New York’s Capital District is ranked 11 out of the top 25 metro markets in the Northeast (according to REIS), but the area is most certainly making noise in the world of multifamily construction projects. A huge demand in the apartment sector, stemming from technology-based job growth, has forced the hands of local and regional developers to get off the sidelines and start tackling sources for much-needed construction financing to meet the demand. To name of few active developers, Tri City Management, Prime Companies, Capital City Properties, and Albany Partners LLC have a total of more than 1,000 units recently built, under construction, or funded and ready to build in the next 16 months. Permit filings were up more than 30 percent from 2009 to 2010, indicating a solid trend for new development slated through 2012. Major projects have been popping up all over the region. The Woods, a 60-unit luxury community in suburban Troy, leased up its first few units in May and had 48 of the 60 units rented long before the grand opening in November. One- and two-bedroom unit rents range from $1,100 to $1,490 for 882 to 1194 square feet, averaging roughly $1.50 per square foot …
Multifamily
Strong job growth characterized the Puget Sound economy throughout 2011, with the region closing the year with a 1.7 percent gain that equated to the addition of more than 28,000 positions. Home to Fortune 100 companies Costco, Microsoft, and Amazon.com, as well as large-scale operations of The Boeing Company, Seattle’s economic prospects are assured. The region will remain a leading employment generator over the next several years, with job growth trending up to 2.6 percent in 2012 and to more than 3 percent in 2013 as the metro area realizes the addition of 50,000 new jobs on average each year. For its part, Boeing now employs more than 81,000 Washington residents, having added nearly 8,000 local jobs in 2011 alone. The Seattle multifamily market deal activity has been good this year, and the market should expect to close more than $800 million in transitions. Current cap rates in the market are in the low 4 percent range and up to $500 per unit in core locations with secondary markets averaging 5.5 percent to 6 percent capitalization rates. One great thing about Seattle is that it has always skewed toward rental housing. In the three-county area alone, the population is 3.4 …
During the last 12 months, the Raleigh/Durham apartment market has continued to maintain a lofty appeal in the eyes of local, regional and institutional investors. The fundamentals of the region, including its growth projections, the diversity of employment and the driving force that is created by three major research universities, has continued to offer good reasons for investors to inject capital into the Raleigh/Durham apartment market. After a slow start in 2010, many developers have set their eyes on taking advantage of the reduced development pipeline that was a casualty of the recession. The institutions as well as local and regional developers with strong balance sheets were those that were in the best position to take advantage of being the first to break ground. After just a few developments started in 2010, the number of new construction starts and new developments in the planning stages during 2011 has exponentially increased. However, number of new apartment units added to the market in 2011 will be the lowest in recent memory. Part of the reason for this increase in development activity is that the investment sales market has been so strong in the Raleigh/Durham marketplace, arguably as strong or stronger than any …
The Boston apartment market is on fire. As a result there is a vast amount of equity, developer interest, and investor interest focused on the Greater Boston Market. What does this mean for the future of the Greater Boston Apartment market? First a matter of definition, the metro Boston market encompasses all towns within Interstate 495 (Boston’s second beltway) and inwards and, therefore, does not include Central and Western Massachusetts, New Hampshire nor Rhode Island. The overall vacancy was 4.2 percent in second quarter 2011 (REIS: Metro Boston submarket). Class A property has seen the greatest rent growth, 1.5 percent in Q2 2011, alone. However, Class B property has maintained a lower vacancy at 4.5 percent during Q2 2011, dropping from 5.9 percent. The city of Boston has exhibited the most rental growth of any submarket of all the Greater Boston submarkets. In the city, rent is up 6.5 percent over the first half of 2011 with rents exceeding $4 per square foot and an average rent of $4,400 per unit based on a recent ARA Class A Survey. These rents are attracting developers and capital. The most recent development start is the 187-unit Avalon Exeter Apartments at the Prudential …
Proving its historic resilience once again, a hale and hearty multifamily investment market continues to outpace other commercial real estate sectors in the wake of the latest economic dip. Thanks to an ailing housing market that doesn’t seem to have a tangible cure in the foreseeable future, the “new normal” in residential living is apartment rentals. Strong leasing fundamentals; 1950s-era, bank-friendly interest rates; and the lack of other risk-averse investment options have contributed toward a dramatic increase in sales velocity along the highly sought-after South/Central/Northern New Jersey corridor. Demand is unrelenting. Just 18 to 24 months ago, many investors were sitting on the sidelines waiting for multifamily properties to follow in the footsteps of other hard-hit commercial real estate assets, including office, non- grocery-anchored retail and industrial, where vacancies skyrocketed and lending came to a virtual standstill. These fears had little-to-no impact on multifamily properties, which possess certain inherent “recession-proof” characteristics. Rental living provides a viable, affordable alternative to people who are concerned about their long-term employment outlook, cannot qualify for a single-family residential home loan or are displaced due to rising foreclosures or natural disaster, such as flooding in the aftermath of Hurricane Irene. As the economic recovery continues …
Redevelopment initiatives in Cleveland’s urban core will attract rental households to the area, while healthy job growth and a lackluster single-family housing market will uphold modest demand in the suburbs. Among ongoing projects in the urban core, the $2 billion redevelopment of University Circle, which includes the expansion of the VA Medical Center, Cleveland Clinic and University Hospitals, has created more than 4,000 jobs since construction started in 2005. The renovations are expected to be complete by 2015 and will support over 36,000 jobs in the area. Surrounding neighborhoods such as Beachwood, Shaker Heights and Cleveland Heights will benefit most as roughly 30 percent of the employees live in these areas. Many of these young professionals occupy apartments and will delay purchasing single-family homes, a trend that will sustain demand throughout the metro area. As a result, most submarkets will post vacancy decreases this year, providing many owners with enough leverage to ease concessions and lift rents. Construction pipeline Development slowed significantly during the last year, as only one apartment complex came on line. The 38-unit University Lofts was delivered in the Cleveland Heights/Shaker Heights area in the first half of 2011. The first phase of the Uptown project will …
During the third quarter of this year, the Memphis multifamily market slowed down compared to the second quarter. Rent and construction were up, however, occupancy and sales fell during the third quarter. “We’re seeing continued improvement in our market,” says Tommy Bronson, III, vice president of the multi-housing group in CB Richard Ellis’ Memphis office. “Due to record low construction levels, we’re seeing positive rent growth, occupancy and concessions burning off.” The overall occupancy in the third quarter of 2011 was 91.6 percent, compared to 92.1 percent in the second quarter. The strongest submarkets are Germantown/Collierville, Downtown and Cordova, which all average in the low- to mid-90s for occupancy, Bronson says. “In those locations, we are often seeing no concessions now, which is a big deal in the Memphis market because we’ve been a concessionary market during the last few years,” he says. Bronson adds that Class A and B properties are pushing rents because concessions are burning off. Rents for new construction rose from $939 per unit in the second quarter of this year to $960 per unit in the third quarter of this year, an increase of 1.8 percent. Overall rents also increased slightly, from $733 in the …
Nashville’s economic growth has remained positive throughout 2011, strengthening Nashville’s position as one of the more resilient and dynamic metropolitan areas in the southern U.S. Through August of 2011, the metro has recovered more than half of the jobs lost during the recession, having added nearly 22,000 jobs since the beginning of 2010. Currently the unemployment rate in Nashville is hovering around 8.4 percent, compared with 9.1 percent at the national level. The area has become a prime relocation destination for major corporations, bringing well-paying jobs to the area. In 2009, Nissan relocated its headquarters from Los Angeles to Cool Springs, and now employs more than 1,300 people. Amazon recently announced two new major facilities that will bring more than 1,500 jobs to the area. GM plans on restarting assembly at its Spring Hill plant, creating 1,700 jobs as part of the new labor deal. The area has become more than just the country music capital. It is now a hub for higher education and healthcare, as the three largest employers are Vanderbilt, HCA and St. Thomas Health Services. Like many markets across the U.S., the Nashville multifamily market has now rebounded beyond pre-recession levels in terms of both occupancy …
During the second quarter of this year, the Memphis multifamily market showed signs of growth. Occupancy, rent, absorption and sales were all up from the first quarter of this year. Construction remains relatively flat; however, after three consecutive quarters of no new units coming on line, 114 units were delivered in the second quarter. “We’re seeing continued improvement in our market,” says Tommy Bronson, III, vice president of the multi-housing group in CB Richard Ellis’ Memphis office. “Due to record low construction levels, we’re seeing positive rent growth, occupancy and concessions burning off.” The overall occupancy in the second quarter was 92.1 percent, compared to 91.6 percent in the first quarter of 2011. The strongest submarkets are Germantown/Collierville, Downtown and Cordova, which all average in the low- to mid-90s for occupancy, Bronson says. “In those locations, we are often seeing no concessions now, which is a big deal in the Memphis market because we’ve been a concessionary market during the last few years,” he says. Bronson adds that Class A and B properties are pushing rents because concessions are burning off. Rents for Class A and B properties rose from $803 per unit in the first quarter of this year …
The U.S. apartment sector staged a strong recovery in 2010 well ahead of expectations, despite modest job creation and stubbornly high unemployment. Net absorption surged, with occupied stock rising by nearly 200,000 units, double the number of apartments constructed and the highest level on record since 2000. Several factors contributed to high levels of absorption, including the release of pent-up renter demand as households de-bundled in the wake of the recession. In addition, apartments benefited from private-sector job growth in the critical 20- to 34-year-old cohort, expiration of the homebuyer tax credit, displaced foreclosed homeowners entering the renter pool, immigration and lower unit turnover. Renting also became a lifestyle and economic choice for many households as the effects of the housing collapse and recession persisted. Continued recovery in 2011 depends more heavily on improvements in the job market, which should gain momentum as the year progresses. Building on that momentum, operating conditions in the suburban Chicago apartment market will strengthen considerably this year, building on improvements in vacancy and rents recorded in 2010. Apartment construction will sink to one of the lowest levels in the past decade, minimizing competition for tenants at a time when renewed job growth will accelerate …