Category Archives: Market Updates - Page 2

Top Ten Apartment Market Rent Growth Leaders for Second Quarter 2013

by  – Property Management Insider

Earlier this month, MPF Research released highlights for the apartment market’s performance in the second quarter of 2013 and reported strong demand and accelerating rent growth.

When MPF releases these quarterly numbers I always look at the leader board to see which metro secures the top spot for rent growth. During the past few quarters, the top spot has been held by one of the Bay Area metros.

Did a Bay Area market once again claim the title as top annual rent growth leader? Did a metro from the Pacific Northwest challenge for the top spot? Let’s have a look.


Top Ten Apartment Market Rent Growth Leaders for Q2 2013

Click here to enlarge graphic.

 

Top 10 Rent Growth Leaders Analysis

Among large individual metros, San Francisco ranks as the country’s rent growth leader by a fairly large margin. Pricing there rose 7.8 percent during the past year, taking average monthly rent to $2,498. Annual rent growth came in at 6 percent to 6.9 percent in Oakland, Denver-Boulder and Seattle-Tacoma, and prices climbed 5 percent in San Jose.

Markets registering annual apartment rent growth of 4 percent or a little more were Portland, Houston, Austin and West Palm Beach. Fort Worth completed the top 10 list of the nation’s biggest metros with the fastest rent growth: rates there jumped 3.6 percent.

Metros that just missed the cut-off point for the best-performers list included Chicago, Raleigh-Durham, Columbus and Miami.

New York Apartment Market Curiously Absent

Notably missing from the top-performing group as of second quarter was New York. In fact, the metro registered slight rent cuts during the year-ending second quarter, with pricing down 0.6 percent. Still, New York’s average monthly rents are by far the highest in the country at $3,269, and its occupancy rate of 97.7 percent is the tightest anywhere. According to MPF Research, the metro is probably just getting a brief, minor correction in rent levels, after owners and operators got perhaps a little too aggressive when pushing prices throughout 2011 and the first half of 2012.

What’s your take? Are you surprised by the apartment markets appearing on this rent growth list? What about those that didn’t make the list? How was the rent growth on your apartment portfolio?

The Top 3 Apartment Lead Sources Used by Renters

by  – Property Management Insider

Ask any marketing director what causes some of their biggest headaches, and you are sure to hear about the need for the correct lead source to be entered into the property management systemwhen a prospect visits a community. Unless you know where your leads are coming from, you won’t know where to allocate your marketing dollars.

So what if you don’t know? What if you aren’t currently tracking sources or you aren’t confident in your current source tracking process? Where do you focus your marketing dollars?

The Top 3 Sources Renters Use to Find Apartments

According to the 2012 SatisFacts Index, which compiles information directly from resident satisfaction surveys, here are the top three sources renters use to find apartments. Counting down, a la David Letterman, let’s start with number three:

3. Internet Listing Services (ILS)

Between 11 and 14 percent of prospects have used at least one of the top Internet listing services to find their new apartment. While there are arguments for and against these pay-per services, they continue to be effective in the marketplace.

2. Word of Mouth (without Social Media)

There’s a lot of focus on social media and how referral incentives potentially skew the true measure of how willing someone is to recommend a community. The fact remains, however, that basic word of mouth—the old-fashioned way without social media—is cited by 17% of renters as a source when they were apartment-shopping.

1. Apartment Signs/Driving By/Curbside Appeal

People typically know the general vicinity in which they want to live. Whether it’s to be close to work, close to restaurants and shopping, close to the freeway, close to childcare, or in a certain school district, people have preferences. And when looking for a new home, they tend to walk or drive through the neighborhoods or areas they prefer. In fact, more than one in five renters claimed signage and driving by as a source in their search.

While ratings and reviews are the talk of the industry (and rightly so, as they are becoming the “norm” in the rental decision), it’s important to ensure we don’t neglect some of the old standbys. Some options are quickly becoming obsolete (newspapers, for example, were only cited by 0.8%), but some of the basics still hold true. Ensure your signage is in great condition, is easy to read, and has your community phone number and/or web page listed. A prospect may drive or walk by this morning, look you up on the Internet when she gets home, and call for a tour by the afternoon. Make it easy for her.

What’s the number one lead source that potential renters use to find your apartment communities? Share them in the comments below.

Downswing in Apartment Construction

By Dees Stribling, Contributing Editor – MultiHousingnews.com

The Census Bureau reported on Wednesday that housing starts came in at an annualized rate of 836,000 in June, or 9.9 percent below the May total of 928,000. That’s because of a downswing of 26.7 percent in apartment construction—which tends to wobble around from the month to month—but also because single-family starts were down a bit. Single-family housing starts in June were at an annualized rate of 591,000, or 0.8 percent below May.

Compared with last year, however, starts are still ahead of the game. For all types of housing, the annualized rate in June 2013 was 10.4 percent higher than during the same month a year earlier. For apartments, the year-over-year increase in June was 7.8 percent, and the single-family total was 11.5 percent higher.

Permits, which serve as a forward-looking indicator, were also down 7.5 percent in June, to an annualized rate of 911,000 units. The drop was in multifamily permitting, however, which declined by 22.8 percent. Single-family permits eked out a 0.6 percent gain for the month. Compared with last year, housing permits were up 16.1 percent.

Growth still modest (or moderate) says Beige Book

The Federal Reserve released its latest “Summary of Commentary on Current Economic Conditions by Federal Reserve District”—better known as the Beige Book—on Wednesday. The language was familiar: according to sources reporting from the 12 Federal Reserve districts, U.S. economic growth increased at a “modest to moderate pace” since the previous survey.

In most districts, businesses continued to hire at an increasing pace, or at least held steady. Some places are still cautious or reluctant to hire permanent or full-time staff, though the demand for part-time workers is relatively strong—a trend that mirrors the most recent jobs data. The New York; Richmond, Va.; and San Francisco districts reported high demand for technology workers, according to the Beige Book. Overall, the upward pressure on wages is weak, and the upward pressure on prices isn’t much stronger, except perhaps for energy.

In the real estate sector, both sales and construction activity continued to rise in June. “Demand for residential construction grew steadily, as multifamily construction remained strong and single-family construction continued to improve,” the book said. Commercial real estate conditions continued to improve as rents rose slowly and vacancies fell.

Wall Street had a modestly up day, befitting the Beige Book’s sentiment, with the Dow Jones Industrial Average up 18.67 points, or 0.12 percent. The S&P 500 gained 0.28 percent and the Nasdaq advanced 0.32 percent.

Texas Markets Rank Tops Nationally for Apartment Demand

by  – PropertyManagementInsider.com

Among folks who pay even the slightest bit of attention to what’s happening in local economies across the country, it’s not exactly breaking news that lots of jobs are being added in Texas. The Great Recession that so many spots nationally are still struggling to recover from was barely a blip on the radar screen across much of the Lone Star State, and job growth has been at or even above the past norms for quite a while.

What you might have missed unless you pay really close attention to the stats, however, is that early figures for job production in 2013 show the economies in Texas kicking into even higher gear and breaking further away from the pack.

That’s particularly true in Houston.

Sure, Houston is the country’s growth leader in terms of the absolute number of jobs created, as it has been for the past couple of years. The latest figure from theBureau of Labor Statistics places that number at 118,700 jobs on an annual basis. What’s changed is that Houston is now also in the #1 position for percentage expansion among the 100 largest markets in the U.S. The metro’s 4.5% growth rate is a truly phenomenal performance given the Houston area is more than three times the size of all but one other place registering growth of 3% or better.

No surprise, Dallas/Fort Worth is the big-market bridesmaid at this wedding, though the 3.7% job growth rate in North Texas really isn’t quite in the same category with Houston’s impressive showing.

Jobs translate to new household formation and apartment demand, right?

Thus, it’s no shock to see the two biggest job producers among the nation’s really large metros also at the top of the charts for apartment leasing during the year-ending 1st quarter. Despite adding fewer jobs than Houston, Dallas/Fort Worth actually garnered the most apartment demand – 11,194 units, compared to 8,044 units – mainly because D/FW operators worked especially hard in order to get a meaningfully bigger block of completions through initial lease-up. Dallas/Fort Worth registered additions totaling 8,443 units during the past year, versus the 5,626 units finished in Houston. The Houston crowd probably isn’t complaining about a little less demand compared to the D/FW tally, however, as they did notably better on rent growth – 3.8% in Houston, relative to 2.3% in Dallas/Fort Worth.

Over the next year or so, look for it to continue be a neck-and-neck race between Houston and Dallas/Fort Worth for the lead in apartment absorption nationally. Houston should continue to have the key advantage of a faster-growing economy, but D/FW will continue to add more new product completions that operators will be pushing hard to get through lease-up.

 

 

Appeal of Renting Versus Owning is Changing

By Donna Kimura – MultiFamilyExecutive.com

The appeal of renting versus owning a home is changing across the country, according to a new study commissioned by the MacArthur Foundation.

On the heels of the housing crisis, 54 percent of survey respondents say renting a home has become more appealing. By nearly the same percentage, 57 percent, respondents believe that buying has become less appealing.

Even though there are positive signs that the housing market has rebounded, the public clearly remains nervous. In fact, 77 percent believe the nation is still in the midst of the housing crisis or the worst is still to come.

The study by Hart Research Associates examines how American attitudes have been transformed by the housing market collapse and changing lifestyles.

Even as attitudes shift, more than seven out of 10 people still aspire to own their own home.

In the past, homeownership and renting were seen more as a zero-sum game, says Rebecca Naser, senior vice president at Hart Research.

“It’s a new way of looking at housing in general,” she says. “You can still aspire to own a home but still see renting in your future.”

In another finding, the study reveals that the public favors a balanced housing policy. Sixty-five percent believe that housing policy should be equally split on ensuring people have access to rental housing and houses to own.

“It is stunning to see how Americans are beginning to favor a new balance that serves both the homeownership and rental markets,” says Peter Hart, chairman emeritus of Hart Research. “The emergence of this more balanced view that government support for rental housing and homeownership should be equalized is both surprising and significant. The How Housing Matters survey underscores that it’s no longer renters versus owners, the haves versus the have-nots, or the young versus the old. There is a new and real acceptance of a more balanced approach to housing policy that puts renting and owning on a more equal footing.”

Other findings of the survey include:

  • 45 percent of respondents have experienced a time when their housing situation was insecure or unstable;
  • 45 percent of current owners can see themselves renting at some point in the future; and
  • Roughly seven in 10 believe that government policies “ensuring that more people have decent, stable housing that they can afford” leads to a major positive impact on the safety and economic well-being of neighborhoods, children’s ability to do well in school, and family financial security.

For more, visit www.macfound.org.

Top Tier Markets, and Assets, See Slower Rent Growth

By Linsey Isaacs – MultiFamilyExecutive.com

The top-tier assets are seeing a slowdown in rent growth, while a trickle-down effect has given Class C assets a big boost.

Rent growth for Class C properties is increasing nationally at an average of 4.3 percent, while Class A rents grew 3.2 percent, down from 4.9 percent a year ago, a new Axiometrics report shows.

And the top-tier metros are starting to slow as well. Boston and San Francisco rent growth rates are both below the national average after consistently ranking in the top tier for the last two years.

Boston’s rent growth rate decreased during the first quarter of 2013 falling to 2.9 percent this February, down from 15.9 percent a year ago. In San Francisco, the biggest decline occurred in Class A properties, with rents 2.5 percent lower this year compared to last year. But Class C assets in San Francisco are seeing the opposite: their revenue growth rates increased 12.1 percent.

Rent growth across all metros and asset types remained steady in February at about 3.5 percent, the lowest rate since August 2010.

Nationally, occupancy is strong at 94 percent, up 35 basis points from last year, and is expected to increase to 94.9 percent by the end of the year.

Employment Continues to Grow in New Orleans, Expanding Population and Multifamily Demand

By Philip Shea, Associate Editor – Multi-HousingNews.com

Source: Hendricks-Berkadia

The Big Easy continues to sport strong fundamentals and is becoming an incubator for the leisure and hospitality sector, having added 4,000 new positions in 2012. The local population expanded 1.6 percent during the same time, strengthening demand for both housing sectors and providing developers with a level of confidence that will bring nearly 1,000 new units to the metro by 2014.

In the meantime, vacancies continue to plunge across the MSA, with the overall average falling 90 points to 7.3 percent over the last four quarters. This rate stood at nearly 12 percent in 2009, falling precipitously over the next few years and now expected to hit 6.1% by the end of 2013 and 5.8% the year after.

Such consistent trends in occupancy led to a notable 2 percent rise in asking rents between 2011 and 2012—to $899 per month. Concessions also fell 90 basis points to 3.3 percent of asking rents.

Going forward, strong economic performance is expected to remain the norm as projects such as the expansion of Boomtown Casino and construction of the University Medical Center take shape. Once finished, the new casino will permanently employ around 750 staff members. The new research and teaching hospital comes as a result of legislators approving $1.1 billion in funds.

Overall payrolls are expected to increase by 1 percent, or 5,500 new positions, over the next four quarters.

Source: Hendricks & Berkadia

In tandem with new construction, permitting activity is expected to surge over the next two years, with 1,050 annualized permits expected for 2013 and 1,020 expected in 2014. Even with new deliveries and an expanding pipeline, however, rents will continue to climb 2.4 percent this year to an average of $921 per month.

The best performing submarket in terms of rents continues to be the historic city center with a 2012 average of $1,211 per month, while the River Ridge/East Bank area sported the lowest average vacancy—of 3.9 percent.

The eastern part of the city around the Ninth Ward, however, continues to see extremely high vacancies near 15 percent and rents averaging $713 per month. This part of New Orleans was severely damaged during Hurricane Katrina in 2005.

Best Cities for Veterans

Bert Sperling, Founder and President Bestplaces.net

Veterans starting the post-service phase of their lives face a unique set of opportunities and challenges.veterans from the marines army air force and navy

On the one hand, the post-9/11 G.I. Bill can help with getting a college education.  On the other hand, the Bureau of Labor Statistics reports that veterans between the ages of 25 and 34 have unemployment rates nearly 4 points higher than comparable civilians.

Working with USAA Insurance and Military.com, we decided to shed some light on this issue by determining the Best U.S. Cities for Veterans.

Out of 379 major U.S. metro areas, here’s the top 10:

  1. Pittsburgh, PA
  2. Phoenix, AZ
  3. Dallas, TX
  4. Cleveland, OH
  5. Atlanta, GA
  6. Warren, MI
  7. Ann Arbor, MI
  8. Cincinnati, OH
  9. Columbus, OH
  10. St. Louis, MO

Each of the variables was weighted based on what soon-to-be or recent veterans said was important to them, and each metro area was then ranked based on its total points for all variables.

Here’s the criteria we considered:

  • Military skill-related jobs
  • Presence of colleges/universities
  • Economic stability
  • Mass transit availability
  • Crime level
  • Unemployment rate
  • Volume of DoD conracts
  • Health resources
  • Affordability
  • Property Tax
  • Local schools
  • Airport proximity
  • Recent job growth
  • Recreation
  • Sales tax
  • Climate
  • Number of federal government jobs

Metro areas with the following attributes were excluded from the list: unemployment rate more than 1% above the national average, cost of living greater than the national average and total crime rate more than 25% above the national average.  You can check out the study on USAA’s site here.

Johnson Development to Solicit Projects for 113-Acre Memphis Industrial Complex

By Barbra Murray, Contributing Editor – Commercial Property Executive magazine

Johnson Development Associates has big plans for Aerotropolis Business Park, the 113-acre site it acquired in Memphis, Tenn., earlier this year. The company is making the property available for as much as 1.2 million square feet of speculative development and build-to-suit opportunities and has tapped commercial real estate services firm Jones Lang LaSalle Inc. to spearhead the marketing effort.

Given the current state of the Memphis industrial market, it appears that JDA’s endeavor is kicking off at the right time. Demand for Class A accommodations continued to climb in the third quarter, driven to a great degree by healthcare, retail and third-party logistics companies, according to a report by JLL. For industrial tenants, the attractiveness of the Memphis market is undeniable, due in no small part to the very simple issue of practicality; affordable labor, low cost of living and relatively low industrial rental rates are reeling in renters.

And the attraction to Aerotropolis is likely to prove irresistible as well. The property, which will bloom on the former site of the Mall of Memphis, is not only located in the right city, it’s sited in the right area of the right city. Aerotropolis is within three miles of Memphis International Airport, the second largest cargo airport in the world, and just four miles away from the newly expanded BNSF Memphis Intermodal Facility. And then there’s the park’s close proximity to the Port of Memphis, which holds the distinction of being the fourth largest inland port in the U.S. Additionally, its immediate access to I-240 puts it within easy reach of the third-busiest trucking corridor in the country.

The call for large blocks of premier industrial space in Memphis has been growing louder, as noted in the JLL report. New Breed Logistics recently expanded its presence in Memphis by taking on 404,400 square feet at Southpark Distribution Center O. And in the absence of availability, some companies are creating additional elbowroom for themselves. In October, Nike Inc. revealed that it will invest $301 million in a project that will add 1.8 million square feet to its 1.1 million square-foot facility.

Aerotropolis certainly has its local backers. The City of Memphis contracted MAP Studio Planning and Policy Advisors for an assessment and the firm gave the project solid thumbs-up.

“We support the Aerotropolis [planned development] application because we believe that the JDA group will provide the right mix of project financing, sensitivity to land use issues, attraction of top-notch companies to the site, and commitment to urban revitalization,” Louise Mercuro, president of MAP Studio, wrote in a letter to the City Council.

Economy Watch: Existing Home Sales, Homebuilder Confidence, Stock Market Up

By Dees Stribling, Contributing Editor – CommercialPropertyExecutive.com

Existing U.S. home sales were up to an annualized rate of 4.79 million units in October, according to the National Association of Realtors on Monday. That’s an increase of 2.9 percent from the previous month, and 10.9 percent from October 2011, and on the whole a solid report.

Perhaps more importantly—at least for driving prices up further—total housing inventory nationwide at the end of October fell 1.4 percent to 2.14 million existing homes available for sale, which represents a 5.4-month supply at the current sales pace, down from 5.6 months in September, the NAR reported. That’s the lowest housing supply since February 2006, when it was 5.2 months. Listed inventory is 21.9 percent below a year ago, when there was a 7.6-month supply.

The Realtors also calculated that the national median existing-home price for all housing types was $178,600 in October, which is 11.1 percent above a year ago. This October marked the eighth consecutive monthly year-over-year increase, and the last time that happened was from October 2005 to May 2006, back in the bubble days. This time around, no one’s calling it a bubble.

Homebuilders Feeling Much Better

Fittingly, the National Association of Home Builders also released a report on Monday, and it found that builder confidence in the market for newly built, single-family homes posted a solid five-point gain so far in November to 46. That’s the closest the index has been to the optimism threshold of 50 since well before the housing bubble popped and the Great Recession decimated the new housing industry.

Two out of three of the index’s component indexes registered gains in November. The component gauging current sales conditions posted the biggest increase, with an eight-point gain to 49, its highest mark in more than six years. The component measuring sales expectations for the next six months held above 50 for a third consecutive month with a two-point gain to 53, and the component measuring traffic of prospective buyers held unchanged at 35 following a five-point gain in the previous month.

“While our confidence gauge has yet to breach the 50 mark—at which point an equal number of builders view sales conditions as good versus poor—we have certainly made substantial progress since this time last year, when [the index] stood at 19,” NAHB chief economist David Crowe said in a statement. “At this point, difficult appraisals and tight lending conditions for builders and buyers remain limiting factors for the burgeoning housing recovery, along with shortages of buildable lots that have begun popping up in certain markets.”

Wall Street was also feeling chipper on the Monday before Thanksgiving, perhaps on hopes that the fiscal cliff boogeyman might actually go away. The Dow Jones Industrial Average gained 207.65, or 1.65 percent, the most in quite a few trading sessions. The S&P 500 gained 1.99 percent, while the Nasdaq advanced 2.21 percent.