Features

The Twin Cities: An Unlikely Shelter in Turbulent Multifamily Markets

by Sarah Daniels October 27, 2020

The Minneapolis metropolitan area made plenty of headlines in 2020, and much of the news wasn’t good. The social fabric was frayed, and property damage estimated at between $250 million and $500 million ensued. On the surface, the Twin Cities appear unlikely sources of stability and relative safety for multifamily investors, and yet market performance and property value trends have so far proven resilient in the face of adversity. In comparison to many of the primary markets and its regional rival, Chicago, Minneapolis has navigated the effects of the pandemic recession remarkably well and may represent an attractive option for investors who remain committed to the urban mid-rise model, as well as those considering increased exposure to suburban situations. The Minneapolis economy was by no means immune to the effects of public health-related lockdowns. Payroll employment plunged by 270,000 jobs in March and April, representing about 13.3 percent of the February metro total. Although severe, pandemic losses fell below the national average (U.S. payrolls fell 14.6 percent) and were comparable to those recorded in Chicago and Milwaukee. Since April, the Minneapolis labor market has made considerable headway. The unemployment rate dropped to 7.9 percent in August, materially lower than the …

October 27, 2020

Conference Coverage Features Student Housing

COVID-19 Crisis Brings Student Housing Industry Closer Together, Say Operators at NMHC-InterFace Event

by John Nelson October 23, 2020

Author John C. Maxwell coined the phrase “Teamwork makes the dream work,” and student housing operators are experiencing that truism firsthand as they deal with the nightmare scenario of the pandemic and its ripple effects. Closed campuses, virtual learning, COVID-19 outbreak concerns and an uncertain leasing season next spring are all challenges that property managers are tackling in real time. Ironically, industry professionals say that the pandemic may actually be a net positive in the long run as it has forged colleagues closer to one another. Demi Sterling-Kinney, vice president of operations at Aspen Heights Partners, a student housing owner and operator based in Austin, said that she met with her property managers more during the pandemic than she would in a normal year. “I feel like the shakeup was good; It was painful in the moment, but overnight it seemed like we were at war and we were all coming at it together,” said Sterling-Kinney. “It felt like everyone came together to be one team.” Sterling-Kinney’s comments were made during the Leasing & Marketing Spotlight panel at the 2020 NMHC/InterFace Student Housing Conference, a joint production between the National Multifamily Housing Council, France Media’s InterFace Conference Group and Student …

October 23, 2020

Conference Coverage Features Multifamily Student Housing

NMHC/InterFace Panel: Why an Aggressive Approach to Student Housing Development is Warranted

by Taylor Williams October 22, 2020

By Taylor Williams Student housing developers say now is a favorable time to aggressively pursue new projects as their customers voice a strong desire to resume on-campus learning, and they are using lessons learned over the past six months to bring debt and equity partners to the table in order to jump-start deals. Whereas demand drivers for new development in the traditional multifamily space typically center on job and population growth, the student housing sector often responds to different economic and social factors. In the COVID-19 era, these fundamentals are manifesting themselves in unusual ways, such as with empirical data suggesting students overwhelmingly want to return to campus. A survey of 800 college students conducted earlier this year by Axios and College Reaction found that 75 percent would prefer to return to campus, even if it meant giving up parties and sporting events. Developers also point to several positive indicators, including moves by prominent universities to reduce density on campus without compromising enrollment, the inclusion of parental co-signors on new leases and the simple fact that occupancy in the space is not linked to unemployment. With regard to concerns over diminished enrollment, developers are encouraged by the fact that some …

October 22, 2020

Industrial Nevada Webinar Western Western Feature Archive

Webinar: Las Vegas Industrial Outlook — How has the Pandemic Changed the Industrial Sector in Nevada?

by Sarah Daniels October 21, 2020

The webinar Las Vegas Industrial Outlook — How has the Pandemic Changed the Industrial Sector in Nevada? hosted by Shopping Center Business and Western Real Estate Business, covers how industrial experts are approaching investment sales, leasing and development within the Las Vegas industrial sector in the wake of COVID-19. With shutdowns, social distancing, and the explosion of e-commerce, industrial has become essential. Shopping patterns have changed, affecting manufacturing as well as warehousing and logistics. How has the coronavirus pandemic impacted industrial activity within the Las Vegas market? What do industrial leaders expect to see in the rest of 2020 and into 2021? See a list of some topics covered below: How has the pandemic impacted industrial activity? How are rents and sales prices trending within the market? Will industrial development slow in southern Nevada or remain steady? What types of tenants are looking for space? What features are they looking for? What are the hot submarkets? What trends in industrial development are you seeing in the Las Vegas market? Panelists: David E. Waters, Lathrop GPM LLP (moderator) Erin Johnston, Copaken Brooks Andy Crimmins, Crossroads Retail Group Tyler Enders, Made in KC Dan Lowe, Legacy Development David Block, Block & Company Webinar sponsors: …

October 21, 2020

Conference Coverage Features Student Housing

COVID-19 Was ‘Black Swan’ Event for Student Housing, But Outlook Is Promising, Says NMHC/InterFace Panelist

by Katie Sloan October 20, 2020

Over the course of the past six months, the student housing industry has grappled with a variety of challenges. For colleges and universities, the largest hurdle heading into the fall semester was deciding the safest route to take for reopening campus. This included decisions on everything from whether or not in-person learning would be allowed, to whether students would be welcomed back into residence halls at normal volumes. These questions was deliberated over throughout the summer, sending a ripple effect through the industry as transactional volume slowed while investors waited to see how universities would proceed. As we move toward the close of October, universities have selected their path forward, and while these choices haven’t been set in stone due to the changing nature of the coronavirus, the industry is now able to get a better view of the pandemic’s impact on the fall semester and the outlook moving forward. Leaders in market analytics and multifamily research sat down for an early afternoon panel yesterday at the NMHC/InterFace Student Housing Conference to provide a comprehensive update on the economy at large with a focus on the student housing sector. Economic Update “COVID-19 ended almost an 11-year expansion period for the …

October 20, 2020

District of Columbia Features Southeast

ULI Panelists Address Social Inequity, Urban Exodus in Emerging Trends Session

by John Nelson October 15, 2020

The U.S. commercial real estate industry is currently balancing a host of market disruptors, and the good news is that those forces are no longer shrouded in mystery like they were at the onset of the COVID-19 pandemic. Speaking at the annual ULI Fall Meeting, real estate professionals outlined social inequity in the industry, teleworking, and the population and investment exodus from gateway markets as the main issues that the industry will face in 2021. The Urban Land Institute (ULI) hosted the discussion at its annual meeting Oct. 14 to a broad spectrum of the commercial real estate industry. Originally scheduled to take place in San Francisco, ULI made the decision to host the event virtually, symbolizing the change that the Washington, D.C.-based organization tackled in greater detail during the panel and in the 111-page Emerging Trends in Real Estate 2021 report. The annual conference concluded Oct. 15. The theme for Emerging Trends 2021, a joint production between ULI and PricewaterhouseCoopers (PwC), is “Dealing with Certain Uncertainties,” with the caveat that an advancement in treatment or vaccine for COVID-19 would be the top economic influencer for the new year. Factors to watch in 2021 Social unrest in the wake of …

October 15, 2020

Content Partner Heartland Feature Archive Illinois Lument Midwest Multifamily RED Capital Group

Investors Seek Safe Harbor in Chicago’s Apartment Market

by Sarah Daniels October 14, 2020

Multifamily investors prefer to concentrate capital in the primary markets. Although prices are steep and cap rates low, the gateway cities offer private equity and institutional buyers the young, affluent tenants, economic diversification, deep trough of performance data and property market liquidity that can’t be found in smaller cities. Gateway cities offer these assets…until they don’t. The pandemic recession has turned the usual way of looking at things upside down. At least for the moment, tenants are fleeing the high costs and perceived dangers of dense urban living for the relative safety and larger floor plans found in suburbs and, in some cases, secondary and tertiary markets. The impact on property performance is significant. In the modern urban mid- and high-rise buildings favored by large portfolio investors, occupancy and rents are down materially, trimming forward-looking net operating income 15 percent or more in many Los Angeles, New York and San Francisco buildings. Determining fair asset value is nearly impossible under the circumstances. Buyers still may be willing to bid at prices generating deeply sub-4 percent initial yields but only against conservatively underwritten NOI levels that discount an extended period of performance weakness. Few owners are willing to realize the resulting …

October 14, 2020

Conference Coverage Features North Carolina Office South Carolina Southeast

Economy is Bouncing Back Ahead of Schedule, Says Wells Fargo Economist at InterFace Event

by John Nelson October 12, 2020

Just a few months after getting hammered by a pandemic-induced recession, the U.S. economy is rebounding faster than anticipated, according to Mark Vitner, managing director and senior economist with Well Fargo Securities. During his keynote address to kick off the 11th annual InterFace Carolinas conference on Oct. 1, Vitner said the consensus estimate suggests U.S. real gross domestic product (GDP) increased at annualized rate of 30 percent in the third quarter. The Bureau of Economic Analysis will officially unveil its first estimate for third-quarter GDP on Thursday, Oct. 29. If realized, the gain would nearly offset the 31.4 percent decline in GDP in the second quarter. “This recession is the worst we’ve ever seen in terms of job loss and declines in GDP, but it was the shortest we’ve ever seen,” said Vitner. “All the decline we saw was in the second half of March and the first half of April. Since April 15 we’ve been recovering.” Employers added 661,000 jobs to the U.S. economy in September, which was nearly 200,000 jobs below the expectations of economists surveyed by The Wall Street Journal. Still, the economy has recovered 11.4 million of the 22 million jobs lost since the beginning of …

October 12, 2020

Conference Coverage Features North Carolina South Carolina Southeast Southeast Feature Archive

Lending Environment Still Rocky Due to Pandemic, Say Panelists at InterFace Carolinas

by Alex Tostado October 8, 2020

The lending environment for commercial real estate has started to bounce back in recent months, but there is still hesitation to close deals across most property sectors. There are some attractive opportunities for lenders in today’s climate, such as multifamily and grocery-anchored retail. That was the sentiment expressed during the virtual InterFace Carolinas panel, titled “Capital Markets Update: When and What will Unfreeze the Lending and Financing Environment?” France Media Inc.’s InterFace Conference Group and Southeast Real Estate Business hosted the event Thursday, Oct. 1. Before the coronavirus pandemic caused a nationwide shutdown, the lending environment was the most competitive it had been in recent memory, according to Aaron Derby, managing director at Benefit Street Partners. “The world went from a competitive market to a shutdown overnight,” said Derby. “Capital markets are very temperamental.” Joining Derby on the panel was Hugh Allen, senior vice president and commercial real estate regional director for TD Bank; Steve Clikas, vice president of investments at Protective Life Insurance Co.; Preslava Kovatchevska, director multifamily production and sales at Freddie Mac; and panel moderator Matthew Rocco, president and national production manager for Grandbridge. CMBS market rebounding Derby says that while his firm continued lending in April …

October 8, 2020

California Content Partner Features Lument Multifamily RED Capital Group Western Western Feature Archive

Rents Weaken, Investors Stay Active in San Diego Multifamily Market

by Sarah Daniels October 5, 2020

By Daniel J. Hogan The economic impact of the COVID-19 pandemic has been felt more severely in Southern California than in most areas of the country. The Southland’s high concentration of employment in the tourism and entertainment sectors made it especially vulnerable to the effects of social distancing protocols and the reluctance of many to board commercial aircraft. Not only were job losses particularly acute in the initial months of the pandemic — the subsequent recovery has been lethargic. The rate of unemployment for July in each of the four large Southern California metropolitan markets remained materially above the national average, and in the case of Los Angeles County (18.2 percent) was the highest of any metropolitan area west of the Hudson River save for Yuma and El Centro. As it always has, Southern California will recover and is likely to do so in even more spectacular fashion than before. In the interim, how can multifamily investors position themselves to prosper? San Diego is the ideal market to scrutinize possible changes in renter behavior during the pandemic and consider their potential investment implications. Indeed, a deep dive into this market may provide clues to some of the great mysteries of …

October 5, 2020

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