Daily Archives: February 18, 2013

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.

SPECIAL REPORT: MBA Predicts M-F Funding Market Share May Fall Slightly in 2013

By Keat Foong, Executive Editor – Commercial Property Executive

San Diego—Mortgage originations for commercial properties will increase by 11 percent in 2013, the Mortgage Bankers Association (MBA) forecasted. The market share of multifamily financing may tick down this year as capital supply to the other commercial real estate sectors make a comeback.

At MBA’s Commercial Real Estate Finance/Multifamily Housing Convention & Expo, MBA released its 2013 mortgage financing outlook. Originations of commercial and multifamily mortgages will grow to $254 billion in 2013, compared to $229 billion in 2012. (In its inaugural financing volume forecast, MBA had predicted the 2012 volume to be $230 billion.)

“Our forecast anticipates Fannie Mae, Freddie Mac and FHA, as well as life insurance companies, will all continue to have strong appetites for making loans, and—coupled with growth in originations for CMBS—the total market will continue to expand,” stated Jamie Woodwell, MBA’s vice president of Commercial Real Estate Research, in a press release.

At a press briefing during the conference, Woodwell predicted that multifamily financing will total about $105 billion in 2012. This financing volume far outstripped expectation, as only $77 billion was originally forecasted for the multifamily sector for the year.

Multifamily financing volume may experience a slight shrinking in 2013 and subsequent years to “a more traditional size” relative to the overall commercial property mortgage market, said Woodwell, during a press briefing held at the conference. Woodwell said multifamily financing had seen its share of the overall commercial property financing market increase due to funding availability and multifamily fundamentals. In 2012, multifamily financing was 46 percent of total commercial property mortgage financing. As mortgage funding for the other sectors are returning a little more strongly, however, “we’ll see more of that traditional balance” between the multifamily and commercial property market shares, said Woodwell.

MBA forecasts GDP to increase to 2.0 in 2013 from 1.8 percent last year, while unemployment rate will fall to 7.6 percent, compared to 8.1 percent for 2012. MBA said the 10-year Treasury yield will rise slightly from 1.8 percent in 2012 to 2.2 percent for 2013. However, actions by the Fed, on which a large part of the interest rate prediction is predicated, could be unpredictable, noted Jay Brinkmann, chief economist and senior vice president of Research and Education.

In the fourth quarter of 2012, MBA reported that commercial and multifamily mortgage originations increased by 49 percent compared to the fourth quarter of 2012. “During the fourth quarter, commercial and multifamily mortgage borrowing and lending hit the highest level since 2007,” stated Woodwell. MBA’s mortgage bankers originations index shows originations for 2012 increased by 24 percent compared to 2011.

The fourth quarter increase in commercial/multifamily lending volume was driven by increases in originations for hotel and office properties, according to MBA. The mortgage financing volume increases, relative to fourth quarter 2011, were 331 percent for hotel properties, 78 percent for office properties, 49 percent for multifamily properties, 46 percent for industrial properties, 5 percent for retail properties and 26 percent for health care properties.

By investor type, the dollar volume of loans in the fourth quarter compared to the same period in 2011 rose by 228 percent for CMBS, 68 percent for commercial bank portfolio loans, 51 percent for GSEs and 18 percent for life insurance companies.

Resident Retention: Great Leadership Increases Loyalty and Revenue

by  – Property Management Insider

Do you employ Apartment Manager Customer Experience Leaders at your apartment communities?

“Do we employ a what-now?”

Let me put it another way.

When it comes to the customer experience are you ready to put your money where your mouth is or will you simply pay lip service to the idea? Do you really understand the value of a better customer experience for your employees and residents?

Apartment Residents and the Experience Economy

In December, 2012, Oracle published a research report, “Why Customer Satisfaction is No Longer Good Enough.” Here are three important points the survey revealed:

  • 81% of consumers surveyed said they are willing to pay more for a superior customer experience
  • 44% are willing to pay a premium of more than 5%
  • Customer experience is now a key driver for revenue growth and an effective channel for brand differentiation

Welcome to the Experience Economy; where customers—your residents—expect more, will tell you more, and are willing to pay more for your apartments and services if you get it right! If you don’t get it right, they are also more than willing to switch to your competitor.

Now does my original question make sense?

Do you employ Apartment Manager Customer Experience Leaders?

If you don’t have the right kind of people running your multi-million dollar apartment communities, it will be difficult to deliver a great customer experience.

Transform the Customer Experience with Great Leadership

While many property management companies are chasing their tails trying to overcome negative customer experiences and customer reviews, some are also proactively focusing on what just might be at the root of the problem—“The Boss.” Yes, the title of Property Manager sometimes causes people to lose sight of their most important job—leading and inspiring people.

Research shows that a well-designed and led customer experience can trigger emotions that have a positive effect on resident retention and loyalty—inside and out.

A great customer experience begins with great leadership.

In his book On Becoming a Leader, Warren Bennis writes about the differences between a leader and a manager. Here are three key differentiators from the book,

  1. The leader innovates; the manager administers
  2. The leader inspires trust; the manager relies on control
  3. The leader asks “what” and “why”; the manager asks “how” and “when”

The best Property Managers are also Customer Experience leaders. They leverage their experience, credibility, and relationships to influence positive change. These are the people who can drive the kind of cultural change that will radically affect the competitive position and performance of the community they run.

When it comes to negative customer feedback, don’t settle for simply improving a few customer-facing business processes or merely eliminating a few common causes of resident complaints. Be proactive and get to the root of the problem. Using tools such as 360-degree employee surveys, apartment reviews, apartment mystery shops, and resident surveys can be very revealing.

Can you really afford not to?

The Property Employee Experience Impacts Resident Experience

It’s silly to think that the on-site employee experience wouldn’t have an impact on resident experience. The best customer experiences are often based on mutual self-interest between on-site employees and residents. Similarly, the best employee experiences are often based on mutual self- interest between the needs of a manager/leader and on-site employees.

Which category of employee do you think will provide the best and most consistent customer experience?

  1. They love their job and hate their manager
  2. They hate their job and love their manager
  3. They love their job and love their manager
  4. They hate their job and hate their manager

I choose door number 3!

Nordstrom is a great example of how creating the right experience for employees can have a positive impact on customer experience, which in turn impacts company performance. For many years, new employees were given a copy of the Nordstrom’s Employee Handbook – a 5X8 card containing 75 words:

Welcome to Nordstrom

We’re glad to have you with our Company. Our number one goal is to provide outstanding customer service. Set both your personal and professional goals high. We have great confidence in your ability to achieve them.

Nordstrom Rules: Rule #1: Use best judgment in all situations. There will be no additional rules.

Please feel free to ask your department manager, store manager, or division general manager any question at any time.

“Using one’s best judgment” remains Nordstrom employees’ number one policy in all aspects of the job. Has the Nordstrom employee experience impacted performance? You bet! The company was named yet again in 2012 to Fortune’s 100 Best Companies to Work For.

Three Ways to Become a Great Leader and Transform the Resident Experience

LISTEN to what their internal and external customers are saying and then they act on the information. They don’t expect to always receive positive feedback.

KNOW WHEN TO GET INVOLVED. They understand that their involvement might not always make them popular, but they are always focused on what is best for the team and the company.

KNOW THE TYPE OF FEEDBACK THAT RESONATES WITH EACH EMPLOYEE. They are also open to their own constructive feedback (surveys) from their supervisor, peers, subordinates and external customers.

Great leaders aim to build teams that believe and perform during prosperous and difficult times. They understand that if they can inspire their employees, then their employees will inspire their customers. The result can be one great customer experience after another!