Over the last few years, tight conditions in Pittsburgh’s multifamily market have allowed operators to aggressively push rents among all class levels. This year, a surge in multifamily completions will put elevated pressure on vacancies, but more jobs and new households will keep across the board operations in positive motion, supporting another year of rent growth. Developers are expected to build more than 1,600 multifamily units in 2014, the largest expansion of supply in over ten years. Most new multifamily projects in Pittsburgh are located north and south of the central business district where construction costs are lower. For example, in Cranberry Township in the north many units are strategically situated around the newly announced $72 million UPMC Lemieux Sports Complex. In southern Pittsburgh, added drilling activity in the Marcellus Shale and energy-related company expansions encouraged demand for rentals, spurring construction of several multifamily and residential communities. A minor overstock of brand-new rentals and single-family homes will move vacancy up somewhat in select submarkets, slowing down the previous year’s persevering rent growth. An improving economy in Pittsburgh and further rent gains will sustain strong buyer demand throughout 2014. Employers will add 24,600 jobs in 2014 to expand employment in Pittsburgh …
Multifamily
New multifamily development in Seattle was robust through 2013. That trend is continuing into this year, as demand remains strong and interest rates stay favorable. Healthy job growth, specifically those with higher wages, has particularly benefitted the Seattle market, leading to declining vacancies and increased rental rates. Vacancy rates continue to remain low at just 3.9 percent, compared to the five-year average of 5.2 percent, according to CoStar. Decreasing vacancy, combined with newer product, has pushed rental rates higher. The current average rent for a one-bedroom unit in the Seattle area is $1,078, up $93 compared to the five-year average. In addition to higher rents, concessions are currently at 1.5 percent, compared to the five-year average of 3.2 percent. Absorption remains strong and is keeping pace with new construction. So far, 3,300 units have been absorbed year-to-date. New construction in 2013 and 2014 has been at one of its highest levels ever. This development is largely concentrated in the Seattle urban core. Job growth remains strong, which has kept this additional supply in check with new demand. A total of 6,171 new apartment units were added over the prior 12-month period. As further evidence of a strengthening market, even condo …
Though Atlanta has had a reputation as a boom-or-bust town for many years, it has struggled to maintain a thriving multifamily development business. However, an in-depth look at the current local trends shows a strengthening multifamily market, and with it, an evolution of many lower-cost neighborhoods into desirable development and residential sites. Now, the city is poised for a more sustainable future as demand for apartment housing inside the Perimeter continues to increase. Classic institutional developers are seeking to use this increasing demand as a platform to boost Atlanta to a new strata in line with New York, Boston and other metropolises such as Houston and Dallas. With no significant barriers to entry, active merchant buyers are taking advantage of Atlanta’s large developable land supply to support new high-density multifamily developments. Developers are working to stabilize the supply in response to the overwhelming demand; three- to five-year waves of building and development will help grow the market steadily. Amid the current five to 10 percent growth rate, some in-town projects are predicted to trade at higher levels than ever before. For example, 77 12th Street is widely expected to trade for more than $300,000 per unit — a robust figure …
Birmingham was recently ranked among the “Top 10 Emerging Downtowns in the Country” by Livability.com, and the city has also become an attractive place for national investors. The Birmingham apartment market has shown stable occupancy of 93 percent and experienced gains in effective rents, despite 540 units being delivered in 2013. Construction of new communities is ramping up as projects delivered in 2012 and 2013 such as The Hill, Tapestry Park, Village at Lakeshore Crossing and Ashby at Ross Bridge were absorbed at record-setting rental rates. Additionally, new buyers are flocking to the Birmingham multifamily market. Improving Fundamentals Rental rates among Birmingham properties are showing encouraging signs of growth. Between mid-year 2012 and mid-year 2013, 61 percent of Birmingham-area properties experienced average effective rent increases, and 53 percent experienced quoted rent increases. This growth is reinforced by nearly universal drops in concession usage. Only one of the eight Birmingham submarkets (East submarket) experienced increased concession usage, and only the West submarket experienced no change. Overall, the Birmingham area experienced an 11.3 percent drop in the number of properties offering concessions. Between mid-year 2012 and mid-year 2013, six of eight submarkets in the Birmingham MSA experienced overall effective rent growth. Of …
The Las Vegas multifamily market is back with a vengeance. The market went into a meltdown in 2009 while the financial crisis was in full swing, delivering the biggest blow to the local economy in Vegas’ history. What had been low unemployment and a development boom to rival all past development cycles quickly turned into a downward spiral. Construction came to a standstill and workers fled the city in search of work elsewhere. Apartment fundamentals dropped to record lows. Asking rents dropped 19.25 percent between 2009 and the second quarter of 2012, while concessions stood at 8.5 percent. Even with all this in play, the Las Vegas market is known for reinventing itself. The market recovery was in full swing last year. Stalled projects were restarted with a whole new set of players, and employment was picking up speed. An exodus from California to Nevada is currently underway, with Penske Truck Rental citing Las Vegas as one of its top 10 places where new residents are moving. Unfortunately, unemployment is still above the national average, but that is changing fast. Fundamentals are improving with concession shrinking to 5.25 percent compared to a high of 8.5 percent in 2009. Asking rents …
Optimism abounds in the Twin Cities apartment market, and for good reason. It’s a top performer in the Midwest, and ranks high in the nation overall. The key indicators are compelling: low vacancies with rental rates rising; steady apartment sales; robust new development, especially in core urban and first-tier markets; and flowing pipelines. Among 52 metropolitan areas showing the most economic momentum heading into 2014, Minneapolis/St. Paul ranked No. 14, according to the Praxis Strategy Group. Criteria included GDP growth, job growth, real median household income growth and current unemployment. Property owners, buyers, developers and funding sources are all benefiting from a strengthening apartment market, a trend that began in 2009. Although statistics vary by source, there is consensus on future apartment trends in the seven-county metro area. For apartment owners, a tight rental market means growing revenues, a far cry from the glut of vacant units that existed a few years ago. Last year, vacancy rates averaged 2.8 percent, compared to 7.9 percent in 2009, according to real estate research firm Reis. A boon for landlords, rising rents are forcing many lower-income renters out of the cities into the suburbs. Statistics show the average rent in the Twin Cities …
Baltimore, long known as a city that wore its grit as a badge of honor, is now shining with high-end multifamily developments and new in-town retail destinations. This city of neighborhoods has hit Forbes’ “hipster” list thanks to a vibrant arts scene, established and trendy restaurants, vital retail destinations and world-class attractions and events. These quality amenities make it possible for residents to work, shop, play and stay in the city, appealing to a growing young professional population. Baltimore’s strong economic base of higher education and health, coupled with the unwavering trend for convenient, quality city living, is driving a strong multifamily market. Delta Associates reports that the Baltimore area economy is experiencing above average growth. Despite losses in the state and local government sector, the unemployment rate remained steady at 6.9 percent in October 2013 compared to the national rate at 7.3 percent in the same period. The region is poised to experience long-term growth as a result of growth in sectors based in the Baltimore area, namely cyber-security, education and health. From December 2012 to December 2013, Delta notes that Baltimore’s Class A rents increased an average of 6 percent and stabilized occupancy is at 95 percent. Baltimore …
The Las Vegas multifamily market is back with a vengeance. The market went into a meltdown in 2009 while the financial crisis was in full swing, delivering the biggest blow to the local economy in Vegas’ history. What had been low unemployment and a development boom to rival all past development cycles quickly turned into a downward spiral. Construction came to a standstill and workers fled the city in search of work elsewhere. Apartment fundamentals dropped to record lows. Asking rents dropped 19.25 percent between 2009 and the second quarter of 2012, while concessions stood at 8.5 percent. Even with all this in play, the Las Vegas market is known for reinventing itself. The market recovery was in full swing last year. Stalled projects were restarted with a whole new set of players, and employment was picking up speed. An exodus from California to Nevada is currently underway, with Penske Truck Rental citing Las Vegas as one of its top 10 places where new residents are moving. Unfortunately, unemployment is still above the national average, but that is changing fast. Fundamentals are improving with concession shrinking to 5.25 percent compared to a high of 8.5 percent in 2009. Asking rents …
More than 9.5 million people live in the Chicago area, making it the third most populous metropolitan statistical area (MSA) in the country. Like many other markets in the Midwest and Northeast, the ongoing population shift from north to south in the United States continues to pose a challenge. Consequently, population growth during the next five years in Chicago is projected to lag behind the national average. The good news is that Chicago employers are expected to generate the largest job growth locally in 15 years in 2014. Indeed, Marcus & Millichap forecasts a net gain of 79,900 jobs this year, a 1.8 percent annual increase. If realized, this would top 2013’s 1.7 percent expansion. The increased job creation is expected to attract new residents to the region, boosting population. During the past decade, the western suburbs have recorded the largest population gains, especially in Aurora, Naperville and Joliet. Renewed urbanism is playing a major role in growth within the city of Chicago, as young professionals and empty nesters return to the urban core. An influx of young workers and an exodus of retirees have lowered the median age in the metro to 36.1 years, which is below the national …
At the end of 2013, the Federal Reserve Bank of Philadelphia reported that year-to-date building permits rose by 17 percent in Pennsylvania, 36 percent in New Jersey, and 21 percent in Delaware as compared to the same 11 month period in 2012. Much of that increase was due to multifamily development. While not yet back to pre-recession levels, multifamily permitting has steadily increased since the third quarter of 2010 in the Philadelphia metro area. As of August, there were a total of 3,485 units approved for the previous 12 months, high enough to rank 25th in the nation for multifamily permit authorizations. In 2013, there were 1,183 multifamily units delivered in eight new development projects. Currently, there are nearly 4,800 units in 27 separate projects in various stages of construction and some 70 projects in the planning stages for a total of 12,740 additional units in the pipeline. Then there are proposed new developments that have been announced, but are not yet in the permitting process. These represent an additional 3,280 potential units scattered throughout the tri-state area in 15 projects. It is unlikely that all of these proposed projects will be constructed, but it is indicative of the optimism …