Ten Days of Buzz: March 18-28, 2013

Ten Days of Buzz

“Investors are buying homes, in part, to rent them out, and that has added a lot of rental supply, and that’s preventing rents from rising.”

Jed Kolko, Chief Economist for Trulia. Rentals slowing down as housing market picks up, Bloomberg News, 3.18.13.

“We have seen it for several years now: foreclosure sales…have become the hunting grounds for investors with two goals: hanging on to these homes until the Fed’s flood of money drives up their value; and defraying the expenses of ownership by renting them out. And funds have a third goal: collecting management fees.”

Wolf Richter of Business Insider. A New and Different Housing Bubble is Taking Shape, BusinessInsider.com, 3.19.13.

“We do want to support this, but at $80 to $100 rent increase per month, I’m worried that will cause displacement.”

Sara Shortt of the Housing Rights Committee of San Francisco. Tenants Say Earthquake Retrofit Law Could Circumvent Rent Control, The San Francisco Public Press, 3.20.13.

“When some of the jobs started coming back, there was a pent-up shortage of rent increases, and everybody took their jumps as quickly as they could.”

Mark Skelte of Western Realty Advisors. Rental Market Madness, Portland Monthly Magazine, 3.22.13.

“Nearly 20 million American households nationwide spend more than half of their income on housing—a severe burden that leaves many with little left over to meet their basic food, clothing, health care, and education needs.”

Jeffrey Lubell, Executive Director of the Center for Housing Policy. Census Data: Housing Costs Pinching Renters, USNews.com, 3.24.13.

“The cities that capture the mobile, college-educated ‘young and restless’ are the ones who are most likely to revitalize their downtowns and accelerate economic progress in their cities.”

Lee Fisher, president of CEOS for Cities. Downtowns: What’s Behind America’s Most Surprising Real Estate Boom, Forbes.com, 3.25.13.

“New construction rents for more. That distorts rent trends. Excluding the new units that opened in the past year, rents still posted a healthy 3.7 percent increase (in the region).”

Dupre + Scott in the latest issue of Apartment Advisor, as quoted by the Aubrey Cohen of the Seattle PI. Apartments expensive, hard to find in Seattle area, SeattlePI.com, 3.26.13.

“This (boom) seems to be more broad-based, not resulting from one particular industry or trend. It just seems more solid, stable and sustainable.”

Bart Flora, co-president of Cornell & Associates. Seattle apartment market: Good times keep on rolling, Daily Journal of Commerce, 3.27.13.

“I moved home because I wanted to figure out what direction I wanted to take in life. It was a very, very hard time for people my age. But I’m very excited about the move [into my own apartment]. Most of my friends are starting to move downtown as well. For a lot of us, adult life is just starting a little later.”

Nicole Shlass, 25 year-old “echo boomer.” Echo kids moving out of parents’ homes fuel high rental market, Metro News Canada, 3.28.13.

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Apartment Advisor Recap: The Units are Coming!

Apartment Advisor RecapThe April issue of Dupre + Scott‘s Apartment Advisor is out–and it’s got some very interesting numbers in it this time around. We know apartment construction has been strong lately; with numbers on everything from vacancy rates to concessions, the Apartment Advisor is the perfect source to check in with on how all of this construction is affecting the local market. Today, we’ll be checking in on five main factors that reflect the state of the rental market. To find out more, head over to DupreScott.com for the full report.

1. Market vacancy in the Puget Sound region is down to 3.8%.

3.8%–that’s the lowest it’s been since 2007, and it’s only been this low three times in the past 30 years. Now as you’ll recall, market vacancy excludes properties in lease-up and those undergoing renovation. When we include those units, we get the gross vacancy, which is currently at 5.2%.

The’s the Puget Sound region as a whole–so where does Seattle fit into all of this? Lots of construction within the city itself means there is a much larger divide between the market and gross vacancies–market vacancy is currently at just 2.9%, while gross vacancy is at 8.0%.

2. Rents have shot up 5.5% in the past year.

When we talk about rent amounts in Seattle today, it’s important to note the difference between rents for existing units, versus rents for units that have just been built–there’s a real and measurable difference between them. While rents have gone up 5.5% over the past twelve months, when we look just at the rent amounts in existing units, this increase is a bit less, at 3.7%.

This difference is particularly noteworthy in certain Seattle neighborhoods where more new units have been going up–take Queen Anne, for instance. Rents have risen 17.1% in that neighborhood; but if you factor out new units, the increase is 8.2%.

Finally, let’s talk about the rents of the future: Over the next six months, local apartment managers plan to increase rents by 2.8%–increasing rent at a rate they haven’t matched since 2008. Looking at per-capita income over the next five years (as per-capita income has been strongly tied to rent growth since 1980), the potential exists for rents to continue to rise strongly.

3. 34,000 units are planned to open over the next five years.

Here’s the part where we talk construction numbers–and these numbers are big. Dupre + Scott put the number of units under construction or just completed in the region at 15,000, with work to start on 5,000 more before July 1. If things go as planned, 2015 should keep pace with 2014. Out of all of this construction over the next five years, 89% of it is expected to be within King County alone.

Some investors worry that the gap between rent amounts for new and existing units, as referenced above, will lead to problems leasing all of this new construction once it’s complete. After all, twelve years ago, rent on new units was 1/3 higher than rent on existing units–now, it’s a whole 50% higher. But with low vacancy in existing units and the amenities, novelty and appeal available with new units, renters are still flocking to these new buildings.

4. Only 20% of surveyed properties are currently offering concessions–but this number will rise.

Speaking of filling new units, we should talk concessions. The number of landlords and property managers offering concessions dropped quickly during the rental renaissance of the past few years. Currently, concessions are offered in just 20% of the units surveyed by Dupre + Scott. But concessions help to fill units, and in buildings completed in 2012 and 2013, we’re seeing concessions offered with 2/3 of the units. As newly-completed units continue to open, we are likely to see an increase in concessions.

5. The percentage of tenants paying for water, sewer, garbage and parking is continuing to increase.

Finally, there are utilities (water, sewer, garbage) and parking to talk about. Taken together, water/sewer/garbage costs in Seattle average $55 to $90 per month; currently, around 2/3 of Seattle landlords are passing water and sewer costs along to tenants, with 50% also charging them for garbage. There has been a real sea change over the past few years with respect to these utilities–between 2008 and 2012, utilities paid by the renter rose 50%.

Then there’s parking. Last year, 60% of surveyed landlords included parking in the rent amount; this year, that number has dropped to 50%. Meanwhile, the number of parking spaces per unit is decreasing in new construction. Between 2000 and 2011, there were an average of 1.3 parking spaces per unit; but with units planned and in construction between 2013 and 2016, this drops to just 0.8 spaces per unit. Perhaps it’s time for a Smart car to go with that micro-unit?

Events Calendar: Spring 2013

Events CalendarHappy Friday! Spring is officially just a few days away, and we just know the weather is going to get with the program any day now (hey, at least it’s lighter at night…in theory). It’s time for us to check in on the events being held over the next few months that can help you make connections and continue to grow as a landlord or property manager. Maybe we’ll see you there!

March 27th: The RHA Presents ‘Solving Problems with Tenants’

This seminar will be presented by Sue Lewis, CPM. She’s got the info on how to save time and money when handling resident issues, resulting in happier tenants and landlords alike. You’ll learn when to take which actions, including making a call or deal, sending notices, and seeking legal advice–and all in just three short hours. The seminar runs from 4:00 to 7:00 p.m. on the 27th and costs $45.00. Learn more here.

April 24th: WMFHA’s 2013 Maintenance Summit

WMFHA themselves say it best: “Service teams are the backbone of the multifamily industry. Day in and day out, our techs, groundskeepers, lead techs and maintenance supervisors keep our residents happy and our properties running smoothly.” This event is all about the service teams, featuring the annual Maintenance Mania competition and a total of nine classes focused on technical skills and leadership. The day runs from 8:00 to 4:00 at the Tukwila Community Center, and costs $69 for members ($99 for non-members) to register. Check it out on their website.

Also April 24th: King County’s ‘Go Green 13’ Sustainability Conference

While your service teams are at WMFHA’s event, you may want to check out King County’s annual Go Green conference, a day of “sustainability training and dialogue on building a green economy in the Puget Sound region.” Any business can go green in their practices and philosophies, and there’s no time like the present to expand your knowledge and your network when it comes to sustainability. The conference runs from 8:30 to 5:00, at the Conference Center on 8th at Pike St., with a reception to follow. Early-bird admission is $150; find out more about the event here.

May 8th: The RHA Presents their New Landlord Orientation

Welcome into the fold, all you new landlords out there! While you’ve already got a leg up if you’re reading the blog, there can never be too much good information–and the RHA regularly presents this workshop on the ins and outs of property management. This crash course in landlord/tenant law and other important aspects of the job runs just an hour and a half, from 3-4:30 p.m. Registration is free–check it out here.

June 8th: The Washington Landlord Association’s Spring Conference

The Washington Landlord Association’s annual Spring Conference is a great way to branch out and cover a lot of topics in the course of a single day. This year’s conference will be held at the la Quinta Inn in Tacoma, and will cover topics including government partnership, security services for landlords, detecting water damage, and estate management. You don’t have to be a member to attend, and fees range from $30 to $40 depending on when you register. Check it out here.

Under Construction: Buildings on First and Capitol Hills, Downtown, and More

Screen shot 2012-12-06 at 8.26.29 PMHappy Wednesday! Have you adjusted to Daylight Savings Time yet? The whole “spring forward” can throw you for a loop. Whatever time it is, it’s also time to check in on the new units that are being planned, built, and opened in the Seattle Area. That’s right, it’s Under Construction!

Proposed: Micro Apartments in West Seattle

  • Who: Architecture firm Nicholson Kovalchick have filed a preliminary site plan with the city for their proposed building.
  • What: The design incorporates 31 “micro-units” into the apartment building’s four stories. Plans for parking are not yet available.
  • Where: The site is located at 4535 44th SW, west of The Junction in West Seattle (a brick office building is keeping the space warm currently).
  • When: With no design review scheduled for this proposal as of now, this building is at least a year or two away from completion…but we’ll be interested to hear more about the nature of the planned micro-units as the process goes forward!

Approved by Planners: Apartment Tower on First Hill

  • Who: Seattle developer William Justen is overseeing this project, which was approved by planners a few weeks ago, for Swedish pension fund company Alecta.
  • What: The building would house 328 units in its 27-story tower.
  • Where: The site is located at Terry Avenue and Jefferson Street, in First Hill.
  • When: With plenty of multifamily buildings under construction in Seattle, Alecta has not yet decided whether to go ahead with the project or put it on the back-burner for awhile. According to Justen, “it takes a crystal ball” to determine whether it’s too late to get in on the development boom.

Construction Underway: The REO Flats on Capitol Hill

  • Who: Madrona Real Estate Services of Seattle and Glenmont Capital Management of New York are partnering on this project, which will preserve the façade of the existing building in a neighborhood first.
  • What: The agreement to preserve the building’s façade, a “first in the Pike Pine Neighborhood Conservation Overlay District,” will preserve historic elements of the building and in return will be able to build bigger properties. There will be 108 apartments, as well as over 7,000 square feet of retail space and underground parking.
  • Where: The project is located at 1515 14th Avenue, between Pike and Pine streets, in Capitol Hill.
  • When: Construction has now begun, with leasing scheduled to begin in March of 2014.

In Progress: The Martin, at 5th Ave. and Lenora St.

  • Who: Vulcan Real Estate is developing this Denny Triangle-adjacent high-rise.
  • What: The Martin will hold 188 apartment homes in 24 stories, and is being constructed to LEED Silver standards. The building is meant to cater to the “upscale urban” renter, and will feature views of the City as well as Lake Union.
  • Where: Located downtown near the Denny Triangle, the high-rise site is adjacent to the historic Paul G. Allen’s Cinerama Theater.
  • When: Vulcan broke ground on this building just over a year ago; it is slated for completion this fall.

Now Leasing: The New Via6 Apartments, at the Intersection of Belltown/Downtown/SLU

  • Who: Local developer Matt Griffin has taken this project personally–last November, he announced his plan for he and his wife to move into the building for a month upon its completion.
  • What: Via 6 is a two-tower, 24-story building housing 654 units, as well as 16,000 feet of retail space.
  • Where: Where else–just across from Amazon’s proposed three-tower development, on Sixth Avenue downtown.
  • When: Now complete, not only is the Via 6 now leasing; it’s also holding a competition for one year’s worth of free rent. We could go for that! (As renters, of course–not as landlords.)

Ten Days of Buzz: February 24-March 5, 2013

Ten Days of Buzz

“They just can’t accommodate all these people. Some of them have just handed over all the reins altogether.” 

Will Baker, Senior VP with Walker & Dunlop. Big Real-Estate Firms Are Going to School, The Wall Street Journal, 2/24/13.

“The fastest growing city for good jobs outside of Texas was another technology capital, Seattle, which is expected to add 136,000 jobs over the next five years.”

Daniel Fisher, Finance writer for Forbes Personal Finance. Texas Dominates the Best Cities for Good Jobs, Forbes.com, 2/25/13.

“We think Seattle has a good story going. It’s a very good economy with lots of diverse drivers.”

James Delmotte, Senior VP of Grosvenor. Grosvenor buys Bothell apartment complex for $88M, Puget Sound Business Journal, 2/26/13.

“Everybody wants in this market. We will push forward and see more trade deals like [Aspira].”

David Young, Apartment Broker with JLL. Apartment building market firing on all cylinders in Seattle, Puget Sound Business Journal, 2/27/13.

“Landlords [in California] already have authority to prohibit smoking in their rental units, through a law implemented last year, but Levine’s bill would impose a mandatory ban statewide.”

Jim Sanders, writer for the Sacramento Bee. California bill would ban smoking in multi-unit housing, SacBee.com, 2/28/13.

“Outlays dropped 2.1 percent, the biggest decrease since July 2011, to a $883.3 billion annual rate, a Commerce Department report showed today in Washington. The median forecast of 45 economists surveyed by Bloomberg called for a 0.4 percent rise.”

Shobhana Chandra of Bloomberg News. Construction Spending in U.S. Unexpectedly Fell in January, Bloomberg.com, 3/1/13.

“A few days ago, I was reviewing some work [on] sustainable cities. The original draft stressed that dense living is the way to go. Wherever the word ‘dense’ appeared, I crossed it out substituted the word ‘walkable.’ …We also need city neighborhoods with nature, culture, good schools, green technology and green infrastructure.”

Kaid Benfield of the NRDC. Not All Density is Created Equal, The Atlantic Cities, 3/3/13.

“Some council members and residents want to lower the maximum height and reduce how wide the buildings could be. Councilmember Nick Licata said he will introduce an amendment to ‘shorten and slim down’ Vulcan’s towers.”

Marc Stiles, Staff Writer. Scope of South Lake Union rezone could get whittled down, Puget Sound Business Journal, 3/4/13.

“During the crisis, the multifamily line of business was effectively the GSE’s diamond in the rough, generating approximately $7 billion in profits between 2008 and the third quarter of 2011.”

Christina Mlynski of Housingwire Investments. FHFA aims to shield Fannie, Freddie from credit risk, HousingWire.com, 3/5/13.

The Green Report: No-Car Buildings, Green Standards, and the Smallest Apartments You’ll See Today

Happy March! It always seems like things start to speed by this time of year; February’s already gone and spring is on its way. Warmer weather always makes us think of renewal, and of greenery–so what better time to check in with the world of eco-friendly living? That’s right, it’s time again for the Green Report. Enjoy!

The Green Report

From Boston, an apartment building so eco-friendly that it bans cars

11971486861879163928ryanlerch_no_cars_sign.svg.medWe all want to do our part for the environment–and for many tenants in urban neighborhoods, that means walking, biking, and using public transportation whenever possible. But one proposed apartment project in Boston would go so far as to ban tenants from owning cars. Yup, you heard us right; according to the Globe, “tenants will have to sign an addendum to their lease that requires them to be car-less.”

The 44-unit building would include private gardens and an open greenway in some of the space that might otherwise have been devoted to parking. Transportation will be provided by Boston’s bus lines, and bikes and mopeds will be encouraged. According to the project’s architect, Sebastien Mariscal, “it just takes one building to change things.” But will tenants go for it? Only time will tell. Read more from the Boston Globe.

Speaking of cars…is the Washington gas tax about to rise?

Gas-CanCould the Washington gas tax soon go up by ten cents per gallon? It will if House Transportation Committee Chair Judy Clibborn has her way. Clibborn has proposed the tax hike as part of a transportation revenue package introduced last week. In order to pass, the increase would of course require a two-thirds majority in the House and Senate, or be voted into law by the people. Read more in the Seattle Times.

New green building standard approved by the ANSI

NAHB Logo 2010Here’s a mouthful for all of the multifamily builders out there: The 2012 ICC 700 National Green Building Standard (NGBS) has been approved by the American National Standards Institute. So just what does that mean? According to the news release from the NAHB, the updated standard “provides practices for the design and construction of all types of green residential buildings, renovations, and land developments,” and is the only nationwide standard approved by the ANSI.

Builders interested in incorporating the standards into their practices can purchase a copy of the NGBS through BuilderBooks.com, and in a further nod to sustainability, it’s now available in an e-book edition. So just what has changed since the last edition? According to NAHB Chairman Rick Judson, the new standard “raises the bar on energy efficiency,” and includes and expanded section on renovations. Read more from the NAHB.

“RecycleMania” in Texas dorms train students for a greener life

Recycle_Logo_by_Har1We’re honest, we’ll say it: not all of our recyclables always end up in the green bin at the end of the day. We might work harder to recycle if it were incentivized with a friendly competition like the one currently happening at the Arlington campus of the University of Texas. RecycleMania has residence halls competing to be the most recycling-friendly dorm; the winner holds on to the (recycled) trophy for a year. Ideally, the competition will ingrain habits that will stick with students when they graduate and become renters. Read more in UTA’s Shorthorn.com

When it comes to micro-housing, how small is too small?

From New York to San Francisco, micro-apartments have been hailed as the solution to high rents and low vacancies. In art exhibits and design contests, we’ve seen apartments that use small spaces to their advantage, making a comfortable living space for the tenant who appreciates efficiency. But how small is too small? Could you live, for instance, in an apartment that was only 5.6 square feet?

Image from Kotaku.com

Image from Kotaku.com

These “share houses,” which from outside look very much like lockers, come to us from–you guessed it–Tokyo. The compartments, which were recently showcased on a Japanese television show, have a bit of space to sleep, and to hang some clothes…and that’s it. Amazingly, tenants pay up to $600/month for the nicest compartments. Read more from OpposingViews.com.