Ten Days of Buzz: November 20-30, 2012

“The median asking rent in the U.S. fell by 0.7% to $716 per month from the previous quarter in Q2 2012, but was still 4.7% higher than the same period last year, according to the U.S. Census Bureau’s Housing Vacancy Survey.”

US Property Market Continues Recovery, from the Global Property Guide, as reported by NuWire.com. 11.21.12.

“If you have a lease expiring anywhere between May and October, I think you have a zero shot of trying to negotiate. In a rental high-rise building, if one tenant goes, they can leave the apartment empty for 30 days so they can find someone with higher value.” 

Alex Cho, Managing Director of MNS. Sandy Sends Renters Seeking Shelter, San Francisco Chronicle, 11.22.12.

“The neighborhood is aesthetically in line with Katherine’s and my vision. There’s no reason it shouldn’t be a completely active neighborhood.”

Chef Matt Dillon, of Melrose Market. Restaurateur, merchants want to revitalize Pioneer Square, one of Seattle’s oldest neighborhoods, Puget Sound Business Journal, 11.23.12.

“That submarket is getting an awful lot of product in a very short time. It’s bound to have an impact.”

Mike Scott, of Dupre + Scott. Ballard’s Apartment Boom Comes with Risks, The Seattle Times, 11.25.12

“Looking at multifamily housing, NAR expects a vacancy rate of 4% in the fourth quarter of this year to tick down to 3.9% in the fourth quarter of 2013.”

Ruth Mantell, Market Pulse. Apartment Rentals a “Landlord’s Market’ in 2013, MarketWatch.com, 11.26.12.

“Commercial and multifamily mortgage borrowing slowed in the third quarter. Even though low interest rates continue to make borrowing extremely attractive, a moderate pace of commercial property sales transactions…limited the overall amount of commercial mortgage loans originated.”

Jamie Woodwell of Commercial Real Estate Research. 7 Percent Drop in U.S. Multifamily and Commercial Mortgage Originations in the Third Quarter of 2012, San Francisco Chronicle, 11.27.2012.

“The main reason for the upward revision to the gross domestic product was businesses restocked at a faster pace than previously estimated. That offset weaker consumer spending growth.”

Martin Crutsinger of AP Economics. US Economy Grew at 2.7 Percent Rate in Summer, the Seattle Times, 11.28.12.

“One year ago, there was almost no institutional capital. Today, there’s $6 billion to $8 billion. Two years from now, we’ll be where multifamily was in the early ’90s.”

Gary Beasley, a managing director at Waypoint Homes. Single Family Rental Demand to Remain as Market Recovers, Bloomberg.com, 11.29.12.

As ULI Sees It: Emerging Apartment Market Trends

From the coverpage of the ULI Report

Earlier this month, the Urban Land Institute put on their Emerging Trends in Real Estate forecast breakfast. Their comprehensive 92-page report can be read online in its entirety, and it’s probably worth your time; but for now, we were particularly interested in what they had to say about the apartment market going into 2013.  Based on their report, even with plenty of new development, apartment projects should be a safe bet at least through next year–we’ve got the highlights of their multifamily subreport below.

At this point, we’re all familiar with the hallmark strengths of the current apartment market–namely, demand buoyed by the rise of the millennials and the aging of the boomers, the shift in the housing paradigm brought about by the last housing bust, and the increased focus on convenience and flexibility. According to ULI, “as long as these trends continue, over the long term apartments should continue to outperform all other property types on a risk-adjusted basis, with excellent cash flow components.” 

Sounds good to us–but are there any risks? We keep hearing about all of the capital that’s been flowing into development lately, for example–as ULI puts it, “shut out of much activity in the office and retail sectors, developers of all stripes pile into the sector as lenders offer construction loans.” Surely that can’t be sustainable in the long run…can it?

But here’s the good news when it comes to the risk of overdevelopment: “Even with stepped-up activity, interviewees say unit deliveries in 2012–about 200,00–will come up short of the roughly 300,000 mark typically needed to maintain equilibrium in markets nationwide.” The fact is, there is demand for new units that even all of the 2012 construction isn’t filling–and so we’ll look to 2013 to start to take the new unit completion numbers where they need to go.

Of course, there is the risk that at some point, if interest rates are low enough and rents are high enough, buying houses may start to seem like a good idea again. But as ULI points out, we are in the middle of an urban shift. Public transportation projects are being green-lighted in cities all over the country, while developers are starting to build smaller living spaces with a greater emphasis on community space and walkability. This all means that “the “continuing urbanization” wave underway should give developers at least “a three- to four-year” window in major markets.”

So what’s the bottom line? ULI says: “…Expect the run of increasing rents and values to continue in most markets at least through 2013 and probably well into 2014.” Note that best bets are all in the urban markets–suburban, car-access rentals will not perform quite as well as their city-based counterparts. That all sounds good to us! Check out the full report here (the apartment section begins on page 50).

The Numbers: National Vacancy, New Household Creation & Hurricane Sandy

Happy Turkey Week! Although it’s nearly time to break for the week and stuff ourselves silly in the loving presence of friends and family, we do have this one more business day ahead of us, so without further adieu, we present: The Numbers! (Don’t forget to click on a graphic to read its source article.) And hey, if we don’t see you…have a wonderful Thanksgiving!

Seattle Centric: New Heights in South Lake Union, New Apartments in Pioneer Square

Happy Friday! If you’re looking for things to do this weekend, there’s a scavenger hunt on Bainbridge Island and an official pub crawl downtown–check out the full list here. In the meantime, we’ve still got a few hours of work ahead of us, so welcome back to Seattle Centric! 
Pioneer Square: The Stadium Terrace project is going ahead–again.

Remember when they were talking about putting up an apartment building next to Century Link Field? The project has been on the back burner for quite awhile now, but thanks to investors lead by Lakeside Capital Management, the project has again been picked up and is now on track to become a reality sometime after 2013.

106 units, 88 parking stalls, and just about 9,400 square feet of commercial space will fill the area at Railroad Way South and Occidental Avenue South. The investors have chosen to build apartments instead of lofts because they are more affordable to construct, and plans to apply for permitting over the next year. Read more in the Puget Sound Business Journal.

An only-in-Seattle question: What makes a neighborhood?

Seattle can be hard to describe to those who haven’t been here. We’ve certainly had more than one conversation go this way: “Do you live in Seattle?” “Yeah, I live in Fremont.” “But do you live, like, in the city?” “Yeah, I live in Fremont.” “…But where’s your address?” Neighborhoods make Seattle deliciously complex. But how did such distinct neighborhoods within a single city come about–and what factors contribute to a sustainable identity?

Writer Knute Berger recently moderated a panel, The Making of a Neighborhood, whose focus was to answer just that. The panel included neighborhood organizers, Parks & Green Spaces committee members and others, and they had some interesting insights to share–check out Mr. Berger’s article (and the video of the panel) over in the Seattle section of Crosscut.com.

Are we on track to see 24-story buildings in South Lake Union?

Next to towering Downtown, South Lake Union has always come up a little short–Amazon currently has the tallest buildings in the area, at just 160 feet each. But thanks to a deal between the City of Seattle and Vulcan Real Estate goes through, that could all be set to change–and soon, we could see 24-story buildings popping up all over South Lake Union’s skyline.

At the heart of the deal is land that Vulcan would give to the city to provide space for nonprofits and affordable apartments. The city has a policy that allows buildings to rise higher if the developers give to public interests. Vulcan, of course, is no stranger to the neighborhood, having been at the helm for much of South Lake Union’s transformation from warehouse district to tech hub. For more, check out the article in the Seattle Times.

The streetcars are coming! The streetcars are coming!

Did you know that the South Lake Union Trolley attracts 2,750 passengers daily? That number has risen steadily since a slow start after its grand opening in 2007. Now that demand has risen, the city is considering investing in studying a more robust offering of streetcar lines throughout the city.

The lines that would be studied in the foreseeable future are Eastlake, Ballard, downtown, and north Broadway; all of these areas once had streetcar lines, before they were abandoned for cars and buses. There are some conflicting opinions on the proposal to study the project–detractors point out that the South Lake Union Trolley can be “painfully slow” and is perhaps best left to tourists, while the Seattle Times puts the cost of installing streetcar lines “at about $50 million per mile.” Are you ready to hop on the streetcar? Check out the full article here.

Ten Days of Buzz: November 2-13, 2012

“It is common knowledge that a healthy construction industry is a component of a healthy economy. What is not well-known is the role of affordable housing construction in the industry and the role it has played in keeping people employed and small businesses solvent while the rest of the housing market crashed.”

Rachel Iskow, CEO of Mutual Housing California. Green Construction and Retrofitting Creates More Jobs, EP Online, 11.2.12.

“The U.S. population age 65 and above offers huge potential for housing and other real estate efforts, according to report author John McIlwain, ULI senior resident fellow for housing. …The age group will grow by 120.1 percent between now and 2050, a much greater rate of growth than any other age group.”

Suzann D. Silverman, Commercial Property Executive. ULI Special Report: The New Seniors—Not So Senior Anymore, MultihousingNews.com, 11.3.12.

“The economic data indicates that current rental markets are very strong with low vacancy rates, rising rents and solid demographic trends. What this research demonstrates is that these conditions are likely to remain in place for several years to come.”

David Brickman, senior vice president of Freddie Mac Multifamily. Multifamily Market To Remain Strong Through 2015 With 1.7 Million New Renters, PR Newswire, 11.5.12.

“I’m getting them a town car and rolling around the city with them as if I am their best friend who knows the area. I understand if you like the symphony or if your little boy loves art classes and how to cater to that.”

Wendy Willbanks, founder of She Moves You. The Rental Concierge Springs up in San Francisco, Bloomberg Businessweek, 11.6.12.

 “These transactions would drop their leverage into the mid-50 percent range, still higher than any other apartment REIT.”

Andrew McCulloch, Green Street Advisors Inc. Archstone Sees $1.77 Billion of Asset Sales by 2014, Bloomberg Business Week, 11.7.12.

“The dynamic that began in 2010 remains in place: the increase in prospective apartment residents continues to outpace the pickup in new apartments completed. While development activity has picked up considerably since the trough, financing for both acquisition and construction remains constrained, flowing mainly to the best properties in the top markets.” 

Mark Obrinsky, NMHC Chief Economist. Apartment Dynamics Look Strong for the Next Two Years, CoStarGroup.com, 11.8.12.

 “We’ve been going crazy. Any time a rental comes on the market, within hours it has multiple offers on it, for the obvious reasons. We’re doing everything we can to help these people. We’re all in the same boat down here.”

Ken Parker, Agent with Century 21 in New Jersey. Victims Scramble for Rental Homes, TimesLeader.com, 11.11.12.

“The “bubble” now shows up in 2014, but if economic growth ramps up by then (Moody’s Economy.com is projecting GDP growth of over 4 percent in 2014, up significantly from 2.0 percent in 2012 and 2.9 percent in 2013), the additional supply will most likely be absorbed relatively painlessly.”

Victor Calanog, NREI Contributor. Multifamily Fundamentals Do Not Face a Cliff, National Real Estate Investor, 11.13.12.

Five Ways to…Market to Millennials

Millennials, Gen Y, the kids who went off to college but then came back and are now living in your basement…whatever you call the children of the Baby Boomers, they’re well on their way to becoming the next big generation of renters. MultifamilyBiz.com released a new webcast this week focused solely on this generation–who are they, and how do we reach them? You can check out the full webcast, presented by Ernest Oriente and Kerry Kirby; in the meantime, we’ve got the key points below.

1. Know the millennials: What defines this generation?

85 million strong, millennials (born 1978-1995) witnessed the housing crisis, so as they move into adulthood, they are by no means eager to purchase a house. These children of boomers will comprise 36% of the workforce by just 2014, and the fact that many of them lived either in student housing or with their parents for some time after they turned eighteen means that pent-up demand is unleashed as the economy improves and they move into their own places. Space isn’t a priority to millennials, but high-speed wifi and good cell reception are.

2. Shift your marketing paradigm: become an advocate for your building and your neighborhood.

Excepting a few hipster luddites, millennials are all digital all the time, which means they probably won’t see an ad in print–and that wouldn’t necessarily be helpful anyway, since many of them have a bit of a distaste for overt marketing.

Instead of focusing on static advertising, in the words of Kerry Kirby, “become an advocate for your community.” Sponsor local events and create a website that acts as a hub of neighborhood information instead of a kind of internet brochure. Tune in to the neighborhood and reflect that local sensibility throughout your branding. And remember, all information you post online should be easily accessible in mobile form–at least 25% of social media use is now conducted via smartphone or tablet.

3. Leverage your online reputation–reviews are powerful things.

It is, as they say, the information age–and now that Yelp and a thousand other sites are out there allowing people to rate their experiences, people take real stock in what they read online about an apartment building or community. In fact, Yelp’s apartment ratings are some of its highest-trafficked areas.

Good reviews can be very powerful, and people who have good experiences will leave good reviews–especially if you plant the seed in their minds. Consider exit questionnaires or other ways to ask tenants if they would give your building a good review, and when bad reviews are left online, be visibly accountable to the reviewer. Amazon.com has found that quite often, once they follow up with consumers who have left bad reviews, the review is amended to reflect the consumer’s now positive experience–and that is powerful as well.

4. Keep the SEO going: multiple online platforms now allow great internet search visibility for even the smallest buildings.

It used to be that a content-heavy website and/or a large online advertising budget was the only way to stay visible online, especially with so many apartment communities clamoring for space–but these days, that’s simply not the case. Once your building or community has a distinct name and identity, posting regularly on Twitter, Facebook, Pinterest, Tumblr, WordPress and elsewhere can ensure that you show up on a regular basis–and with plenty of positive results–when a user searches.

Millennials are, as Kerry puts it, “the information generation;” they search for a new apartment just 30 to 60 days before they plan to move, and for many potential tenants, if you don’t have a robust presence online, you may as well not exist. It’s easy to feed social media into the pages of your website, adding to its image as information hub (in the words of the older generation, think online community center) instead of static brochure.

5. Move your leasing center online.

Is a particular floorplan available? What are the current lease rates? Which forms does a potential tenant need to fill out? If millennials need to know this information, they are less likely to call or enter a leasing office and ask someone than they are to look for it online. In an ideal world, any information, forms, etc. that a tenant can get from a real leasing center, they should be able to access online. This accessibility is also conducive to the tenant sharing it via Facebook or other social media platforms. In Kerry’s words, “your online leasing center should be the center of your universe when it comes to generating leads.” A millennial is much more likely to apply for a unit if they can do so from their phone or laptop, instead of sitting down in a leasing center and filling things out manually. Viva la digital revoluciòn!

 

Landlord Toolkit: Emergency Preparedness Plans

What a week! What with Hurricane Sandy wreaking havoc on the East Coast, it’s sometimes been hard to think of anything else–and our thoughts are with the people of New York, New Jersey, and elsewhere as businesses reopen and people begin to rebuild affected areas.

While Seattle isn’t exactly prone to hurricanes, events like those of this week remind us that emergencies can occur–and there is plenty that can be done beforehand.

Drawing up an Emergency Preparedness Plan

We thought we’d take today’s post to put together a landlord toolkit for emergency preparedness, focusing on the ever-important Emergency Plan. Emergency plans are just about essential for every building, and we found several easy guides for putting one together. Here are the essentials–follow the links for even more information.

Emergency Phone Numbers

Of course, the plan should include a contact number for you or your property manager, as well as a list of emergency numbers (the fire department, gas company, poison control hotline, etc.). These numbers should be listed in a location that is easily accessible for every tenant, as well as being included in the plan.

Also, don’t forget to keep a list of your own emergency numbers: who do you call with a plumbing emergency? What about if you need an electrician? Locating these numbers before an emergency occurs can save time and prevent damage if an apartment is flooding from a burst pipe, or wires are sparking, and time is of the essence.

What is an Emergency? …And Do Tenants Need Renter’s Insurance?

About.com noted that you may also wish to include a short section on what constitutes an emergency in your plan–for instance, a gas leak requires immediate attention…while a dripping faucet can wait until tomorrow. You may also wish to advise your tenants to purchase renter’s insurance, as your own insurance coverage will not cover a tenant’s furniture or belongings if a fire or storm damage them–and renter’s insurance can often be found for as little as $10 per month.

What to Plan For

So you’ve laid out some basic info. But what else do you need…and what exactly does your plan need to, well, plan for? Any feasible event, according to MultifamilyInsider.com: “You will need to have a plan on hand in the event of fires, floods, earthquakes, and other unforeseen emergencies that may potentially apply to your region. Tenants need to know not only how to evacuate the building, but also what to do in cases where they must remain inthe building as a disastrous event occurs.” You’ll need to plan both your own and your tenants’ roles during the emergency–for instance, who calls 911 if the fire alarm is not triggered?

The Multifamily Insider article includes a pretty exhaustive (but not too long) list of what you’ll need to include on your emergency plan–check it out here. Once the plan is complete, be sure to distribute it to all tenants, either when they sign the lease, or when new information is added.

Hopefully, your emergency preparedness plan is something you’ll never have to use. But you may sleep better at night knowing the info is all laid out–and if an emergency does occur, you’ll know what to do.

For more on emergency preparedness, go to http://www.redcross.org.