The leaderboard of rent growth leaders shuffled slightly, but the markets remained about the same. Las Vegas took the top spot for annual rent growth in July at 8.4%. Phoenix (8.3%), Sacramento (5.2%), Raleigh/Durham (5.1%) and Greensboro/Winston-Salem (5.0%) rounded out the top five. Austin, Nashville, Riverside, Charlotte, Atlanta, Milwaukee and Cincinnati all saw between 4.0% and 4.8% annual rent growth.
The article also points out that national occupancy rates hit 96.2% in July, the highest they’ve been in 20 years:
Strong leasing activity in this year’s peak season has continued to cause apartment vacancies to drop, with July’s occupancy rate reaching 96.2 percent. That rate, the highest rate since 2000, was up 0.4 points year-over-year.
As usual, occupancy was tightest in the Northeast region, at 97 percent. The West and Midwest were 96.5 percent and 96.4 percent occupied, respectively. Occupancy landed at 95.7 percent in the South. Those rates were up 0.2 points to 0.5 points from a year ago.
Of the nation’s 150 largest apartment markets, 91 meet or exceed the national norm for occupancy and 135 hit the effectively full mark of 95 percent. Only four markets register occupancy below 94 percent, including some supply challenged Texas markets like College Station and Lubbock.
NAA’s Units Magazine has an interesting piece from Apartments.com about some research they’ve done on renters’ searches. Here’s an excerpt:
Searches on Apartments.com indicate renters are usually looking for a deal that may not exist, according to a new analysis of that search data. On average, the typical user searches for a maximum rent that is less than the actual average rent for a given area. In fact, there is roughly a 12 percent premium between average one-bedroom rents and the average maximum rent for which searchers on Apartments.com look. Searchers want the best price—and who can blame them? …
Indeed, the more expensive an area is, the more searchers look for lower rental costs. Areas that have average rents between $2,000 and $2,500 have an average premium of real, over searched-for, rents of 22 percent. The premium for areas that average $1,000 to $1,500 is only 8 percent. No area that averages more than $2,500 in one-bedroom rents has renters searching for maximums above the market average.
Furthermore, the overshooting and undershooting of rents correlates to the percentage of income spent on rent. The more expensive an area as a share of income, the less likely a renter is to overshoot rents with their max search. Linear regression predicts that in areas where a renter pays about 25 percent of their income on rent, searchers will plug in a rent that is only 83 percent of the average. At about 11 percent of income spent on rent, they match their max search with the average (Note: These rent-to-income ratios purposely exclude any instance of affordable, discounted, or reimbursed housing).
Blackfin Real Estate Investors LLC, based in Arlington, Virginia, and GMF Capital LLC of New York City, bought The Hamptons at Country Park in Greensboro for $18.7 million from Johnston Properties of Greensboro. The deal was recorded Aug. 13 by Guilford County…
The Hamptons, l4515 Lawndale Dr., is a 264-unit multifamily property on 22.8 acres adjacent to Country Park. The property, last sold in December 1999 for $9.13 million, is listed as Class C and being built in 1979 in Guilford County records.
In our research, we find that strong economic growth and the robust labor market continue to support the strength in the multifamily market. Last year ended much stronger than anticipated with near record absorptions and stronger rent growth compared with the prior few years. The first two quarters of 2019 saw mixed results, with slower growth in the first quarter but preliminary second quarter information indicating the spring leasing season is off to a strong start. Along with the strong fundamentals, lower interest rates continue to drive origination volume higher throughout 2019...
We continue to see an overall shortage in housing as household demand outpaces new supply. The U.S. Census Bureau reports five-plus unit multifamily completions are on pace in 2019 to exceed the previous few years. However, total housing completions over the past three years have averaged 1.1 million housing units each year, while the number of households have increased on average 1.4 million each year. The continued increase in multifamily construction when the overall housing market continues to remain unbalanced is not necessarily an oversupply concern as the economy struggles to build enough housing. ..
The multifamily market is expected to remain healthy for the rest of 2019 and into 2020. We expect demand to remain robust and continue to entice construction of multifamily units. New supply is scheduled to remain elevated for the next few years. As this supply enters the market, we expect vacancy rates to increase throughout the year, but only marginally, up to 5.2%. We anticipate that rent growth will remain healthy at around 4% in 2019.
NAA recently interviewed economist Ryan Severino about what he’s seeing in the apartment market, and he had some interesting things to say about the demographic measurements that apartment owners should keep an eye on. Here’s his reply to the question, “What concerns do you have for the apartment market over the next couple of years?”:
Severino: Certainly, affordability is an issue. This is years down the road, but I wonder what happens when Gen Y is not the prime rental cohort anymore. What happens during that change over? Even though we make the blanket assumption that the propensity to rent isn’t going to change, the shrinking of that generational changeover from Gen Y to Gen Z will mean significantly fewer renters during that period, especially if Gen Y starts to transition a little more seriously out of renting into homeownership.
Because of that, I wonder what happens to some of these new apartment communities that are expensive because the land is expensive and material costs are expensive and labor is expensive. What happens to that stuff when you start to get a pullback as a demographic changeover occurs? That’s a little bit further down the road than just the next couple of years, but it’s something that I’ve been thinking about because of demographics.
According to a brief published by CBRE and referenced in an article in MultiFamily Executive, national turnover rates for multifamily housing are at their lowest level in the past 20 years. From the article:
A recent brief published by CBRE shows the turnover rate for multifamily housing has fallen to 47.5%, which is the lowest level in two decades. CBRE quotes numbers from RealPage that show a drop of 80 basis points. The decline is confirmed by additional evidence culled from six major real estate investment trusts (REITs). AvalonBay, Camden, Equity Residential (EQR), MAA, and UDR all show a lower turnover rate in Q1 2019 as compared with 2018 with an annual average drop of 2% to 42%. Essex showed a 1-point rise to 41%.
The drop represents an overall trend that has been happening since at least 2000, when the rate was clocked at 65%. According to CBRE, “lower turnover rates are generally interpreted as positives for the industry and a sign of favorable market strength at this point in the cycle.” Turnover ticked up a bit in the mid-2000s but then tumbled again during the Great Recession.
The lowest turnover rates were in the Northeast and Midwest, while the rates in the South and West were higher. Also, rates of turnover were lower in Class B and C properties than in Class A properties.
Wood Partners has been successful in marketing some of its communities at Starbucks’ in-store or drive-thru lines. Here’s a little about their program from an article in UNITS magazine:
We partner with Starbucks often and have great success with outreach events at Starbucks locations near our communities. One of our favorite ways to outreach at Starbucks and other local coffee shops is to have a pay-it-forward event, where we purchase coffee drinks for the prospects and distribute information about our community.
It creates feel-good experiences that are memorable for the patrons and at the same time, helps us to get the word out about our new communities. I can only imagine the word-of-mouth exposure that our communities receive when the recipients of a pay it forward coffee drink share the news with friends, family and colleagues.
We had a particularly successful partnership with a Starbucks location in Charlotte, N.C. The local Starbucks named a drink, the vanilla-flavored APV Latte, after our newly opened community, Alta Prosperity Village, and we were able to advertise the drink.
Starbucks provided our team with Starbucks gift cards, and we provided our prospects with a gift card after each tour. We have found Starbucks to be a great partner and that they are willing to work with us in most scenarios. The level and type of partnership vary by location.
Earlier this year PTAA’s Food Drive Committee set a crazy, audacious goal: raise enough food and money for Second Harvest Food Bank to provide 500,000 meals. Why’s that audacious? Because the 2018 goal was 225,000 meals! But, they would not be deterred and when then the drive kicked off on May 1 they were determined to meet that crazy milestone.
Well, we’re happy to report that around noon on July 31, the day that marked the official end of the food drive, we received an anonymous donation that put us over the top and we succeeded in meeting the 500,000 meal goal! Much credit and thanks are due to:
All of the PTAA member communities, management companies and supplier partners who enthusiastically participated in the drive.
The Food Drive Committee, co-chaired by Renee Phillips and Tyler Hunt, who did a great job organizing and recruiting volunteers for our food drive-related events.
All of PTAA’s Volunteers; especially those hardy souls who stood out in the heat to collect food for Fill the Stands With Cans.
The Greensboro Grasshoppers, High Point Rockers and Winston-Salem Dash who partnered with us for Fill the Stands With Cans.
WXII for also partnering with us by filming and airing promotional videos for the Fill the Stands With Cans games and by covering the games on their broadcasts.
PTAA’s staff who work hard throughout the year coordinating with Second Harvest and providing the Committee with the resources they need to do their thing.
I’m sure I forgot to thank some folks, so let me just end by saying, “Thank You! Thank You! Thank You!” to everyone who made this year’s Food Drive a tremendous success.
Now, if you’re reading this and still have food or money to donate, it’s not too late. Just contact Stephanie Beeman at PTAA (stephanie AT piedmonttaa.org) and she can help you out.
Probably the highest-profile project in Winston-Salem that isn’t in the Innovation Quarter is the repurposing of the old GMAC Insurance Building at 500 W. 5th Street. As part of that project, Grubb Properties is constructing a five-story mixed-use building that will include 224 apartments. Here are some of the details of their plans as described in an article in the Winston-Salem Journal:
Grubb has announced plans for a $48 million, five-story mixed-use facility that will stretch to the boundaries of Fourth and Poplar streets. It will contain a mini dog park and an adjacent “pocket park” off North Spruce Street.
Thomas said the plans include having five stories fronting on Fourth Street with retail on the first floor and four stories on the side adjacent to the 500 West Fifth Street tower...
Grubb has committed to making 5% of the apartments affordable to people making up to 90 percent of area median income, and 25 percent of the apartments having rents affordable by people making up to 110 percent of the median.
Thanks to everyone who has been participating in our 2019 Summer Food Drive, we’ve raised more than 415,000 meals for Second Harvest Food Bank this summer, and we’re on track to pass the total we raised last year.
Every dollar raised for the food bank can be used to provide at least seven meals to kids in need. How does that work? Through their partnerships with grocery retailers and the USDA, the food bank is able to source nutritious food, including fresh meat, dairy, fruits and vegetables. The food bank’s culinary program uses some of the ingredients to prepare hot meals, and they are distributed along with fresh food to local pantries, summer feeding locations and soup kitchens across 18 counties.
Our goal for 2019 is to raise half a million meals, and we’re looking for that last boost to get us to the goal by July 31.
It’s time for Jon to step in! We’re offering him up for auction to help us reach our goal. The winner of the auction will have Jon all to yourself at your corporate office or chosen property for one day! Jon has maintenance skills, salesmanship skills, and a wealth of industry knowledge and experience, and we’re happy to share him with you for a day.
You can place your bid by donating to the team “Jon Lowder” on our donation page (click the button below). If you haven’t used the page before, just click “Donate Now,” then “Search for a Participant or Team,” then begin typing “Jon Lowder.”
The MINIMUM bid is a donation of $500, which equals 3,500 meals!
The donation must be made between today and July 31
ALL DONATIONS will go to the food bank and are NONREFUNDABLE – regardless of whether or not you win the auction
Whichever company has made the highest donation by 11:59pm on July 31 will win the grand prize: Jon Lowder for a day!
The company with the second-highest donation will win 2nd prize: Jon Lowder for half a day (half the day, all the awesome)
Once the auction is over, Jon will follow up to arrange a day to spend on your property, and PTAA will be sure it is well covered in our social media and other publicity!
Questions? Contact Jon with any questions you have before you donate.