a perfectly appropriate location for multifamily’s largest and most well-attended annual event: the NAA Education Conference & Exposition.
Nowhere else will you find world-renowned and innovative speakers, such as Sir Richard Branson, Erik Wahl and Bert Jacobs, to name just a few (visit the conference website to preview these and other speakers), as well as unparalleled education opportunities with more than 50 breakout sessions covering all the industry’s hottest trends and topics. Add in dozens of chances to network and hundreds of supplier partners demonstrating the latest and greatest in products, technologies and services and the decision to attend quickly becomes a no-brainer.
Make sure to book your housing as soon as you register—rooms are going fast. Visit the Education Conference website for information and reservations for all official NAA Education Conference hotels.
And, remember to consider group discounts: Register five or more attendees and save your company up to $500! More information about the conference is available.
Learn What Works When Companies Practice Sustainability at the 2013 NAA Green Conference
Conventional knowledge suggests that, “it’s not easy being green;” that really isn’t the case, but the question multifamily housing professionals should be asking is, “Is it profitable?”
Find out the answer by registering for the 2013 NAA Green Conference, April 15-17, in Baltimore.
Join forward-thinking industry colleagues and learn ways to improve your community’s energy efficiency and bottom-line performance through a cutting-edge lineup of education topics and panel presentations at the NAA Green Conference.
Come learn from acclaimed green-industry expert Andrew Winston, a best-selling author of “Green to Gold” and “Green Recovery,” who will serve as the event’s keynote speaker. Find out how your business can profit from environmental thinking as Winston guides you about what works—and what doesn’t—when companies go green.
You also will have the opportunity to share valuable experiences about “sustainability” successes at your property and discover additional, proven, cost-effective strategies by networking with other industry professionals and suppliers. Featured are sponsored hospitality lounges where attendees and supplier partners can discuss the exciting growth potential of sustainable apartment management.
Save $200 off the onsite registration rate before Feb. 15.
Visit the 2013 NAA Green Conference website for all hotel and travel information.
Cut-Off Date for Special NAA Capitol Conference Room Rate Is Friday!
With tax reform, housing finance reform and other industry hot-button issues on the table, the time is now for you to invest in advocacy.
Register to participate in the 2013 NAA Capitol Conference from March 10 - 13! You must act now! The cut-off date for NAA’s special room rate is Friday, Feb. 8. Conference pre-registration is free.
So join your fellow members of the apartment industry for top-notch advocacy education sessions, special guest speakers, the Capitol Hill issues briefing, networking events and much more. If you’re new to the Capitol Conference, you’ll be eligible to win two free nights of hotel accommodations for next year’s conference.
The time is now to make an investment in advocacy!
Register today for this can't-miss event!
Program Available to Corporate Trainers—Feb. 25-27 in Boca Raton, Fla.
Corporate staff trainers or training executives should consider participation in NAA Education Institute’s Corporate Advanced Instructors Training (AIT) program. AIT is customized for the needs of trainers and has been expanded to include the issues of performance measurement aligned with corporate cultures and goals, critical relationships between trainer and operations supervisors and a robust exploration of alternative delivery platforms, synchronous and asynchronous methodologies and programming and development. The successful student is an experienced presenter providing learning and development support within the confines of a functioning corporate structure. It will be held Feb. 25-27 in Boca Raton, Fla.
Learn more and register today!
Best of the Best? Enter 2013 NAA PARAGON Awards Competition
The Call for Entries for the 2013 PARAGON Awards is now open! If you would like to nominate an individual, an affiliated association or a community that represents our industry's models of excellence, please visit the PARAGON Awards Overview page. Entries must be received by Monday, March 18, 2013. Winners will receive their PARAGON award during the NAA Awards Celebration breakfast with Bert Jacobs during the 2013 NAA Education Conference & Exposition, Saturday, June 22, in San Diego. They will also be featured in the September 2013 issue of units Magazine, NAA’s monthly publication that reports on the apartment industry.
NAAEI Designation Courses Offered Near You!
Roanoke Valley Apartment Association
South Dakota Multi-Housing Association
Greater Charlotte Apartment Association
Austin Apartment Association
January – February, 2013
Apartment and Office Building Association of Metropolitan Washington
February – March, 2013
South Dakota Multi-Housing Association
February – March, 2013
Rental Housing Association of Boston
April – May, 2013
Roanoke Valley Apartment Association
Apartment and Office Building Association of Metropolitan Washington
To find more courses in your area, click here.
For more information about any of the classes listed, please contact Kimberly McCrossen at email@example.com or 703/518-6141 ext. 121.
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