The population in the Greater Portland metro grew by more than 80,000 between 2016 and 2019, while the total number of all housing units permitted was 31,538, according to the Census Bureau. This ongoing housing shortage both inside and outside Portland city limits is expected to keep property values and rents growing as demand continues to outpace supply for the foreseeable future. Since 2015, there has been an increase in the vacancy rate as thousands of new apartments have been added and absorbed. Rent and other concessions that grew during 2018 have decreased in close-in Portland, East Vancouver and Oregon City. They have increased, however, in neighborhoods where new units were delivered. After experiencing flat rents two years ago, rent increases averaged 3.7 percent between April 2018 and 2019, according to the Multifamily NW Apartment Report. Portland saw an overall transaction volume increase with a total of 38 institutional transactions in 2018. Properties valued at less than $10 million experienced only a slight increase in transactions between 2017 and 2018. Oregon also became the first to adopt statewide rent control on Feb. 28, 2019. Rent increases are capped at 7 percent plus inflation annually. No-cause evictions are limited. The Portland …
The City of Los Angeles checks all the boxes for an excellent apartment owner environment. This includes a booming economy, expensive housing, meaningful job growth, and an abundance of Millennials and professionals. Los Angeles enjoys an immense and fast-growing high-tech industry, especially within the media, tech, aerospace and advanced transportation industry with the likes of Netflix, Google, SpaceX and Northrop Grumman. Los Angeles County houses the nation’s largest international trade industry, the nation’s largest manufacturing base, and an increasing amount of venture capital investment startups. A growing economy is almost always paired with escalating housing costs, and Los Angeles is no exception. More than ever, residents are driven to rental housing as homeownership is prohibitively expensive and not conducive to job mobility and flexibility. Last year was a banner year for region’s apartment sector. The average market rent in the Los Angeles MSA has seen extremely impressive growth, increasing an average of 5.3 percent annually since the turn of the century, according to Axiometrics. This remarkable trajectory has been spurred by the extremely tight rental market, with annual occupancies averaging between 94 percent and 97 percent. Such indicators allow landlords to be extremely discerning when vetting tenants, which, in turn, …
After a brief increase in the overall vacancy rate in the Pittsburgh region in 2017, the market has rebounded nicely and is back in the 4 to 5 percent range. But what has been more eye-opening is the increased velocity in the acquisition market that has investors from outside of Pittsburgh more focused on the Western Pennsylvania market than ever before. Multifamily Sales Market Multifamily sales in the Pittsburgh region over the last 10 years have been rather anemic. Sales velocity was slow due to various factors, including the reluctance of long-time local ownership groups to sell a property in a market where few options existed for a 1031 tax-deferred exchange transaction. There was also very little new construction to attract outside capital. In general, not much attention was paid to the Pittsburgh metro. However, developers recently had an epiphany and noticed that there was much old multifamily product scattered throughout the region, and that the time was right to break ground on new projects. Now that a significant amount of new construction projects have been delivered over the last six or so years, Pittsburgh has become a target for many investment firms from outside Western Pennsylvania. Some of the …
An overwhelming number of residents are moving to San Antonio rather than leaving. The metro experienced a net in-migration of nearly 21,000 households in 2016, according to Moody’s Analytics, the latest data available at the time of this writing. The metro primarily draws from Austin and Houston with a notable cohort of new residents coming from Washington, D.C. Many newcomers to San Antonio from the nation’s capital are drawn to the city’s military and defense industries. Basic Numbers Among these in-migrants to San Antonio is a large proportion of millennials. At 14.4 percent, San Antonio ranked No. 2 in terms of the fastest-growing areas for young adult growth from 2010 to 2015, according to a 2018 report from The Brookings Institution. San Antonio’s rate of millennial population growth during that period outranked that of peer and non-peer cities such as Austin, Denver, Houston, Orlando and Seattle, among others. As a result, the San Antonio market skews younger with approximately 25 percent millennials and 28 percent Gen Z. The median age in San Antonio is 34, four years lower than the national average among comparable cities. In turn, the metro’s job growth both reinforces and is fueled by this in-migration, accounting …
Demographic shifts and the subsequent demand for affordable housing are currently impacting the greater Indianapolis multifamily sector, but the most marked influence is increased and expanded investor interest. Demographic shifts in population are influencing developers and owners in their long-term decision making when it comes to the multifamily sector. Two primary factors are at play. One, the traditional renter’s segment is changing as millennials age and delay having children. Two, national population projections are showing a decline in the prime renter’s segment as Baby Boomers begin to move into seniors housing. As a result, developers and owners are beginning to plan more senior living communities. Millennials are also impacting affordable housing occupancy rates as they want to live in walkable and amenity-rich areas without the cost of high-end apartments. This is leading to more rehabbed properties. At the moment, Class C properties in the Indianapolis area are reflecting greater occupancy movements, as occupancy declines when properties become distressed and increases when they are purchased and rehabbed. Additionally, college debt is delaying graduates in purchasing traditional homes. Both of these factors are causing occupancy rate increases which, in turn, result in a shortage of affordable housing. New housing construction costs are …
As the second-largest city economy in the world, New York City continually retains its reputation as one of the most desirable locations for long-term real estate capital appreciation, both nationally and globally. In turn, increasing rent growth and decreasing vacancies have characterized the New York City multifamily market as the influx of supply in 2018 quickly gets absorbed. In the next 24 months, the city will see a dramatic reduction in the new supply of rentals, with current projections for 2019 to 2020 estimating 12,000 units to come on line. This figure represents a substantial decrease from the 20,680 units that were delivered in 2018. Of those 20,680 units, Queens and Brooklyn accounted for more than 50 percent of the new supply. Despite these deliveries, effective rent grew in 2018 by 2.9 percent in Manhattan, 2.2 percent in Brooklyn and 3 percent in Queens. Total multifamily sales volume in Manhattan for 2018 was $6.8 billion, an 83 percent increase from 2017’s total transaction volume of $3.7 billion. With 181 total transactions, properties that traded for more than $50 million made up 65 percent of the volume in 2018 across 22 trades. Similarly, sales in Brooklyn hit a record volume of …
Relative to past cycles, the multifamily market of the McAllen-Edinburg-Mission metro area has seen a record number of new deliveries of Class A product over the last four years. The metro’s population has grown significantly during the current economic expansion. According to the U.S. Census Bureau, the population of the city of McAllen alone has increased by 9.5 percent over the past decade. Combined with a relatively low cost of living throughout the region, the market’s natural growth has prompted greater demand for multifamily product while also allowing more residents to gravitate to higher-quality housing. With demand rising over the last few years and developers adding record volumes of new supply in order to meet it, 2019 purports to be a year in which developers focus more on leasing up existing projects rather than greenlighting or breaking ground on new ones. To better understand the depth of supply additions to this market between over the last four years, consider fluctuations in the vacancy rate. Vacancy Movement In 2014, just before the building boom began, the market had a vacancy rate of 5.5 percent. At the peak of the construction cycle, which occurred in mid-2017, vacancy stood close to 14.5 percent. …
If you had to sum up the El Paso multifamily market — and to some degree the entire city — in word, it would be “steady.” Though El Paso’s location ensures that impacts of political policies with Mexico can cause immediate disruption in the economy, our commercial real estate markets remain insulated from this activity. Even so, as the city’s jobs and population have grown in tandem with the national economic expansion, El Paso has not yet experienced a true building boom of Class A multifamily product. The city is seeing its renter base become more gentrified, particularly on the west side. In addition, developers in El Paso face the same rising construction costs as builders in other markets. The citywide vacancy rate, which currently stands at about 8 percent, is slowly declining while average asking rents are creeping up. These economic and demographic trends suggest the ceiling for new development of Class A multifamily product in El Paso is quite high. Absorption of new units has remained consistent during this cycle, but as things currently stand, there are only a couple hundred units under construction. Retail Influence Retail frequently follows rooftops, but in El Paso, the two seem to …
Omaha’s apartment market continues to be fundamentally strong and attractive to national and regional investors. According to Reis, Omaha’s asking rental rates have increased in every quarter over the past eight years, and vacancy remains low at 5.6 percent as of the end of 2018. Historically Omaha has had low vacancy. The 4.6 percent average vacancy rate over the past decade and 4.4 percent over the past five years is in line with the five-year national average of 4.5 percent. Looking forward, Reis expects the vacancy rate in 2019 to remain steady at 5.6 percent, and Colliers International expects the vacancy rate to dip slightly during 2019. Remaining affordable Not surprisingly, the relatively tight market, coupled with new construction, has continued to drive rents higher with asking rental rates growing at a strong 5.1 percent during 2019, according to Reis. Colliers, as well as local developers we surveyed, expect that rents will continue to grow in 2019, but at a more modest level, which we expect will be very close to Omaha’s average annual increase of 2.7 percent over the past 10 years. Importantly, Omaha also continues to have a relatively low cost of living for apartment dwellers with an …
As demand for housing increases with Austin’s growing population, all eyes are on the multifamily housing market. But with rents rising as well, pressure on the already-sparse affordable housing stock is more intense than ever. Traditionally, affordable housing has served as a resource for low-income residents, those who earn at or below 60 percent of the area median income (AMI). Providing affordable housing has become a major priority for Austin’s city council and developers during this cycle. But a growing concern involves the segment of the population caught in the middle: those who may not qualify to live in traditional affordable housing properties, but for whom market-rate apartment prices are getting uncomfortably high. The solution? Workforce housing. Rapid Residential Growth Average rent is increasing faster in Austin than in any other major metropolitan city in Texas. This activity is pushing workers out of housing they could afford in areas that are convenient for them and forcing many into long commutes from unfamiliar neighborhoods. According to industry data, in 2018, rents in Austin rose by 4.4 percent, in contrast to 3.8 percent in Fort Worth, 3.5 percent in San Antonio and 2.7 percent in Dallas. And the squeeze on lower-income residents …