Multifamily

St. Louis Apartment Builders Play Catch-Up

by Christina Cannon January 21, 2016

Strong renter demand in the metro St. Louis apartment market helped boost annual effective rent growth by 3.6 percent in 2015, 200 basis points above the market’s long-term average, according to Axiometrics. An estimated 1,012 apartment units were delivered to the St. Louis market for all of 2015 compared with 2,378 units of absorption during the same period, reports Axiometrics. But with numerous projects in the pipeline, that ratio is likely to change over the next few years, say real estate experts. “We expect supply levels to increase in 2017 and for absorption to begin to struggle to keep up due to slowing job growth,” says Sophie Zatterstrom Gore, analyst with Axiometrics. But 2016 is a different story, she points out. Robust job growth will help absorption outpace new supply by about 600 units in 2016: 1,587 units of absorption versus 990 units of new supply. Such strong demand is giving a strong lift to real estate fundamentals in the local apartment sector. The average effective rent in the third quarter of 2015 was $914, which Axiometrics projects will rise to $948 by the end of 2016. The average vacancy rate is projected to fall from 6.3 percent at the …

January 21, 2016

JV Acquires InvenTrust’s University House Student Housing Platform for $1.4B

by Nellie Day January 4, 2016

OAK BROOK, ILL. — UHC Acquisition Sub LLC has agreed to purchase University House Communities Group Inc., InvenTrust Properties Corp.’s student housing platform, for $1.4 billion. UHC is a subsidiary of a joint venture between Canada Pension Plan Investment Board, GIC and Scion Communities Investors LLC. InvenTrust created University House Communities in 2007 as a development, acquisition and management firm that focuses on student housing communities in university markets across the United States. The Dallas-based firm has communities in 15 states, including Florida, Oregon, Louisiana, Oklahoma, Alabama, California and Arizona. The company decided to divest the asset after refocusing its core retail business. The Oak Brook, Ill.-based company owns 128 multi-tenant retail properties in 24 states, as of Sept. 30, 2015. Its retail portfolio contains a total of 19 million square feet. “The sale of University House marks the culmination of our portfolio evolution strategy to focus our energies and investment capital into our multi-tenant retail platform,” says Thomas McGuinness, InvenTrust’s CEO and president. “While University House has been a valuable component of InvenTrust’s portfolio, we are very excited about this transaction, which represents the conclusion of a robust evaluation process to maximize the value we receive for the platform.” …

January 4, 2016

Market Reports Massachusetts Multifamily Northeast Northeast Market Reports

Despite Naysaying, Boston Remains Attractive to Millennials and Developers

by Jaime Lackey December 30, 2015

Despite the clichés and naysayers, Boston’s apartment fundamentals continue to trend at the top of U.S. cities’ forecasts. For developers, investors and borrowers, Boston truly is that city on a hill. Clichés heard often in the commercial real estate community: Interest rates have no place to go but up. Who is going to pay $4.50-per-square-foot rents? Wait until the next wave of units is delivered. Valuation and yield don’t make sense. The facts: Economists have been predicting interest rate increases for the past five years. Market vacancy has been sub-5 percent for more than five years. Every major apartment player owns or is currently building in Boston, averaging $1.2 billion in product for past three years. Boston is a premier gateway city and buyers want in. The Investor Outlook Simplified When cap rates for the most desired real estate class — in a gateway city, in the safest country for investment in the world — average 4.25 percent, it’s a great time to invest. The 2006 cap rates were just 100 basis points above the 10-year risk-free rate. Today they are 2.0 to 2.25 percent. Half of the deals are cash transactions. Locals can only shake their heads at the …

December 30, 2015

Kentucky Market Reports Multifamily Southeast Southeast Market Reports

Louisville Multifamily Rents, Occupancy Maintain Forward Momentum

by John Nelson December 21, 2015

The Louisville multifamily market has consistently demonstrated strong, favorable market fundamentals, which has drawn significant interest in this growing riverfront city. Since 2010, the market has seen 19.8 percent rent growth and continually posted occupancy gains. This momentum resulted in a record amount of multifamily transactions in 2014 and continues to fuel investor demand today. This momentum in the multifamily sector is happening not only in Louisville, but across the U.S., according to CBRE Research. Overall demand for rental housing continues to be driven by demographic-led household formation and a deepening preference for rental vs. owner tenure. Supply continues to grow briskly and rent and revenue growth are accelerating. Additionally, a recent CBRE multifamily study found that the national homeownership rate is 63.4 percent — its lowest level since 1967. The report also discovered that the national rent growth has reached its strongest year-over-year gain in nine years. And we don’t expect this trend to level off anytime soon. During the first half of 2015, the Louisville market demonstrated strong fundamentals with increasing rents and occupancy. Between 2014 and 2015, the annual market-wide rent growth was 3.4 percent, bringing the average rent to $786, or $0.86 per square foot. The …

December 21, 2015

Market Reports Multifamily Texas Texas Market Reports

Dallas: A Market with Multifamily Staying Power

by Haisten Willis December 18, 2015

Right now, the Dallas-Fort Worth metropolitan statistical area is one of the hottest multifamily markets in the country with an eye-opening 34,000-plus units currently under construction. Long-term trends suggest that even if construction slows somewhat, demand for north Texas apartments will outstrip supply for the foreseeable future. The reason is straightforward. Dallas has much going for it that employers find extremely appealing, including a central location equidistant from both coasts, an educated workforce, a diverse economy and a favorable business climate. These underlying advantages are simply not going to change. In the last three years, a number of companies, including Toyota North America and Nationstar Mortgage, have relocated their headquarters to Dallas-Fort Worth, while others, like Southwest Airlines and AT&T, have added thousands of positions to their headquarters. Most recently, American Airlines announced plans to create a corporate campus west of its current location near Dallas/Fort Worth International Airport. Dallas-Fort Worth has also become a popular site for regional corporate centers. State Farm is constructing a 2 million-square-foot campus on Dallas’s main north-south light rail line in suburban Richardson. When it is completed in 2016, the company will have more than 5,000 employees in north Texas. Liberty Mutual announced this …

December 18, 2015

Market Reports Multifamily Southeast Southeast Market Reports Virginia

Richmond’s Multifamily Market Couldn’t Look More Attractive to Investors

by John Nelson November 23, 2015

The Richmond metropolitan area, with a population of 1.3 million, is bursting with multifamily development. The growing MSA contains more than 72,000 apartments units (45 percent Class A) and has 2,018 units under construction with another 5,826 in various stages of pre-development. On top of all this activity, the overall market occupancy remains at 96 percent. The fuel for these conditions comes from the many amenities in the market, from the University of Richmond and a robust sports scene to the proximity to Atlanta, the Atlantic coast and Washington, D.C., as well as the encouraging employment picture. The city’s unemployment stands at 5 percent compared to the U.S. average of 6.3 percent; since 2000 the city’s population has grown by nearly 15 percent. These conditions allow property owners to leverage this diverse and sustainable market for multifamily investments. Richmond development also benefits from the attractive interest rates, which remain low despite having climbed 80 basis points since late January. Along with monitoring this upward trend, news earlier this month from the Federal Reserve of a rate hike will serve as a caution sign for investors. Whether we see this hike in the next couple of months, or not until 2016, …

November 23, 2015

Market Reports Multifamily Office Texas Texas Market Reports

San Antonio Wins the Race with Consistency, Diversified Economy

by Haisten Willis November 20, 2015

The story of the tortoise and the hare can be used to describe the major metros throughout Texas. In recent years, Austin has sprung to life while San Antonio has developed slow and steady. Most recently, however, it appears San Antonio’s office market has received a jolt — the second quarter of 2015 saw three to four times more activity than historic averages indicate — and San Antonio now boasts its lowest vacancy rate since 2008. With a 3.4 percent unemployment rate, San Antonio ranks third on the list of major metropolitan cities across the country with the lowest unemployment rates, trailing only Austin at 3 percent and Salt Lake City at 3.1 percent. These numbers are indicative of a much larger picture of San Antonio. Uniquely positioned to capture the spillover of tech companies and supporting businesses from Austin, its neighbor, San Antonio’s low rental rates for both Class A and B office space along with stable infrastructure make it a viable, attractive alternative for many major businesses looking to expand. But where in San Antonio is all this activity erupting? San Antonio’s newest residents are interested in one area, and you need look no further than the central …

November 20, 2015

Market Reports Multifamily Northeast Northeast Market Reports Pennsylvania

Philadelphia’s Apartment Market Remains Bright

by Jaime Lackey November 18, 2015

Philadelphia’s apartment market remains bright as increasing employment fosters stable economic growth, which in turn is bolstering apartment operations. Employers in the metro, which is known as the center of economic activity in Pennsylvania, will increase hiring 1.2 percent this year, adding 35,000 jobs. In 2014, new jobs increased 1.6 percent and the unemployment rate decreased 130 basis points. Total employment is on the upswing, recovering nearly all of the jobs lost during the recession. The favorable employment conditions are supporting demand for apartments and swiftly improving performance throughout the metro, prompting developers to start new multifamily projects. Builders in Philadelphia are focusing their attention in Center City, which includes the central business district and central neighborhoods of Philadelphia, where nearly 25 percent of this year’s deliveries will be placed into service. Developers are on track to complete 3,600 units in 2015, increasing total apartment inventory 1.4 percent. Last year 2,400 rentals were delivered. Part of the reason that demand is especially strong in Philadelphia can be attributed to the increasing popularity of living in the urban core among young professionals and baby boomers. The lack of developable in-fill locations in the area is prompting developers to convert office buildings …

November 18, 2015

Market Reports Western Market Reports

Sound Market Fundamentals: The Source of Seattle’s Multifamily Strength

by Nellie Day November 17, 2015

The underlying forces bolstering the strength of the Seattle metro multifamily marketplace are robust job growth, new development projects and the short supply of single-family houses. While these factors also slightly impact vacancy levels, property prices and sales activity are expected to continue to rise. New and expanding companies, particularly in the tech sector, have sustained job growth in the Seattle-Tacoma region over the past five years. They have put more than 115,000 people to work since the pre-recession peak. This influx of workers, strong housing demand and a number of new development projects contributed to the construction sector posting the region’s strongest 12-month job gain of 14,600 new jobs. Company expansions are anticipated to generate an additional 65,000 jobs this year alone. Construction of both single-family and multifamily housing projects is expected to continue at an accelerated pace over the next several years. Limited inventory and affordability issues associated with single-family houses are preventing many people from transitioning to homeownership, thus fostering intense demand for apartment rentals. Roughly 12,000 rentals are expected to come online this year – with about 2,600 apartments delivered in the second quarter of 2015 alone. This represents the second-largest quarterly gain in more than …

November 17, 2015

Market Reports Multifamily Southeast Southeast Market Reports Virginia

Apartment Supply in Richmond’S CBD Attracts Young, Economically Powerful Residents

by John Nelson November 16, 2015

Richmond has become a multifamily safe haven with unemployment rates below the national average and the second-best annual rental returns in the nation at 20.42 percent. Richmond’s high annual returns are due in large part to its population. The city has become a mecca for young adults as 32.2 percent of the population is in its 20s and 30s — well above the national average of 22 percent. This population’s drive for an urban, walkable lifestyle is generating a great deal of development in the CBD, as well as the Manchester submarket where Virginia Commonwealth University’s (VCU) Institute for Contemporary Art is located. VCU’s art institute is the No. 1 art and design school in the country, and continues to draw in Millennials looking to take advantage of the open and historic downtown district surrounding the James River. Richmond’s flourishing, younger population is demanding adaptive re-use and new development and developers in Richmond are answering the call. Areas such as Scott’s Addition, Shockoe Bottom and Manchester have all seen new mid and high-rise developments in recent months that are attracting a plethora of new tenants. Highlights of Richmond’s apartment market include: • 1,000 units are currently under construction with an …

November 16, 2015

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