Features

Seniors Housing Developers Shift to Repositionings Amid Economic Uncertainty, Say InterFace Panelists

by Kristin Harlow October 28, 2022

CHICAGO — As shovel-ready projects get put on hold, seniors housing developers are looking 24 months ahead, hoping that by then the economic outlook will have improved. For now, they worry about a possible recession and rising costs for everything from debt financing to building materials as they turn their immediate focus to repositioning opportunities. “The industry has been hit with macro-economic shocks,” said Adam Heavenrich, managing director at Heavenrich & Co., a Chicago-based investment brokerage firm. “What you hear is that if you’re developing now, you’re crazy.” Heavenrich gave these opening remarks as moderator of a panel discussion on development at France Media’s sixth annual InterFace Seniors Housing Midwest conference, held Oct. 20 in Chicago. The day-long event featured six panel discussions on topics relevant to industry stakeholders, along with networking opportunities. The development panel included experts who analyzed the smartest plays for the upcoming year. They recounted a growing list of barriers to new construction. The industry is still clawing its way back from the occupancy declines due to the pandemic. Seniors housing occupancy stood at 82.2 percent at the end of the third quarter of 2022, according to data analytics firm NIC MAP Vision. Inflation, last pegged …

October 28, 2022

Content Partner Features Midwest Multifamily Northeast Pavlov Media Southeast Texas Western

Multifamily Fiber Networks Must Be Dedicated, Resilient to Serve Increased Resident Demand

by Sarah Daniels October 27, 2022

Fiber networks built with multifamily properties in mind offer network resilience while maximizing ROI for owners and operators. Well-constructed fiber networks are at the heart of meeting and exceeding residents’ growing Internet needs, especially when work-from-home culture and the constant need for online connection have made Internet slowdowns and downtime unacceptable for end users. Fiber can also strengthen connectivity across multifamily properties, shoring up the Wi-Fi services residents have come to know and on which they’ve come to depend. How does a national fiber network integrate with multifamily properties? By focusing just on the needs of the multi-dwelling unit (MDU). “Instead of building out 200-mile routes of duct and fiber, we build out ‘miracle miles’ in densely populated MDU areas. From that point, we’re able to easily grow or expand out from that area,” says Michael O’Linc, president of fiber services & campus communications at Pavlov Media. O’Linc stresses the importance of a more planned, methodical approach for MDUs. A network that serves multifamily buildings must be a network focused on backups and fail safes. The “miracle mile” method creates a main line with laterals — creating a ring shape as it expands. This approach to fiber makes networks easier to …

October 27, 2022

Features Multifamily

How Multifamily Owners Can Retain Residents in Today’s Turbulent Environment

by Taylor Williams October 26, 2022

By Ben Johnson, founder & president, Spruce It’s no secret that the U.S. economy is in the midst of a very turbulent period. Businesses of all sizes and types are experiencing adverse pressures like never before and seeking ways to cut costs and increase revenue wherever possible. The real estate market, including the multifamily industry, is no exception. With fewer people able to buy homes due to skyrocketing mortgage rates and minimal inventory for sale, more people are turning to apartments. As renting by necessity grows, residents are looking for the highest value from their rental experience. Consequently, multifamily owners and operators are now putting a bigger emphasis than ever on tenant retention by asking why high retention rates are important, how they can be maintained and what some alternative options are. Why Retention Matters Many of the hottest multifamily markets in the country have seen annual rent increases well over 20 percent over the last year, and several markets have even seen increases exceeding 30 percent. While this growth is a boon for existing owners, it begs the question of whether these increases are sustainable, or if the next several years will usher in below-trend increases. Why is this …

October 26, 2022

Features Multifamily

Apartment Demand, New Leasing Stalls in Third Quarter, RealPage Reports

by Jeff Shaw October 25, 2022

RICHARDSON, TEXAS — Demand for apartments in 2021 and early 2022 was booming, with new renters filling apartments at record levels. In the third quarter, however, most markets experienced a “surprisingly big slowdown in leasing traffic,” according to RealPage, a data analytics and property software company based in Richardson. Negative demand means that in the third quarter of 2022, more tenants moved out than in. According to Realpage, this slowdown has caused a decrease in demand, with negative 82,095 units absorbed, bringing year-to-date net demand down to negative 47,143 units. This is during a time that is typically a seasonally strong leasing period. Effective asking rents fell to negative 0.2 percent month-over-month in September, the first time effective asking rents have fallen since December 2020. Apartment demand in the third quarter of 2022 registered as negative in 119 of the nation’s 150 largest metros. Most of these metros only saw mild decreases in demand, but a handful of markets did see notable decreases in apartment occupancy of up to 1.5 percent, including cities such as Phoenix and Las Vegas and some Florida markets, including Tampa, Fort Lauderdale, Orlando, Jacksonville and West Palm Beach. RealPage emphasizes that the U.S. apartment market …

October 25, 2022

Bohler Content Partner Development Features Midwest Northeast Southeast Texas Western

Prep for Success: Site Civil Engineering Design Streamlines Construction, Avoids Snags

by Sarah Daniels October 25, 2022

Can you dig it? Possibly, but site civil engineers can help determine if construction can rock on without running into rocky situations. Thorough site civil due diligence is the foundation for developing a project with minimal delays. Keeping land development projects moving forward — especially during construction — requires highly informed due diligence processes and expertise when it comes to approvals and plans. Site civil engineering design with constructability in mind can support general contractors while streamlining the overall bidding and construction process. But what are best practices when it comes to ensuring a successful project? REBusinessOnline spoke to two experts who specialize in high-quality construction documents: Benjamin Plumb, P.E. project manager, and Keith Simpson, director of engineering, work for Bohler, a land development consulting and technical design company. You Never Know What You’ll Find Before You Dig — However, These Tips Can Help Uncertainty is part of any development project, but Simpson outlines two scenarios that make up the majority of the challenges he sees: 1. Existing underground utilities that are not reflected in plans. 2. Soils that differ from what was expected from the geotechnical report. In some cases, slowdowns are unavoidable and will cause delays, but due diligence can …

October 25, 2022

Affordable Housing Content Partner Development Features Loans Midwest Northeast Southeast Texas Walker & Dunlop Western

Shortage of Tax Credits, Higher Interest Rates Plague Affordable Housing

by Sarah Daniels October 20, 2022

Forty-year-high inflation rates that are outpacing wage growth and eating away at personal income are exacerbating already outsized resident demand for affordable housing financed by the federal Low-Income Housing Tax Credit (LIHTC) program. But it seems that obstacles to supplying new units to meet that demand are only multiplying. Those range from a shortage of housing tax credits needed to fund new supply to resistance to multifamily development at the local level. Meanwhile, higher mortgage rates are making home buying more difficult and expensive. In turn, that is creating more apartment renters, thereby putting upward pressure on rental rates. In September, for example, the average monthly rent price nationwide hit $1,759, an increase of 7.8 percent from the prior year, according to Realtor.com’s monthly rental report. That’s also nearly 25 percent higher than September 2019, the organization reports. What’s more, from 2015 through 2020 — long before mortgage rates spiked — the U.S. lost 4.7 million apartment units with rents less than $1,000 per month, according to U.S. Apartment Demand Through 2035, a report by the National Multifamily Housing Council and National Apartment Association. “Demand for affordable units is only going to become more acute between now and the end of …

October 20, 2022

Features

How Tenants Can Curb Effects of Inflation in Commercial Leases

by Taylor Williams October 19, 2022

By Jason Aster, managing director, KBA Lease Services Inflation hit 9.1 percent in June, the fastest pace of escalation in more than 40 years as measured by the Consumer Price Index (CPI), and hasn’t retreated much since then. And while businesses are factoring soaring prices into many decisions, they should make sure to keep a close eye on their leases. Most leases contain additional rent provisions designed to protect landlords from inflationary increases in operating costs over time. Accordingly, increases in operating costs will generally be passed on to tenants over the course of their lease terms. However, sharing the burden of inflationary increases should be fair to both tenants and landlords. During lease negotiations, tenants should try to protect their interests by pushing back on certain expense increases via a negotiated limit on how high costs can rise in a given year. Controllable or Not? A typical lease requires tenants to pay for certain operating expenses, many of which are affected by inflation. For some of them, such as taxes, insurance and utilities, there is not much landlords can do to control these costs, which are determined by municipalities, insurance companies and utility providers. Accordingly, both landlords and tenants …

October 19, 2022

Development Features Multifamily Multifamily & Affordable Housing Feature Archive

Commercial-to-Residential Building Conversions Help Fill Housing Shortage Nationally

by Jeff Shaw October 17, 2022

NEW YORK — The COVID-19 pandemic left many offices and commercial districts vacant, as employees worked from their homes and left cities to seek housing in more suburban areas. Simultaneously, hundreds of U.S. cities have been unable to meet housing demands for both homes to buy and homes to rent. Developers are eyeing adaptive reuse projects to address both issues. Adaptive reuse means repurposing an existing structure for a new use. Commercial-to-residential conversions are a form of adaptive reuse whereby office developments, retail spaces and hotel properties are converted into multifamily communities. Office conversions are the most common form of commercial-to-residential transformation. Forty-one percent of all rental apartment conversions in 2020 and 2021 involved former office buildings. Former factories and hotels are also common structures to be converted, according to RentCafe, a Yardi Systems apartment listing and management service, which also conducts research and publishes reports on local, state and national level multifamily dynamics. In 2020, developers completed 11,800 commercial -to-residential conversions — more than double the 5,271 units completed in 2010.The number nearly doubled again in 2021, when an approximate 20,122 units were slated for completion before the end of the year. The National Apartment Association (NAA) expects nearly 53,000 …

October 17, 2022

Features Multifamily Seniors Housing

Seniors Housing Occupancy Rate Rebounds to 82.2 Percent After Fifth Consecutive Quarterly Increase

by Jeff Shaw October 13, 2022

ANNAPOLIS, MD. — The national occupancy rate for private-pay seniors housing increased 100 basis points from 81.2 percent in the second quarter of 2022 to 82.2 percent in the third quarter, according to NIC MAP Vision. Occupancy is up 430 basis points from a pandemic low of 77.9 percent in the second quarter of 2021. NIC MAP Vision is a product of the National Investment Center for Seniors Housing & Care (NIC), an Annapolis-based nonprofit firm that tracks industry data gathered from 31 primary metropolitan markets. Private-pay seniors housing comprises independent living, assisted living and memory care. The occupancy increase — the fifth consecutive quarter of increase — is due to a surge in demand, which strongly outpaced growth in inventory. Further, the total number of occupied senior housing units within the primary markets is just 2,400 units shy of its pre-pandemic, all-time high level. Demand has rebounded more strongly for assisted living than independent living, with another quarter of robust gains pushing the number of occupied assisted living units to their highest level ever in the third quarter across the primary markets. Because new inventory was added during the pandemic, the overall assisted living occupancy rate has not yet …

October 13, 2022

Aaron Hargrove Walker Dunlop Affordable Housing

Affordable Housing Content Partner Features Leasing Activity Loans Midwest Multifamily Northeast Southeast Texas Walker & Dunlop Western

Walker & Dunlop: Affordable Housing’s Appeal Grows for Investors

by Sarah Daniels October 11, 2022

With transaction volume for market-rate housing beginning to ebb, affordable housing investment is poised to play a more central role in the months ahead. Several factors have broadened the allure of affordable housing as an investment vehicle in recent years. When the pandemic began taking a toll on market-rate housing performance, investors saw federal, state and even local governments enact measures to help residents at affordable communities maintain their rent payments and help ensure housing remained available for people struggling financially. We saw the interest level in Section 8 properties, for example, increase significantly during the pandemic, due chiefly to federal guarantees backing those rent streams. From a financing perspective, the strong commitment shown by Fannie Mae, Freddie Mac and the Federal Housing Administration to preserve liquidity for affordable housing has bolstered development and investment in the space. Due to the required hold periods, affordable housing investments are less affected by market cycles, so liquidity should remain strong. Now, changing economic forces promise to drive new equity to the affordable sphere and fuel further investment. The Federal Open Market Committee’s resolve to combat record inflation is exerting upward pressure on mortgage rates and, eventually, cap rates, which could discourage sellers …

October 11, 2022

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