Daily Archives: November 21, 2013

Job Growth in Jacksonville Outpaces Florida, U.S. Averages

By Philip Shea, Associate Editor – MultiHousingNews.com

After three years of tepid employment growth, the Jacksonville metro is poised to create 12,500 new jobs before year’s end—amounting to a 2.1 percent increase, with even more expected in 2014. As a result, vacancies are expected to recede back to pre-2007 levels, with minimal deliveries expected over the next two years.

Hendricks-Berkadia reports that sectors such as finance, education and health care have been integral to the boost in jobs, with locally based Foundation Financial Group creating 60 new positions within the past year. Additionally, expansions of several hospitals such as St. Vincent’s Medical Center Clay County and Brooks Rehabilitation are expected to create nearly 800 new jobs.

All of this positive development in the local economy has brought the overall vacancy rate down to 8.1 percent, with another 60 basis points expected to be shaved before the end of the year. While this figure ranks far higher than the national average, it is far lower than the near-15 percent rate seen at the height of the recession in 2009.

Additionally, the pace of rent growth is expected to rise, with asking rents expected to rise 3.4 percent to $849 per month in 2013 and 4 percent to $883 per month in 2014. The most expensive submarket continues to be the areas near the beach, with rents there rising 3.4 percent to $1,029 between 2011 and 2012.

As alluded to previously, hiring is expected to accelerate even further over the next 18 months, with another 19,000 positions expected to be added throughout 2014. Other metro employers seeking to expand their operations include the Mayo Clinic, CMG Financial, and Digital Risk—the latter of which has a plan to bring 1,000 jobs to the state over the next few years.

While permitting activity is expected to pick up pace over the next two years, actual deliveries will remain modest, with 560 units and 675 units expected to be completed in 2013 and 2014, respectively. One of the larger developments currently under way, the 294-unit 220 Riverside, is slated for completion by the end of this year.

With a pause in bulk completions and demand on the rise, the metro is likely to see a marked increase in investment activity throughout the current development cycle.

 

Keeping Your Mind Tuned for Success

by Chris Widener

Absolutely no one can overestimate the power of the mind and its role in our success. It is imperative to keep our minds right and on the right track if we are to achieve balanced success in our career, finances, health, emotions, relationships and spiritual lives.

The analogy I would like to use here is one of a radio station. For example, there may be a “success” station. But the only way you can hear a radio station is to be tuned into it. Even a little off and you can’t get the full effect.

The same is true with our mind and success. If our minds and our thoughts get sidetracked, our success will get sidetracked. As our minds stay tuned to “success” our bodies will then carry out our success and we will begin to experience abundance.

So here are some ways to keep tuned into success.

Use your innate ability to decide and choose. One of the things that separate us from the animals is that we live not by instinct, but by choice. Constantly flexing that muscle of choice builds it up and keeps us on track for success. It is like working out. The more we do, the stronger we get. The more “fit” we get. Want to keep your mind tuned for success? Keep it healthy by making good choices and decisions on a regular basis. For example, do you have a bad habit? Then flex your mind muscle and choose to change—today. If you choose to stay the same way (and those are the only two alternatives) you will have just chosen to tune your mind to a different station than “success.”

Put good stuff into your brain. There are lots of things that want to work their way into our minds (and eventually work themselves out again in our actions). There will be lots that we just get from walking around all day. But what about what we put in on purpose?

We can choose to put good stuff in on a regular basis. Do you take time each day to put good things into your mind, to tune into success? Here are two things to consider when you are choosing what to put into your mind: First, is it positive? Will it build you up or tear you down? Will it make you a better person, or lesser? Will you grow from it or not? Will it tune you to success or not? Secondly, will it move you toward your goals in the areas of your life that you want to see success and abundance in?

Keep the junk out. Like I mentioned above, there will always be junk floating around, like a fellow employee who gripes all the time. But what surprises me is how many people who want success actually willfully choose to put junk into their minds and then expect to be tuned into success. Here are some thoughts on this: First, evaluate everything that you put into your mind. Evaluate what you read, listen to and watch. We live in a fast-paced world and we have little time. Why then would we spend our precious time putting junk into our minds? Does what you read, listen to and watch move you toward your goals or away from them? It is a simple question, really. At least most of the time. And here is my soapbox. Eleven years ago, my wife suggested we give away our television. I was shocked to say the least, but decided to give it a try. Now I am the anti-tv fanatic in our house! I have more time than anyone I know and I don’t have to spend a lot of energy filtering my mind to tune it to success. Just a thought.

Eat right and exercise. That’s right. The way we eat and the amount of exercise we get goes a long way toward our mind’s ability to tune into success. Put the right foods into your body and the brain responds. Exercise on a regular basis and the body releases chemicals that literally ignite your brain for success.

Homebuilders Still Confident

By Dees Stribling, Contributing Editor – MultiHousingNews.com

Builder confidence in the market for newly built, single-family homes was unchanged in November from a downwardly revised level of 54 in October, according to the National Association of Home Builders, which released its Housing Market Index on Monday. That means that for the sixth consecutive month, more builders believe market conditions are good than poor.

The index gauging current sales conditions in November held steady at 58, while the component measuring expectations for future sales fell one point to 60—both strong readers. The index gauging traffic of prospective buyers, which is the weakest component, dropped one point to 42.

“Policy and economic uncertainty is undermining consumer confidence,” NAHB chief economist David Crowe warned. “The fact that builder confidence remains above 50 is an encouraging sign, considering the unresolved debt and federal budget issues cause builders and consumers to remain on the sideline.”

Fewer Americans on the move

Americans aren’t moving as much as they once did, according to a report released by the Census Bureau on Monday. About 35.9 million U.S. residents, or 11.7 percent of all Americans, moved between during the 12 months ending in March 2013, down from 12 percent during the same period a year earlier. The decline in the nation’s overall mover rate follows an uptick from the record low of 11.6 percent for the period ending in March 2011. That means the 2013 mover rate isn’t statistically different from the 2011 rate.

Most moves are local. Nearly two-thirds of movers stay in the same county, and even those who leave their county didn’t move all that far away: 40.2 percent of inter-county movers relocated less than 50 miles away. Only 24.7 percent moved 500 or more miles to their new location.

Young Americans in particular aren’t moving at the velocity they once did, mostly because their employment situation (on the whole) isn’t nearly as healthy as their elders, and because fewer of them are buying houses than during previous decades. According to the bureau, only 23.3 percent of adults aged 25-29 moved in the 12 months ending March 2013. That’s smallest percentage in 50 years, and down from the previous year’s 24.6 percent.

Housing starts report postponed

Official numbers on housing starts in October were to have been released on Tuesday, but the Census Bureau said on Monday that the statistics would be out on Nov. 26, citing the rippling impact of the federal government shutdown last month. The September report, which wasn’t released at all last month, will come out at the same time as the November report. Normally timed data collection and data releases, the bureau says, will resume with the release of the November data in December.

Wall Street held steady on Monday until near the end, when sellers started outpacing buyers. Still, the Dow Jones Industrial Average eked out a gain of 14.32 points, or 0.09 percent. The S&P 500 lost 0.37 percent and the Nasdaq declined 0.93 percent.

What Renters Want: The Amenity Arms Race

By Leah Etling, Contributing Editor – MultiHousingNews.com

Los Angeles—Gen Y likes rooftop pools, multimedia-equipped fitness suites, concierge package service and the ability to order housekeeping for their apartment. They have dogs, get lots of UPS deliveries but almost no mail, like walking places (but also need to charge their electric vehicles), and want the lobby of their apartment community to look like that of a four-star urban hotel.

Sound high maintenance? It’s a fair assessment.

Last week, a panel of multifamily experts delivered an overview of “What Renters Want: Development + Design Trends that Drive Occupancy,” at an AIA continuing education event held in Los Angeles and sponsored by Multi-Housing News, Interface and Universal Fibers.

Speakers Manny Gonzalez, principal, KTGY Group; Kelly Farrell, vice president, RTKL; and Alan Dibartolomeo, chief development officer, AMF Development Inc. didn’t pull any punches when it came to the wish list of the nation’s largest renter demographic: 20-to-mid-30-somethings.

“Gen Y rents by choice. We’ll see if they continue to rent by choice as they age. But if they keep renting, your rentals will have to be flexible enough in their amenities program to meet their needs in the future and the needs of their kids,” said Farrell, who described the demand for services among today’s typical resident.

They want to be able to order up housekeeping, but not pay for it on a regular schedule, calling for an appointment when they have been too busy to clean or Mom and Dad are coming to visit. Someone should be in the lobby to receive their dry cleaning delivery and accept their packages while they work. Rent should be payable by credit card so they can auto-schedule the payment and forget about it.

The good news is that they’re willing to pay for these conveniences.

“It’s a generation that if they have the money, they want to be served,” said Dibartolomeo, whose firm competed a Glendale project near Americana at Brand and the Glendale Galleria that features a 26,000 square foot rooftop skydeck, replete with a dog park and hot tub.

The only disadvantage of creating such posh living spaces is that residents really do seem to think they’re at a resort.

“They really believe they’re in a hotel. And there’s a downside to that: they think they can barbecue and cook and just walk away and leave it, and somebody will clean it up. Almost everything is ‘somebody else will take care of it,’” Dibartolomeo said.

Describing some of the private student housing communities that have been developed across Southern California, Gonzalez implied that multifamily would likely have to raise the luxury bar to keep up with rising expectations. Does your community’s swimming pool feature a lazy river?  How about a fitness center that rivals the offerings of the neighborhood’s most high-end health club?

“If your community isn’t big enough to do something like this, then don’t even try to do it. Get them a membership to the adjacent club. If you can’t go all the way, don’t just go halfway,” Gonzalez advised. He added, “It’s what I call the amenities arms race. Everything’s getting bigger, how much can we do? All the money seems to be going into the amenities: ‘My pool’s bigger than your pool.’”

A few other trends the panel identified:

  • Black box theaters are out, outdoor theaters—where weather permits–with movable furniture are in.
  • Business centers are out, but universal wireless network coverage and scattered “creative spaces” are in.
  • Printers and a couple of computers on site are still popular for that moment when the household printer is out of ink and you need to print boarding passes for a flight or tomorrow’s homework assignment.
  • Multimedia fitness “suites” where you can do a yoga, pilates or P-90X workout alone or with a few friends are hot.
  • Some new construction doesn’t bother to wire for landline phones. Direct data connections are the alternative.
  • The most important amenity? Five bars. “If you walk in and your phone doesn’t have five bars, you’re walking out,” Gonzalez said.
  • Green isn’t as important as you think, though it may matter to owners, builders and lenders. “The leasing people don’t sell it too hard. They may mention it, but it’s not an amenity that really sells,” Dibartolomeo said.
  • Got an In-and-Out burger nearby? You’re golden. A Whole Foods? High five. Neither? No worries. Settle for a designated food truck parking space and invite local trucks to set up a regular visitation schedule. “It’s a great opportunity for them that costs you absolutely nothing,” Gonzalez noted.
  • Micro units need some kind of separation barrier between living space and sleeping space. It gives the feeling of a one-bedroom unit, even if the entire apartment is less than 500 square feet.
  • Kitchens can be smaller than we’re accustomed to, especially with new reduced-footprint appliances. But entertaining is still important, and expandable spaces to host a larger crowd are requested.
  • Location still matters—a lot. “You’ve got to build it where the rest of the amenities are already provided by the city that’s there,” Dibartolomeo observed.

Reis 3Q Briefing Gives Reason for Optimism

By Scott Baltic, Contributing Editor – Commercial PropertyExecutive.com

“All indicators are pointing toward another year of recovery” was the optimistic bottom line of Wednesday’s Q3 2013 Capital Markets Briefing from Reis Inc. Hosted by Reis senior economist Ryan Severino, the conference call promised to tackle angles such as economic growth and the capital markets, interest rates and cap rates, and the GSE pullback.

Though he cautioned that the data are still preliminary, Severino said that GDP growth at an annualized 2.8 percent in the third quarter is better than what had been expected by many and added that job creation figures look good: “We are now ahead of last year’s pace of job creation.”

He does, however, expect a slowdown in growth in the fourth quarter, in part because of lingering effects from the government shutdown.

In the office sector, Severino said, “demand continues to slightly outpace new construction.” He noted, though, that improvement in the office sector has been largely concentrated in a limited number of markets, such as metro areas with strong high-tech industries.

In the multi-family sector, “the market has hit a floor, at least temporarily,” he said, and any future cap rate compression will be “far more gradual.”

As for retail, Severino said, there’s “more evidence that retail cap rates have hit a floor.” This product type, he said, is the one “arguably with the weakest recovery,” not least because “consumer spending remains depressed.”

An examination of 12-month rolling cap rates found that, like last quarter, “we’re getting complicated results,” he said, with a few markets represented in the top 10 for one product type and the bottom 10 for another. (Detroit, for example, is in the top 10 in retail (3.7 percent) and in the bottom 10 (11.1 percent) in multi-family.)

These anomalies, Severino explained, are probably caused by a “shallow transaction environment.”

The briefing highlighted a string of positive signs for the economy and the CRE sector.

* The Mortgage Bankers Association’s Originations Index has approximately tripled since the lows of 2009, from roughly 50 to about 150 (100 = the 2001 quarterly average).

* A year-over-year decline in outstanding balances on GSE loans obviously reflects those entities’ mandate to cut their originations, but Severino also suggested that the GSEs would in any case be getting more competition in the current multi-family lending market.

* The CMBS recovery remains intact, with originations on track to total $80 billion this year, “well ahead of predictions,” according to Severino.

* A Federal Reserve survey of bank senior loan officers found a higher percentage reporting stronger loan demand than at any time in the past 13 years.

* The overall commercial mortgage delinquency rate, now at 2.7 percent, has fallen 300 basis points in three years. Or, as Severino put it, “It’s coming down about as fast as it went up” from 2008 to about 2010.

One intriguing question toward the end of the conference call was whether cheap capital is artificially inflating CRE prices. Severino answered that two quarters ago he might have said yes, but that the improved economy has allayed some of those concerns.

The economy is probably more resilient than many thought, Severino said, and though the credit market will remain “choppy in the short term,” if the capital markets behave well, “We could be on the verge of a real recovery.”

Fed Mulls Tapering in Near Future; Inflation Still Nonexistent; Existing Home Sales See Downtick

By Dees Stribling, Contributing Editor – CommercialPropertyExecutive.com

The Federal Open Market Committee released the minutes from its Oct. 29-30 meeting on Wednesday, and one of the more closely watched subjects taken up in was tapering. The question now isn’t whether to taper, but how much and exactly when. The central bank hasn’t quite made up its mind about that yet – but the minutes seem to say that it will be a matter of months before tapering kicks in, albeit gradually.

“During this general discussion of policy strategy and tactics, participants reviewed issues specific to the Committee’s asset purchase program,” the FOMC minutes said, referring to the $85 billion worth of bond buying that the Fed has been doing every month. “They generally expected that the data would prove consistent with the Committee’s outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months.”

Perhaps more importantly for the long-term health of the economy, the FOMC also discussed at length the federal funds rate, which is currently next to nothing. The committee said it was thinking about a way to tell markets that the rate is going to remain that low for a long time, and whether to lower the unemployment rate threshold for considering any rise in the rate.

The minutes – in their long-winded way – said that “as part of the planning discussion, participants also examined several possibilities for clarifying or strengthening the forward guidance for the federal funds rate, including by providing additional information about the likely path of the rate either after one of the economic thresholds in the current guidance was reached or after the funds rate target was eventually raised from its current, exceptionally low level.” We’ll get to it when we get to it, in other words.

Inflation Still Nugatory 

One of the persistent worries about QE3 – at least among a certain class of economists – is that the stimulus will cause inflation. So far, however, inflation refuses to rear its ugly head: the Bureau of Labor Statistics reported on Wednesday that the all-urban CPI in October dropped 0.1 percent, mostly because of declines in the price of gas. Over the last 12 months, the all-items index has increased 1 percent.

The gasoline index fell 2.9 percent in October. Other energy prices were mixed, with electricity rising, but fuel oil and natural gas declining. The food index rose slightly, with major grocery store and food group indexes evenly split between advances and declines. Take food and energy out of the picture, and prices were up 0.1 percent in October.

Everything else was likewise a mixed bag in terms of price increases and decreases. The price of shelter rose, but at the slowest rate since the end of last year. Air fares, recreation, and used cars and trucks also became more expensive. Medical care – surprisingly — was unchanged, while apparel, household furnishings, and new vehicles all became less expensive.

Existing Home Sales See Downtick

The National Association of Realtors reported on Wednesday that total existing-home sales dropped in October to an annualized rate of 5.12 million units, down 3.2 percent compared with September. Year over year, sales are better: the current rate is 6 percent higher than the 4.83 million-unit level in October 2012. Sales have remained above year-ago levels for the past 28 months.

The national median existing-home price for all housing types was $199,500 in October, up 12.8 percent from October 2012, which is the 11th consecutive month of double-digit annual increases, the Realtors reported. Distressed properties – foreclosures and short sales – accounted for 14 percent of October sales, unchanged from September, but very much changed from October 2012, when they were 25 percent of the total. Part of the gain in median price is from a smaller share of distressed sales.

Total housing inventory at the end of October declined 1.8 percent to 2.13 million existing homes available for sale, which represents a five-month supply at the current sales pace, according to NAR. The supply was 4.9 months in September. Unsold inventory is 0.9 percent above a year ago, when there was a 5.2-month supply.

Wall Street didn’t much like what the FOMC minutes had to say on Wednesday, with an up day turning into a down day as soon as they were released. The Dow Jones Industrial Average dropped 66.21 points, or 0.41 percent, while the S&P 500 and the Nasdaq were down 0.36 percent and 0.26 percent, respectively.