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.

US Apartment Rents and Occupancy Up in Third Quarter

Across the U.S. rent and occupancy rates rose in the third quarter, although not at the same rate they were rising a few years back. From the Wall Street Journal:

Apartment rents rose 2.9% in the third quarter from a year earlier, up from 2.5% annual rent growth in the second quarter, according to real estate analytics firm RealPage Inc. A strong economy with better wage growth helped boost demand for apartments. So did a weak home-sales market, as tight supply may have prompted more renters to put off buying.

Source: Wall Street Journal

“There definitely doesn’t seem to be the pressure to buy that was there a little bit earlier,” said Greg Willett, chief economist at RealPage.

The rental market has still slowed significantly from a few years ago, when rents grew by 5.2% in the third quarter of 2015. But Mr. Willet said that “an upward blip rather than a downward blip” shows at least that the slowdown isn’t accelerating.

The share of occupied apartments during the third quarter rose to 95.8% in the third quarter from 95.4% in the second quarter, according to RealPage.

Interestingly, one factor that might be contributing to the stronger than anticipated rental market is the tax cut passed last year:

Barbara Byrne Denham, a senior economist at Reis, attributed stabilization in the rental market to the tax bill that passed last December. That bill almost doubled the standard deduction for individual and joint filers, making it less advantageous for most homeowners to itemize and take the mortgage interest deduction.

What We Learned at PTAA’s 2017 Industry Forecast Breakfast

PTAA’s 2017 Industry Forecast Breakfast, held November 28 at Revolution Mill in Greensboro, featured a panel of three speakers: Mark Vitner, Managing Director & Senior Economist at Wells Fargo; Brian Ford, Managing Partner at Capstone Apartment Partners; Colin Wolfe, President of Real Catalyst Group. Vitner provided a regional and national economic update and forecast; Ford addressed the Triad apartment market from a transactional standpoint; Wolfe reviewed the PTAA Supply and Demand Dashboard that he developed in 2017.

Some key takeaways included:

Vitner (National and Regional)

  • Greensboro apartment activity has slowed in 2017 after the highest amount of absorption on record to close 2016. As a result of slower supply growth, rents have increased each quarter this year.
  • North Carolina continues to see solid economic gains across most major metro areas.
  • Pace of job growth in the Triad trails that of the state.

Ford (Piedmont Triad Apartment Transaction Outlook)

  • 52% of Triad Multi-Family Owners are based outside of NC.
  • Since 2016, 78% of buyers in the Triad are new to the area.
  • Number of transactions this year in the Triad is 31 YTD. In all of 2016 there was 54.
  • Triad had almost as many transactions in 2016 (54) as the Triangle (58) did.
  • Cap Rates in the Triad are on average 0.5%+ higher compared to Charlotte and Raleigh MSAs, thus providing for higher returns for investors.

Wolfe (Triad Supply and Demand Dashboard)

  • Completions and Demand in the Triad have been largely balanced over the last four years.
  • Completions as a percentage of overall apartment stock in the Triad has been about the same as the national average over the last four years (1.5% to 2.6%) while Raleigh has ranged from 3.4% to 5% and Charlotte has been in the 4.2%-5.1% range.

Following their presentations, the panelists took questions from the audience for 30 minutes, and the conversation was lively and informative. One fun takeaway from that discussion: Vitner is of the opinion that Charlotte and Atlanta are frontrunners for Amazon’s second HQ.

For more information about the session please contact Jon Lowder.

Apartment Industry Resources for Helping Hurricane Harvey Victims

The National Apartment Association published helpful links to apartment industry resources for those interested in the Hurricane Harvey recovery operations:

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.

NAA’s Emergency & Disaster Library and the Texas Apartment Association’s Resource Page both offer detailed guidance to aid members faced with the devastating impacts of Hurricane Harvey.

If you are in an area affected by the hurricane and are in need of shelter, the Red Cross can assist.

A list of 26 ways to assist in terms of housing, supplies and cash donations is provided here by Parker Molloy of Upworthy.

Meet Ras Fenger, Owner of Disaster One and PTAA Board Member

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This episode of Not a Complex podcast features an interview with Ras Fenger, President of Disaster One and a member of PTAA’s Board of Directors. Among other things, we talked about how he came to own Disaster One, how technology is impacting his business, the Chips for Children fundraising event he organizes each year to benefit The Boys and Girls Club, leadership and his favorite books and movie.

Over the coming months you’ll see (hear?) more interviews with members of PTAA’s Board of Directors. There are multiple reasons we’ve kicked off this series, but the two big ones are:
1. These folks have a wealth of knowledge to share
2. We hope this will allow PTAA’s members to get to know their leadership a little better.

So, sit back and enjoy the show. If you have any questions or comments please feel free to email them to us at info@piedmonttaa.org

Subscribe via: iTunesStitcher

Show Notes:

Disaster One

Chips for Children

 

Ras’s Favorite Books & Movie:

Good to Great by Jim Collins

7 Habits of Highly Effective People by Stephen R. Covey

The Good, the Bad and the Ugly

NAA Introduces New President and CEO

The National Apartment Association’s Board of Directors has announced who will succeed Doug Culkin as President and CEO upon his retirement at the end of 2016. Here’s the text of the announcement from NAA Chairman Marc Ross:

As you know, the Doug Culkin, our current President and CEO, announced some time ago that he intended to retire at the end of this year. As a result, National Apartment Association (NAA) formed a CEO Search Committee to secure the next staff leader of the organization. The Committee selected Spencer Stuart, an international executive recruiting firm, to conduct a nationwide search. Hundreds of candidates expressed interest in the position, and the Committee culled the applicants down to a final recommendation.

I am happy to announce that on August 30, 2016, the NAA Board of Directors approved the Committee’s recommendation that Robert “Bob” Pinnegar, the current Executive Vice President and COO, be selected as the new President and CEO of the NAA. Bob brings more than 20 years of experience and commitment to the apartment housing industry. In his role as an association executive with a strong local affiliate and nearly 5 years with NAA, he is uniquely positioned to lead the Association and the industry forward.

The transition will occur during in November and December of this year allowing adequate time to ensure NAA’s smooth transition into 2017.

Additionally, I would like to thank the members of the CEO Search Committee:

  • Tom Beaton, CAPS, CPM®, Search Committee Chair, 2015 NAA Chairman, Dolben Company
  • Cindy Clare, CPM®, NAA Chairman-Elect, Kettler Management
  • Mike Clark, NAA Region 6 Vice President, Alpha-Barnes Real Estate Services
  • Mike Clow, CPM®, NAA Treasurer, Greystar
  • Josie Eatmon, 2015 AEC President, Triangle Apartment Association
  • Kellie Jackson, CAM, CPM®, NAA Region 9 Vice President, Milestone Management
  • Jeff Lowry, CAPS, NAA Vice Chair, Madera Residential
  • Diana Pittro, NAA Region 3 Vice President, RMK Management Corporation
  • Tony Sculthorpe, CAS, 2015 NSC Chairman, CSC ServiceWorks
  • Ron Shelton, CAPS, 2009 NAA Chairman, Amalgamated Management Corporation
  • Jerry Wilkinson, CAPS, CCIM, 2012 NAA Chairman, The Wilkinson Group, Inc.

I hope you all will join me in looking forward to a continued strong future for NAA with Bob at the helm.

What If All Leases In a City Expired the Same Day?

Ever wonder what it would be like if all the leases in town expired on the same day? Well, for over a century that’s what happened every year in New York City:

It’s hard to believe, but for more than a century, all New York City leases expired and started on the same day of the year, May 1. This meant thousands of families loading up the entirety of their belongings onto carts and maneuvering them through the cramped city streets to new apartments.

The origins of this unfortunate practice are hazy — some say it began with English celebrations of May Day. But by 1820, the New York State legislature signed a law stating that unless you worked something out with your landlord or renewed your lease, all leases were up on the first of May.

Landlords would inform their tenants of any rent increases for the coming year on February 1, giving tenants three months to find a new place or decide to stay. With the new rent due on May 1, most families elected to remain in their old abodes until the very last moment, moving en masse using horses and carts.

And you thought doing turns in August on student properties was wild.

Rents Rising Faster Than Wages

Across large segments of the US rents are rising faster than wages, and that’s putting pressure on more and more households:

Much of the problem is attributable to simple supply and demand. The job market has improved and millennials are entering the labor pool in force, boosting household formation. But in a structural shift for the real-estate market, new households are much more likely to be renters than buyers.

So there are more renters which is putting pressure on the current housing stock and that means rising rents.

“Rents have skyrocketed so much and incomes haven’t kept pace, so we have an affordability crisis in some of our major metropolitan areas for the middle housing market,” said Kenneth Rosen,chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley.

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The squeeze is tighter in some of the “usual suspect” markets like San Francisco and New York, but even markets like Nashville are seeing it too:

Nashville is one city “getting meaningfully more expensive,” saidGreg Willett, vice president for research and analysis at MPF.

Rents there were up 5.1% in the second quarter from a year earlier, well outpacing incomes. According to separate Labor Department data, average weekly wages rose 2.4% in the Nashville metropolitan area between 2013 and 2014.

While builders have been adding new units to the market, most are luxury apartments. In response, the Nashville Metropolitan Council passed a bill July 21 ordering the local planning department to devise a zoning plan that would increase the supply of affordable housing.

If the affordability crunch isn’t addressed soon then we’ll start to see more and more cities try to do what Nashville is doing, but they might find themselves fighting an uphill battle when confronted by NIMBYism from neighborhood groups. This article about San Francisco’s struggle to find a solution to its affordable housing crunch is an excellent primer on difficult a nut this can be to crack. Private sector development is critical to this process, and hopefully cities will work with developers to address these issues, but even if they do there will still be a steep hill to climb with interest groups.

SCRA Affidavits Now Required in Counties Throughout the Triad

In June the courts in Forsyth County started requiring SCRA affidavits to be filed for summary ejectment cases (see the original story here), and at the time we warned that this requirement would likely make its way to other counties soon. Well, we just heard from a member that as of last Tuesday they are being required in Guilford County too, and after further investigation we learned it’s required in many other counties in the Triad.

Our friends at Loebsack & Brownlee were kind enough to provide a list of NC counties that they are aware of that are requiring the SCRA affidavit:

  • Alamance
  • Beaufort
  • Brunswick
  • Buncombe
  • Burke
  • Carteret
  • Catawba
  • Cleveland
  • Cumberland
  • Davidson
  • Davie
  • Durham (after 08/01/2015)
  • Forsyth
  • Gaston
  • Guilford
  • Harnett
  • Henderson
  • Iredell
  • Johnston
  • Lee
  • Mecklenburg
  • New Hanover
  • Onslow
  • Person
  • Pitt
  • Randolph
  • Rockingham
  • Rowan
  • Stokes
  • Union
  • Watauga
  • Wayne

As a reminder here’s what we had about the Forsyth County requirements last month:

Originally the Clerk was requiring the filing of a completed affidavit that they had developed for this purpose (found on their website at this link) but after meeting with her we were able to determine that members could visit the US Government’s SCRA website (found here) at which they can confirm the military status of any person, print the results and staple them to the complaint or bring it with them to court.

We asked for some clarification on timing and received the following via email from the Clerk after she checked with the District Court judge: How many days would the Status Report be acceptable? For the duration of the case was her answer. Presenting the Status Report or Affidavit at the time of hearing and not at filing is acceptable. She is meeting with magistrates and conveying these same issues with them to have consistency. 

So in a nutshell, what you can do is either use the affidavit provided by the Clerk or you can print off the results of the search from the SCRA website. You can attach the affidavit or printout to the complaint or you can bring it with you to court.

Unfortunately we received word today (6/10/15) that the courts have decided that affidavits will be required from now on in Forsyth County. Also, we’ve heard that the same is true in Mecklenburg County so our members who have properties there should be prepared to file an affidavit there as well.

MASSIVE Discount for PTAA Members Who Want to Attend the 2015 NAA Education Conference!

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Every year the National Apartment Association’s Annual Education Conference is the biggest apartment industry event in the country. In 2014 over 8,000 people attended the conference in Denver, CO to hear keynote speakers like Michael J. Fox, to attend any of the dozens of educational sessions, and to visit a trade show floor that featured almost a thousand top-notch vendors. On June 24-27, 2015 the conference will be held in Las Vegas and it’s expected to be the biggest and best yet.

To help make the conference as “do-able” as possible for our members, PTAA has arranged a huge discount on registrations for our members. If you register through us your registration rate will be $575 which is a $150 savings over what it would cost you to register on your own. That’s a savings of over 20%!

Also, if you’re a member of another NAA affiliate in North Carolina, South Carolina, Georgia, Tennessee or Kentucky you should check with your local affiliate to see if they are offering the discount. If not you’re more than welcome to register through us as well. If you’re not a member of any affiliate or of NAA directly you can still get $150 off the non-member rate.

We’re in the process of setting up our registration system now and should be live in the next week or so. In the meantime we are taking pre-registrations. Simply click here to get a PDF version of our registration form, fill it out and email it to Jon Lowder. Once our registration system is live we’ll get you entered and send you your confirmation number(s) so that you can arrange your housing whenever you’re ready.