A decline in apartment construction in major metro areas has tampered the overall rate of new home construction in the U.S. From the Wall Street Journal:
Overall housing starts slipped 0.8% in August from the prior month to a seasonally adjusted annual rate of 1.18 million, driven by continued steep declines inmultifamily building, the Commerce Department said Tuesday…
The report offers a mixed picture of a market in which single-family construction is gradually improving while multifamily construction is declining significantly due to an oversupply of apartments in many urban markets.
A local developer is seeking a rezoning in Greensboro that would allow him to add apartments to an existing condo development. From the Triad Business Journal:
Graham developer and builder Dennis Euliss wants to add 72 apartments to a 24-unit condominium building along Old Battleground Road in north Greensboro, to form one community with shared amenities.
Euliss’ request on the agenda for Monday’s Greensboro Zoning Commission would change zoning at Landon Creek condominiums from Conditional District Residential Multifamily-18 and Single Family Residential-3 to Planned Unit Development. The change would allow the developer to build 72 apartments — in addition to condos — on the undeveloped 7.83-acre property at 4493 Old Battleground…
The original three-story, 24-condo building was built in 2008.
Isaacson said Euliss believes apartments would be the best option. He said shared amenities would include an office, swimming pool and fitness center, and would require an agreement with condo owners.
“It’s more efficient to develop the property with one owner than with 72 owners,” said Isaacson.
CoStar Group announced today that it is acquiring ForRent.com, adding it to a portfolio that already included Apartments.com, which it purchased in 2014 and Apartment Finder, which it purchased in 2015. The price tag on this purchase is $385 million, with $350 million in cash and the remainder in stock.
Landlords have listed apartments online for more than a decade, partly on sites developed by newspaper owners worried about their loss of traditional print ads. In 1998, a venture of the Times MirrorCo. , Tribune Co. and Washington Post Co. purchased the company that went on to build Apartments.com.
In recent years, large investors such as CoStar and Zillow began to make big bets on the business. Currently there are 46 million rental households, up from 35 million in 2004, according to CoStar.
Competitors also include RentPath Inc., which is owned by private equity giants TPG and Providence Equity Partners. Major players like FacebookInc., Google Inc. and Craigslist also get an enormous amount of traffic from people looking for rental apartments.
The rental segment is now Zillow’s fastest-growing marketplace, according to remarks made by Chief Executive Spencer Rascoff during the company’s second quarter earnings call. He said the business grew 64% year over year in the second quarter.
Apartment construction continues to steam along, but it is set to decline despite a continued demand for more units in cities across the US. From the Wall Street Journal:
Overall U.S. housing starts declined for the fourth time in five months in July, the Commerce Department reported Wednesday. Total housing starts decreased 4.8% from the previous month to a seasonally adjusted annual rate of 1.155 million.
While starts edged 0.5% lower for single-family construction, they plummeted 17.1% for construction on buildings with five or more units. Apartment construction is tapering off because of an oversupply of units, especially at the top end of the market that is causing rents to flatten in many major cities.
“I’m optimistic that single-family will catch up,“ Mr. McLaughlin said. ”It’s not going to happen this year and it’s probably not going to happen next year.”
There are immediate consequences to a pullback in multifamily buildings if single-family doesn’t immediately catch up. It could exacerbate a shortage of homes. While there is a surplus of luxury apartments in most major metropolitan areas, housing overall remains scarce.
A question not addressed in the article: where are all the construction workers going to come from to build those single family homes?
The Texas Apartment Association (TAA) announced Monday that it is making a $10,000 donation to the American Red Cross to assist with Harvey relief efforts. NAA also has pledged $10,000 to the Red Cross. If you’re interested in helping, NAA and TAA encourage their members and friends to consider a monetary donation to the Red Cross. To give to Harvey relief efforts, text REDCROSS to 90999 to donate $10 to American Red Cross Disaster Relief or visit The American Red Cross.
According to a report from Marcus & Millichap, rents in the Triad have risen over the past four quarters thanks in part to investors looking for fertile territory after the Charlotte and Raleigh markets became a bit saturated. From the Triad Business Journal:
Rent for apartments increased 7.7 percent in the improving Triad market over the past four quarters, according to a Third Quarter 2017 report released by Marcus & Millichap (NYSE: MMI), a California-based, commercial real estate firm that provides research and advisory services in the U.S. and Canada.
The effective rent — the remaining cash after paying operating expenses — for landlords in the market was up 8.3 percent to $811. The vacancy rate dropped from nearly 6 percent to 4.5 percent over the past year.
By comparison, effective rents in Charlotte averaged $1,090 and in Raleigh they averaged $1,109
You know that suburban office park that’s been sitting there 50% vacant for the last few years? That might be your next mixed-use residential redevelopment. From the Wall Street Journal:
Many of these developers also are looking at ways they can create downtown-style districts with a mix of office and retail. But these can be tougher sells as employers flock from these types of office campuses to downtowns and suburban shopping centers get clobbered by online retail.
Some of these master-planned developments have also been criticized for having an ersatz quality similar to the faux city in the 1998 movie “The Truman Show.” Even the best ones can’t match the vibrancy of a thriving downtown.
But suburban developments have popular downtowns licked when it comes to affordable housing, something that is in scarce supply in New York, Boston, San Francisco and other cities. The housing crisis in cities has become “suburbia’s opportunity to participate in the new urban movement,” said Jonathan Miller, chief executive of Miller Samuel Inc., a real-estate appraisal firm.
Much of Winston-Salem’s downtown apartment development has been concentrated near the Innovation Quarter and the central downtown area, with the notable exception of the Link Apartments Brookstown, which is across the street from BB&T Ballpark on the west side of downtown. That’s about to change with the addition of West End Station, which should deliver 229 apartment units to Winston-Salem’s West End within 24 months. From an article in the Winston-Salem Journal:
The $35 million development will provide 229 apartments in a block that’s close to both the center of downtown and the BB&T Ballpark, said Porter Jones, the president of DPJ Residential, a Charlotte-based developer doing its first project in Winston-Salem…
DPJ Residential and Chaucer Creek Capital of Raleigh are going 50/50 on the development. Chaucer Creek Capital owns the Gallery Lofts apartment community in downtown Winston-Salem, but the West End Station is the first development here for DPJ Residential…
Jones said West End Station will have a saltwater swimming pool and a fitness center, a two-story clubhouse with an outdoor terrace and gas grills, and two elevated courtyards above the parking deck on the lower floor of the building that faces Brookstown Avenue. In all, there will be 300 parking spaces.
Offering a mix of one- and two-bedroom apartments, the development will have rent ranges from $1,200 to $1,300 per month for the one-bedroom units, Jones said, to $1,600 to $1,650 for the two-bedroom units.
This episode of Not a Complex podcast features an interview with Susan Passmore, Executive Vice President of Blue Ridge Companies, past-president and current board member of the Apartment Association of North Carolina, and newly elected Regional Vice President (Region 4) of the National Apartment Association. We talked about Susan’s new role with NAA, her career (her first job was as a bookkeeper on a property in Asheboro, NC) and her varied personal interests – her lifelong passion for professional wrestling in particular. It’s a great interview and you’ll find yourself learning something while being entertained in the process.
So, sit back and enjoy the show. If you have any questions or comments please feel free to email them to us at firstname.lastname@example.org
According to data released by Apartment List, median rents (July,2017) in Winston-Salem and Greensboro were among the lowest in the 100 largest US metro areas, but they are growing. Winston-Salem came in at the 94th slot, with median 1BR rents of $640 and 2BR rents of $780. Greensboro came in at the 85th slot, with median 1BR rents of $710 and 2BR rents of $840.
While the rents are low in the Triad, Winston-Salem’s rent growth is actually among the strongest in the country. Median rents there grew 1.8% from June to July (1st in the country), and 4.6% from July, 2016 to July, 2017 (26th in the country). Greensboro’s rent grew 0.5% from June to July (50th in the country), and 3.3% from
Greensboro’s rent growth wasn’t as spectacular as its neighbor to the west, but 0.5% from June to July (50th in the country), and 3.3% from July, 2016 to July, 2017 (43rd in the country) still beats a stick in the eye.