PTAA Goes to Washington

On March 6 members of the Piedmont Triad Apartment Association visited Capitol Hill in Washington, DC as part of the National Apartment Association’s Lobby Day. While there, PTAA’s representatives met with Rep. Virginia Foxx, Rep. Ted Budd and Rep. Mark Walker to help advocate for NAA’s legislative priorities, which this year centered around housing affordability, including:

PTAA’s representatives were also able to join other apartment industry professionals from North Carolina for a photo opportunity with Sen. Richard Burr on the steps of the Capitol, and sit in on meetings with staff members from Sen. Tillis and Sen. Burr’s offices. Despite the frigid temperatures they had a very successful day advocating on behalf of the apartment industry.

Northwinds Sold, Renamed

The property formerly known as Northwinds was sold and the new owner is planning on making upgrades. From Multi-Housing News:

Arcan Capital has acquired Village 1373, a 332-unit, garden-style community in Greensboro, N.C., for $21.3 million from Southwood Realty, per Yardi Matrix information. Hunt Real Estate Capital has originated a $21 million, three-year acquisition and renovation loan for the buyer, according to Guilford county recorded documents.

Located at 1373 Lees Chapel Road, the property formally known as Northwinds is less than 6 miles from downtown Greensboro. The community offers one-, two- and three-bedroom apartments in 17 three-story buildings. Amenities include two pools, a fitness center, a tennis court and a playground. The asset had an 89.5 percent occupancy rate as of January.

rcan intends to use the Hunt-originated financing to upgrade the interiors, exteriors and common areas. “While the former owner maintained the property, it has not undergone any renovations or improvements for the past 11 years,”said RJ Guttroff, managing director at Hunt, in prepared remarks. “Upon acquisition, the new owners will rebrand the property and implement a capital improvement plan exceeding $4 million to upgrade and reposition the property.”

208-Unit Apartment Community in High Point Sold

In late February the Chatham Wood Apartments in High Point were purchased by a Gastonia-based company. From an article in the Triad Business Journal:

Chatham Wood Apartments at 856 Lakecrest Ave. sold Tuesday for $14.8 million, according to a deed on file with the Guilford County Register of Deeds. The complex is off Johnson Street south of U.S. Highway 311.

ARWC-808 Lakecrest Avenue LLC of Atlanta sold the 19-acre complex to Gastonia-based MAAC Legacy Chatham Woods LLC.

Built in 1985, Chatham Wood last sold for $9.4 million in 2015.

Zumper: Triad Rents Among the Nation’s Lowest

According to a report released by Zumper, rents in Greensboro and Winston-Salem were among the lowest in the 100 markets they surveyed. From an article in the Triad Business Journal:

Of 100 U.S. cities surveyed, Greensboro was No. 88 with average monthly rent of $720 for one-bedroom unit ($820 for two bedrooms). The prices reflected a 5.9 percent yearly increase for one bedroom and a 3.8 percent jump for two bedrooms.

Winston-Salem, which was No. 78 on the list at $780 ($840 for two bedrooms), has experienced a larger spike in rent prices, with increases of 9.9 percent and 10.5 percent, respectively…

Charlotte ($1,160 and $1,310) ranked No. 33; Durham ($1,110 and $1,270) was No. 43; and Raleigh ($1,000 and $1,150) was No. 48.

New HUD Policy on REAC Inspections: 14 Days Notice

From an alert sent out by the National Apartment Association:

I’m writing to make you aware of a recent policy change by the U.S. Department of Housing and Urban Development (HUD) that will drastically reduce the time frame required to provide notice of inspection to rental housing providers that operate HUD-assisted housing or subsidized property developments.

According to the new standard, HUD employees and contract inspectors will provide a notice to private property owners and operators who participate in HUD-assisted programs 14 calendar days prior to a property inspection through the Real Estate Assessment Center (REAC). If a property owner or operator refuses the REAC inspection, which is designed specifically for HUD-assisted housing or subsidized properties, a score of zero will be recorded. However, if the property is successfully inspected within 7 calendar days after the initial declined visit, the resulting score will be recorded.

While we understand owners and operators take great care to prepare for REAC inspections on an ongoing basis, HUD says this change will encourage program participants to maintain their properties year-round, instead of short-term fixes to pass a specific inspection. This new policy will take place 30 days after the posted notice.

In addition to the policy change, HUD will be hosting listening sessions across the United States to collect input from public and private HUD partners about a potential pilot program that will bring a new approach to inspections of HUD-assisted properties. NAA highly encourages owners and operators to participate in HUD’s listening sessions to ensure the industry’s voice is heard. 

The first round of listening sessions is scheduled for the following locations:

  • Philadelphia
  • Fort Worth
  • Atlanta
  • Detroit
  • Seattle

Student-Style Living for Everyone?

It was only a matter of time: some developers are interested in taking the apartment model familiar to everyone in the student housing sector and opening it up to the masses. There are challenges, not the least of which are local zoning ordinances, but at a time when affordable market-rate housing is at a premium, this approach might actually have a chance of catching on. The Atlantic has the story of one company’s effort to introduce co-living in a Rust Belt city’s downtown:

On Friday, on the top two floors of the building, he’s starting construction on a space he envisions as a dorm for Millennials, though he cringes at the word “dorm.” Commonspace, as he’s calling it, will feature 21 microunits, which each pack a tiny kitchen, bathroom, bedroom, and living space into 300-square-feet. The microunits surround shared common areas including a chef’s kitchen, a game room, and a TV room. Worried about the complicated social dynamics of so many Millennials in one living unit? Fear not, Evans and partner John Talarico are hiring a “social engineer” who will facilitate group events and maintain harmony among roommates.

Forget communes or co-ops. Millennials, Evans says, want the chance to be alone in their own bedrooms, bathrooms, and kitchens, but they also want to be social and never lonely (hence #FOMO)…

The building even appeals to people outside the “Me Generation.” Evans says he’s had interests from all age groups, including empty nesters looking to be more connected to the city.

Michelle Kingman is one of the Syracuse residents interested in Commonspace. Kingman considers herself a minimalist—until she rented an apartment in February, all of her possessions could fit into her car, she told me. Now she and her husband Julian live in a two-bedroom downtown, and have turned one of the bedrooms into a pristine meditation space. They’d have to give that up if they moved into a tiny Commonspace apartment, but Kingman, who is working on her own startup, likes the idea of being part of a big neighborhood community in one building. And when she wants to escape that and retreat into her tiny microunit, she says, she’ll be able to.

“It’s the best of both worlds,” she told me. “You have roommates, but they’re not roommates.”

  

The Rise of 5-Over-1 Apartments aka “Stumpies”

Bloomberg has an article that helps explain the rise of the “5-Over-1” apartment buildings that have proliferated over the last 20 years. From the article:

These buildings are in almost every U.S. city. They range from three to seven stories tall and can stretch for blocks. They’re usually full of rental apartments, but they can also house college dorms, condominiums, hotels, or assisted-living facilities. Close to city centers, they tend toward a blocky, often colorful modernism; out in the suburbs, their architecture is more likely to feature peaked roofs and historical motifs. Their outer walls are covered with fiber cement, metal, stucco, or bricks.

They really are everywhere, I discovered on a cross-country drive last fall, and they’re going up fast. In 2017, 187,000 new housing units were completed in buildings of 50 units or more in the U.S., the most since the Census Bureau started keeping track in 1972. By my informal massaging of the data, well over half of those were in blocky mid-rises.

These structures’ proliferation is one of the most dramatic changes to the country’s built environment in decades. Yet when I started asking around about them, they didn’t seem to have a name. I encountered someone calling them “stumpies” in a website comment, but that sadly hasn’t caught on. It was only after a developer described the style to me as five-over-one—five stories of apartments over a ground-floor “podium” of parking and/or retail—that I was able to find some online discussion of the phenomenon…

The boom has also been shaped by zoning that sometimes leaves downtowns and suburban commercial districts as the only practical spots for new housing. Ordinances requiring a minimum number of parking spaces per apartment unit factor in, too: Where minimums are relatively high, as in Texas, the best solution can be wrapping the building around a parking deck, a style known as the Texas doughnut. Where they’re lower, the ground-floor podium will do. City planners also often require developers to devote street-front podium space to shops and restaurants.

If you’re interested in why apartment construction has trended in this direction, you really should read the full article; it helps explain the impact that building codes, zoning and regulation can have on what’s built and where it’s built.

Keystone Wins Approval for Horse Pen Creek Apartment Development

With an 8-1 vote the Greensboro City Council approved rezoning for a proposed 380-unit apartment community off of Horse Pen Creek Road. The Greensboro News & Record has the story:

The council voted 8-1 in favor of rezoning 21.4 acres for the apartment project that developer Keystone Homes says will cost about $50 million and include up to 380 units. ..

City staff members and Keystone consultants told the council they believe a widened Horse Pen Creek Road can handle additional traffic from the project and required safeguards should protect the environment adequately…


Wallace said the apartment complex would attract “active adult” residents and young professionals drawn by its amenities, nearby commercial district and ready access to nearby highways and the Piedmont Triad International Airport.


Amenities would include a fully equipped chef’s kitchen, a variety of fitness facilities, a children’s game room, a pet spa and one- and two-car garages, he said.

How Credit Privacy Numbers (CPN) Impact Screening

NAA posted an interesting article about CPNs that explains what they are and why apartment managers need to be aware of them.

Through ads targeting high-risk individuals, groups selling CPNs entice individuals with claims of a clean credit slate and most commonly, the car, house or apartment that is beyond reach. For approximately $150 to $250, a group such as CPN Direct will provide the buyer with a “clean” 9-digit CPN which can be used in place of their existing SSN on credit, loan and lease applications. Included within each CPN package are credit lines that have been opened and maintained to establish good credit — often in the 750 range — for the buyer.

Using CPNs in place of an SSN in a financial transaction is a federal crime, according to the Federal Trade Commission — and for good reason. CPNs are directly tied to predatory identity theft practices that target children, the elderly and those incarcerated for long periods of time, and aim to build credit off of the victims’ stolen Social Security numbers. With each victim group, it often is years after the events that the crime is recognized, often crippling the victims’ financial wellbeing…

Unlike other fraud schemes such as chip reading, which focuses on flash scams, CPNs and Synthetic Identity fraud are designed for major transactions, including apartment rentals. While the cost of a resident skipping or being evicted varies greatly by market, the cost to prematurely turn an apartment is universally a burden of time and finances for a management company. Compounding the risk of fraudulent lease activity are secondary risks to premise liability that all rental housing operators must factor in.

Student Debt Impacted U.S. Housing Market

One of the demographic factors contributing to the continued strength of the apartment industry is that young adults are waiting longer than previous generations to purchase their first homes. One factor contributing to that wait is that many of them are carrying significant student loan debt. From the Wall Street Journal:

Homeownership among people ages 24 to 32 fell 9 percentage points, to 36% from 45%, between 2005 and 2014, the Fed said. While many factors affected the homeowner rate, the Fed said 2 percentage points, or about a fifth, of the decline was tied directly to student debt. That translated into 400,000 borrowers who could have owned a home by 2014 but didn’t because of student loans.

Source – Wall Street Journal

The article goes on to point out that the study period for these results (2005-14) corresponded with a sharp increase in student loan delinquencies, and that in ensuing years many borrowers have enrolled in plans that reduce their monthly bills, but there isn’t any hard data yet that shows the impact has been reversed completely.