A Statement On Ukraine from Kevin Maggiacomo, SVN President and CEO

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SVN | AVAT REALTY, LLC COMPLETES SALE OF MILWOOD MANOR IN NASHVILLE, TENN. FOR $13.45 MILLION

Nashville, Tenn., SVN | AVAT Realty, LLC, one of the nation’s premier net lease brokerage firms, has completed the sale of Millwood Manor, a 200-unit multifamily development in Nashville, Tenn. Andrew Agee, Senior Advisor of SVN | AVAT Realty, LLC brokered the sale of the 201,850 square-foot property for $13.45 million.

“Nashville rents are appreciating faster than anywhere in the Southeast creating an ideal opportunity for both the seller and the buyer in the transaction,” said Agee. “Following the buyers proposed large scale renovations, the property will further increase in value, creating a substantial value add for the buyer.”

Nashville, the capital of Tennessee and one of the most popular cities in the state, is located adjacent to the Cumberland River and in close proximity to major transportation including Nashville International Airport, CSX Transportation by Amtrak, the Metropolitan Transit Authority and Interstate I-40, I-24, and I-65.

 

About SVN | AVAT Realty, LLC:

SVN | AVAT Realty, LLC is an independently owned and operated SVN® office. The SVN organization is a globally recognized commercial real estate entity united by a shared vision of creating value with clients, colleagues and our communities. The SVN Brand is comprised of over 1,600 Advisors and staff in more than 200 offices across the globe. Our brand pillars represent the transparency, innovation and inclusivity that enables all our advisors to collaborate with the entire real estate industry on behalf of our clients. SVN’s unique Shared Value Network® is just one of the many ways that SVN advisors create amazing value with our clients, colleagues and communities.  For more information, visit www.svn.com.

SVN | Rich Investment Real Estate Partners Brokers Sale of Santa Monica, CA Multifamily Property for $23.8 Million

Santa Monica, CA (October 11, 2017) SVN | Rich Investment Real Estate Partners, one of the nation’s premier commercial real estate firms, brokered the sale of 153 San Vicente Boulevard, a 30-unit, 44,199-square-foot multifamily development located on over 21,000 square feet of land in Santa Monica, CA for $23.8 million. Shiva Monify of SVN | Rich Investment Real Estate Partners, one of the firm’s top producers, advised on the transaction.

“Properties like 153 San Vicente Boulevard, which offers an ideal location and favorable design features, rarely come on the market in Santa Monica,” said Shiva Monify, Managing Partner of Special Asset Team SVN | Rich Investment Real Estate Partners. “SVN | Rich Investment Real Estate Partners recognized the value at hand and worked to present the client with the perfect opportunity to invest in this asset. Following the property’s closing the new owner plans to renovate the asset and build a new rooftop observation deck.”

Santa Monica is a beachfront city located in western Los Angeles County and is one of the most desirable locations in the area. Situated on Santa Monica Pier, the neighborhood is known for its downtown core and strong tourism. 153 San Vicente Boulevard is well situated in the center of town, walking distance to Ocean Avenue and an ample amount of entertainment options and conveniences.

About SVN | Rich Investment Real Estate Partners

SVN | Rich Investment Real Estate Partners is an independently owned and operated SVN® office with locations throughout Los Angeles county. The SVN organization, a globally recognized commercial real estate franchisor, is comprised of over 1,600 advisors and staff in more than 200 offices across the globe, and provides services to over 500 markets across the United States.  SVN’s Core Values of transparency, cooperation and organized competition center on what is truly important for achieving organizational success and lasting value. SVN’s unique Shared Value Network® is just one of the many ways that SVN Advisors create amazing value with our clients, colleagues and communities.  For more information, visit www.svn.com.

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Tampa, FL | 2016 Top #CRE Markets to Watch: Multifamily

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2016 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Tampa, FL

Tampa has recovered significantly after experiencing deep impacts from the recession and is now growing jobs at an annualized pace of 3.6% with an unemployment rate of 4.8% as of January ‘16, according to the Bureau of Labor Statistics. Job growth also helped sustain population growth of 6.8% from 2010 to 2014, according to the Census Bureau. This growth has caused the multifamily sector in Tampa to expand with growing rents, falling occupancies, and lots of new supply. 2016 should bring approximately 5% rent growth with stable occupancy levels. The city is approximately 50% rental housing based and should demand more units as economic expansion continues. Top sectors for employment growth include Construction, Professional and Business Services, Leisure and Hospitality, and Financial Activities which have annualized growth rates of 7.1%, 7.1%, 6.6%, 3.4%, respectively.

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top multifamily markets, download the full version of the 2016 Multifamily Market Outlook report here.

 

[bctt tweet=”Tampa, FL is one of 2016’s top multifamily #CRE markets to watch.” username=”svnic”]

Seattle, WA | 2016 Top #CRE Markets to Watch: Multifamily

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2016 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Seattle, WA

Seattle - Top Multifamily Market to WatchSeattle is one of the fastest growing cities on the West Coast, with a population that grew 9.8% from 2010 to 2014, according the Census Bureau. Job growth continues at an annualized pace of 3.0% while unemployment has been stable with the latest reading in January ‘16 of 5.6%, according to the Bureau of Labor Statistics. Seattle is an expensive city to live in and as such approximately 54% of the housing units are rentals, according to the Census Bureau. The need for ample housing is real and multifamily assets should perform well for 2016 and beyond. Rents are expected grow over 5% as new supply hits record highs to fill new demand. The best sectors for job creation include Information, Leisure and Hospitality, Trade, Transportation, and Utilities, and Financial Activities, which are growing at 8.1%, 5.0%, 4.2%, and 4.1% annualized rates, respectively.

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top multifamily markets, download the full version of the 2016 Multifamily Market Outlook report here.

2016 Multifamily Market Outlook

[bctt tweet=”Seattle, WA is one of 2016’s top multifamily #CRE markets to watch.” username=”svnic”]

San Jose, CA | 2016 Top #CRE Markets to Watch: Multifamily

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2016 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: San Jose, CA

San Jose - Top Multifamily Market to WatchSan Jose is one of the hottest cities in the Bay Area and thus has experienced very strong employment growth since 2011 which has brought the unemployment rate down to 3.9% as of January ‘16 while jobs are still being created at the robust pace of 3.8% annualized according to the Bureau of Labor Statistics. Population growth is also significant at 6.6% from 2010 to 2014 as people find this market relatively more affordable. The San Jose housing stock is traditionally owner oriented with only 43% used for rentals. Given the rate of regional growth, local multifamily assets are very well positioned to pick up demand from surrounding areas a well as localized growth. Rent growth is expected to exceed 5% with relatively low new supply in 2016. Top sectors in job creation include Construction, Information, and Professional and Business Services with annualized growth rates of 10.3%, 8.4%, and 6.8%, respectively.

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top multifamily markets, download the full version of the 2016 Multifamily Market Outlook report here.

2016 Multifamily Market Outlook

[bctt tweet=”San Jose, CA is one of 2016’s top multifamily #CRE markets to watch.” username=”svnic”]

Reno, NV | 2016 Top #CRE Markets to Watch: Multifamily

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2016 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Reno, NV

Reno - top multifamily markets to watchReno is experiencing sustained gains in employment with a 4.4% annualized rate after being severely impacted by the past recession; unemployment has improved dramatically and now sits at a still relatively high 6.2% as of January ‘16, according to the Bureau of Labor Statistics. Population has grown robustly with a 4.9% increase from 2010 to 2014, according to the Census Bureau. As is common with tourist market economies, the percentage of city housing used for rental purposes is high at 53% meaning that job growth will quickly mean growth for the multifamily sector. The city’s economy is rapidly diversifying with the biggest gains coming from Construction, Professional and Business Services, Financial Activities, and Education and Health Services with annualized growth rates of 9.6%, 9.5%, 5.2%, and 5.0%, respectively.

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top multifamily markets, download the full version of the 2016 Multifamily Market Outlook report here.

2016 Multifamily Market Outlook

[bctt tweet=”Reno, NV is one of 2016’s top multifamily #CRE markets to watch.” username=”svnic”]

Portland, OR | 2016 Top #CRE Markets to Watch: Multifamily

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2016 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Portland, OR

Portland, OR - top multifamily market to watchPortland has experienced rapid employment growth in 2015, bringing the unemployment rate down to 4.7% as of January ‘16 while sustaining new job creation at a rate of 3.1%, according to the Bureau of Labor Statistics. Population in the city grew by 6.1% between 2010 and 2014 according to the Census Bureau who also reports that approximately 47% of the housing stock is used for rentals. Portland is a relatively high priced market for the nation but still affordable for a major West Coast metro with an excellent quality of life. Leading employment sectors include Information, Leisure and Hospitality, and Education and Health Services growing at 9.4%, 4.6%, and 4.5% respective annualized rates. These dynamics should lead to strong performance of the multifamily sector in 2016 and beyond with rents growing over 10% this year as new supply remains relatively moderate.

Advisor Insights: SVN | Bluestone & Hockley

SVN’s Portland-based Advisors at SVN | Bluestone & Hockley have some multifamily market highlights to share. Here’s what to look out for in Portland’s multifamily market in 2016:

  • More units coming online
  • Price leveling off
  • More outside of the market investors coming in

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top multifamily markets, download the full version of the 2016 Multifamily Market Outlook report here.

2016 Multifamily Market Outlook

[bctt tweet=”Portland, OR is one of 2016’s top multifamily #CRE markets to watch.” username=”svnic”]

Phoenix, AZ | 2016 Top #CRE Markets to Watch: Multifamily

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2016 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Phoenix, AZ

Phoenix - top multifamily market to watchPhoenix experienced significant gains in overall employment in 2015 that moved the number of jobs significantly above pre-recession peaks as unemployment fell to 4.6% in January ‘16 with continued annualized employment gains of 3.6%. The population grew by 6.2% from 2010 to 2014, according to the Census Bureau, helping to fuel new demand for apartment units. The city utilizes approximately 46% of its housing units as rentals and has relative affordability with high quality of life making the market a prime one to grow in 2016 and beyond, with rents expected to grow over 5% this year. The leading employment sectors are Information, Construction, Financial Activities, Education and Health Services, and Professional and Business Services, growing at annualized rates of 7.6%, 6.3%, 5.3%, 5.2%, and 5.1%, respectively.

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top multifamily markets, download the full version of the 2016 Multifamily Market Outlook report here.

2016 Multifamily Market Outlook

[bctt tweet=”Phoenix, AZ is one of 2016’s top multifamily #CRE markets to watch.” username=”svnic”]

Philadelphia, PA | 2016 Top #CRE Markets to Watch: Multifamily

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2016 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Philadelphia, PA

Philadelphia - top multifamily market to watchJob growth in Philadelphia has brought the city back above pre-recession employment levels as unemployment stays steady at 4.8% as of January ‘16 with modest annualized employment growth of 2.1%, according to the Bureau of Labor Statistics. Population growth has been below the national average as the city only gained 2.2% from 2010 to 2014, according to the Census Bureau. Accordingly, demand for new apartment units is modest compared to other metros of similar size; yet the city does have a relatively high use of housing units as rentals at approximately 47%. Philadelphia does have an advantage in affordability, especially compared with other East Coast metros, and thus has growth potential with rents forecast to grow by over 3% in 2016. The city’s top sectors for job growth include Mining, Logging, and Construction as well as Professional and Business Services where are expanding at annualized rates of 8.2% and 3.7%, respectively.

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top multifamily markets, download the full version of the 2016 Multifamily Market Outlook report here.

2016 Multifamily Market Outlook

[bctt tweet=”Philadelphia, PA is one of 2016’s top multifamily #CRE markets to watch.” username=”svnic”]

Charlotte, NC | 2016 Top #CRE Markets to Watch: Multifamily

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2016 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Charlotte, NC

Charlotte - top multifamily market to watchThe multifamily market in Charlotte has experienced strong growth in demand as the city has gained 10.1% in population from 2010 to 2014, according to the Census Bureau. This has been fueled by significant job growth that has set new records substantially above pre-recession peaks, leading the present unemployment rate to sit at 5.3% as of January ‘16 with new job creation occurring at an annualized rate of 2.8%, according to the Bureau of Labor Statistics. Approximately 45% of the city’s housing stock is renter occupied. Thus, a good deal of the new population is likely to demand an apartment. Further, gross rents are below national averages, making Charlotte affordable and capable of seeing meaningful rent growth. New supply has grown approximately 4% in 2015 which will lower rent growth slightly in 2016, but still likely to be robust and above 4%. Many sectors are adding jobs at annualized rates above 4%, including Financial Activities, Professional and Business Services, and Leisure and Hospitality. However, this city does face a unique risk to continued growth from the new “bathroom” law, perceived very negatively by many; this could jeopardize new job growth and thus the market if firms choose to relocate or otherwise curtail operations in the state.

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top multifamily markets, download the full version of the 2016 Multifamily Market Outlook report here.

2016 Multifamily Market Outlook

[bctt tweet=”Charlotte, NC is one of 2016’s top multifamily #CRE markets to watch.” username=”svnic”]

Denver, CO | 2016 Top #CRE Markets to Watch: Multifamily

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2016 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Denver, CO

Denver - top multifamily market to watchThe Denver multifamily market has experienced significant additions of new supply as its population has grown 10.6% from 2010 to 2014, according to the Census Bureau. Further, the employment market is outstanding with 3.0% unemployment as of January ‘16 and annualized job growth of 2.5%, according to the Bureau of Labor Statistics. Denver features a larger renter population with approximately 50% of its metro’s housing units used for rental purposes; still rental rates are relatively affordable for a metro of its size, giving it room to grow. Top sectors for employment growth include Leisure and Hospitality, Financial Activities, Manufacturing, and Professional and Business Services growing at annualized rates of 6.0%, 3.9%, 3.5%, and 3.2%, respectively. As such, rent growth could hit 7% in 2016.

Advisor Insights: SVN | Denver Commercial

SVN’s Advisors at SVN | Denver Commercial have some multifamily market highlights to share. Here’s what to look out for in Denver’s multifamily market in 2016:

  • As population grows, (over 100,000 additional people since 2014), demand grows likewise for multifamily.
  • Household formation is growing with a younger demographic makeup in Denver. The CBD area alone now is housing a population of 90,000 residents, mostly in multifamily buildings.
  • Rents have risen significantly over the past few years but are now reaching affordability limits.
  • Renters are demanding fully amenitized properties when higher rents are asked by landlords.
  • Expect to see more micro-apartments to address affordability issues, especially in the CBD area.
  • Vacancy rates are now approaching more “normalized” conditions of 5-7%, versus virtually nil in the last couple years. This is due to increased delivery of new apartment units to the region, somewhat outpacing demand.

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top multifamily markets, download the full version of the 2016 Multifamily Market Outlook report here.

2016 Multifamily Market Outlook

[bctt tweet=”Denver, CO is one of 2016’s top multifamily #CRE markets to watch.” username=”svnic”]

Boston, MA | 2016 Top #CRE Markets to Watch: Multifamily

SVNIC’s 2016 Market Outlook Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2016. Today we are delving into the 2016 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2016 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Boston, MA

Boston top multifamily marketBoston’s economy has experienced significant job growth such that its unemployment rate is now 4.0% as of January ‘16 and new jobs are being created at a 1.4% annualized rate, according to the Bureau of Labor Statistics. Further, population has grown 6.2% from 2010 to 2014, according to the Census Bureau, and has thus significantly increased the demand for rental housing in the metropolitan region. Bostonians are highly predisposed to renting as over 65% of the housing units in the city are rentals according to Census data; thus prolonged population and job growth will place great pressure on rents which could grow over 6% in 2016 and keep occupancies above 97% while new supply is likely to remain less than 2% . The top sectors for job growth include Financial Activities and Education and Health Services which are growing at 3.1% and 2.9% annualized rates, respectively.

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

To read more on other top multifamily markets, download the full version of the 2016 Multifamily Market Outlook report here.

2016 Multifamily Market Outlook

[bctt tweet=”Boston, MA is one of 2016’s top multifamily #CRE markets to watch.” username=”svnic”]

SVN Releases 2016 CRE Market Outlook Reports

New Updates on Trends in Top Markets

This week SVN released the 2016 Market Outlook Reports as a way to update the CRE industry on current trends. Teaming up with the Lakemont Group, Real Capital Analytics, and REIS, SVN put together reports detailing today’s economic conditions and how they impact commercial real estate. These reports also highlight top markets to watch across the U.S., citing cities such as Chicago and Atlanta that CRE professionals should keep an eye on. Broken up into four major asset classes – industrial, multifamily, office, and retail – these reports provide useful insights as we head into the second half of 2016.

Highlights from Each Report Include:

Industrial

Chicago Market Outlook Reports
Chicago, IL
  • Global pressures weigh on growth
  • Net absorption strong as vacancy falls
  • Fundamentals improve for all industrial sectors
  • Demand growth persists
  • Yield seeking investors discover industrial properties
  • Warehouse is the storefront of tomorrow

Multifamily

  • New supply meeting demand
  • Rent growth fuels supply expansion
  • Class ‘A’ leads in rent growth, ‘B/C’ in occupancy
  • Record households and jobs increase demand growth
  • Low cap rates engender price risk fears
  • Baby Boomers may form next rental wave
Atlanta Market Outlook Reports
Atlanta, GA

Office

  • Slow growth and steady gains
  • Record rents amidst still high vacancies
  • ‘B/C’ holds steady while ‘A’ gains
  • Domestic strength and global uncertainty
  • Wide spreads indicate low risk
  • Return of the private office is possible

Retail

  • Discovering a new normal
  • High vacancies restrict the need for new supply
  • Neighborhood centers make gains on power centers
  • Consumer segment continues to grow
  • Opportunities for mispriced assets exist
  • Housing reconstruction to spur retail demand

Stay Updated…

Over the next few weeks, the SVN Blog will be featuring posts that will focus on each of the top markets to watch for industrial, multifamily, office, and retail properties. SVN Advisors from selected top markets have provided their industry expertise regarding what to look out for in their specific market in the coming months. Don’t miss out on these important insights – subscribe to the SVN Blog on the right side of the blog homepage.

 

CRE Market Outlook

[bctt tweet=”SVN released the 2016 Market Reports as a way to update the #CRE industry on current trends. ” username=”svnic”]

Early Summer 2016 Commercial Real Estate Update

Investing in Commercial Real Estate for Stability

Present economic conditions are teetering on the edge of flat to very slow growth causing rising fears of a sustained slowdown. The catalysts of these issues are reductions in employment and investment in energy production and a general tapering of demand from overseas. The result to the United States as of June 2016 has been three months of below 200,000 hiring (only 38,000 in May), below 1% GDP growth (0.8% annualized in latest first quarter estimates), and flat growth of corporate profits. Not surprisingly, some investors are worried.

Charlotte - July Economic Update
Charlotte, NC

Those making the jump to say that slow economic growth equals a real estate downturn, or even the feared “bubble” should stop and take stock of the fundamentals. Occupancy rates for all major categories of commercial real estate, even apartments, are stable and improving nationwide. In fact, a recent Yardi Matrix report even states that the “worst” major metro it tracks is Houston, and its apartment occupancy rate is still 94.7% where energy price pains are the worst. Rents are generally still growing for all property types as well, even apartments. This point was also made clear by the same Yardi Matrix report stated that nationwide rents hit another all-time record high in May of $1,204 per month. If rents are rising and so are occupancies, then there is one simple conclusion; demand is still outpacing supply. That is a buying sign, not a selling sign, all else equal.

Supply Not Matching Increasing Demand

New supply, which has increased in the past few years, especially in the multifamily sector, may have trouble expanding in the future. Lenders appear increasingly stringent in providing development financing and labor and construction costs are not predicted to slow their perpetual increases. In fact, the internal, less discussed measures from the government jobs report show that hourly labor costs rose 3.9% in the first quarter. Thus, it appears that a part of the slowing pace of hiring is a cost constraint; not necessarily a falling demand issue. Developers of real estate have known this pain for years; they repeatedly tell stories of projects delayed and slowed due to labor shortages. For the commercial real estate market, this means that the supply and demand balance is likely to remain in favor of landlords, even if user demand cools moderately.

Those considering investing in real estate should look at these facts; solid fundamentals, low levels of new supply, and low interest rates when analyzing the next acquisition. Yes, it should be noted, that one great benefit of tepid economic indicators is remaining low interest and borrowing costs. The Federal Reserve is far less likely to push interest rate increases in 2016 than earlier thought and borrowers should take advantage of this. Plus, the real return to bonds and stocks is likely to drag lower compared to real estate, especially when considering the global exposure of many publicly traded companies. Real estate can provide a real income yield, supply and demand suggests that it can grow, and best yet, it can grow with inflation when and if it starts back up. Real estate offers income and stability in these types of economic climates; even REITs have outperformed the general stock market in 2016 to prove the point.

Investors Seeking Affordable Stability

Austin - Economic Update
Austin, TX

There is one theme that investors should keep mind, that is “affordability.” Rents can only rise as high as incomes (personal or business) can support. Growth patterns show people and firms moving from high-rent “24 hour” cities (New York, San Francisco, Los Angles for example) to lower rent “18 hour” cities (Nashville, Charlotte, Orlando, Phoenix, Austin for example). Thus, while the major markets have been the leaders in the past few years, it’s logical to expect the “secondary” markets to be the relative winners for the next several years. If a property provides great value and utility at a relative “affordable” price point; then it is best positioned to provide stability in all economic environments.

In conclusion, it would be a mistake to equate minor economic jitters with impending doom, as many on television like to do. The United States went through a significant downturn from 2008 through 2012, but frankly hasn’t grown that fast since. Thus, the economy really is not possibly “overheated” as it was last time. Since commercial real estate is undersupplied on a relative basis, it may actually be one of the best investment categories in the near to long term; a totally different starting point than in 2008.

To learn more about the current CRE market and economic conditions, read the SVN Commercial Real Estate Cooperation Report here.

[bctt tweet=”There is one theme that investors should keep mind, that is affordability #CRE” username=”svnic”]

Finding the Perfect Apartment Building

Investing in Apartments Includes Some Benefits

Apartments are the hottest class of commercial real estate and are likely to continue being hot for a while. Independent of the unique demographic and economic drivers for their success in the current post-Great Recession economy, there are a few basic truths that make them attractive:

  • Housing costs usually move up and apartment rents can be adjusted on a regular basis.
  • Vacant units are easy to re-rent with little or no cost. In fact, tenant security deposits usually pay for cleaning and repairs.
  • Excellent financing with 80 percent leverage is readily available.
  • Relatively easy appreciation through making cosmetic upgrades to increase rents.

…But Apartments Also Include Some Downsides

For many investors, though, apartments have three key problems compared with other classes of commercial real estate. They have tenants that break things, complain and fail to pay rent. Apartments have kitchens that tend to start destructive fires. Finally, they have bathrooms that leak and cause damage to surrounding units. At the same time, many cities heavily regulate apartments and, in many cases, favor tenants over landlords. These problems make apartments challenging and time-consuming to own.

Imagine, for a moment, an apartment building without tenants, kitchens or bathrooms and with little or no government oversight. All that you would have are rooms with furniture, clothing and other items in them. If you have ever owned an apartment building, you know that a building like this one would be a dream to own!

The Solution: Self Storage Facilities

In fact, the perfect apartment building is a self-storage facility. Mini-storage facilities offer a similar ownership experience to apartments but without any of the drawbacks. Because they frequently serve apartment tenants, their performance tracks the apartment industry, as well. Furthermore, modern management systems make them much easier to own than many people realize.

Read more of Solomon Poretsky’s blog posts here.

[bctt tweet=”In fact, the perfect apartment building is a self-storage facility.”]

San Francisco, CA | 2015 Top #CRE Markets to Watch: Multifamily

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2015 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: San Francisco, CA

San Francisco: 2015 Multifamily Markets to WatchSan Francisco’s tech industry is booming, bringing with it jobs, rental households, and multifamily investment dollars. In spite of new development, the city still ranks as one of the most expensive (if not the most expensive) places to live in the United States. Chandan Economics reports that rents for mortgage-backed properties increased at a double-digit pace in 2014. Across the multifamily inventory, the average apartment rent was nearly $3,000. Prospects for income growth are well-capitalized into the market’s aggressive pricing; domestic and cross-border investors ready to pay a premium for liquidity are best prepared to navigate around buying opportunities.

The influx of young well-paid tech workers and the reach of development into new neighborhoods are not without their problems, as many long-time residents of San Francisco have found themselves on the losing side of gentrification. Affordability remains a concern for San Francisco residents and the stringent rent-control regulations remain bothersome for developers looking for short-term value-add investments. San Francisco should see 10,000 new units delivered before the end of 2015. The strong demand side fundamentals of the local economy should absorb the new supply easily. Among the notable projects, approvals are now in place for Parkmerced in the Outer Sunset. The first phase includes more than 1,500 units and will eventually rise to nearly 9,000 apartments. Lennar’s Hunters Point Shipyard-Candlestick Point redevelopment, which will produce 478 affordable and 755 market-rate units, is also underway, with the first affordable units expected in 2016.

To read more on San Francisco and other top multifamily markets, download the full version of the 2015 Multifamily Market Update report here.

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It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors with more than 180 locations in 200 markets.

San Diego, CA | 2015 Top #CRE Markets to Watch: Multifamily

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2015 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: San Diego, CA

San Diego: 2015 Multifamily Markets to WatchSan Diego’s diverse economic base has been essential to its recovery from the Great Recession and the prevailing strength of the apartment sector. Recent investments in infrastructure, including the expansion of both the San Diego International Airport and San Ysidro Land Port of Call border crossing, have helped bolster the economy with construction jobs, while also laying the groundwork for permanent employment gains in San Diego’s manufacturing, shipping and logistics, and tourism sectors. San Diego has a very large military and defense contractor presence, but it has also seen an uptick in biotechnology investment, including the completion of J. Craig Venter Institute’s net-zero-energy, LEED Platinum genomics laboratory in La Jolla in February 2014. The ambitious I.D.E.A. (Innovation, Design, Education, and Arts) District is aimed at transforming the East Village area of downtown San Diego into a hip “24-hour” neighborhood, with ample space for technology startups, restaurants, and housing options that will appeal to younger renter households.

The market’s overall fundamentals remain strong even as new supply comes online. Freddie Mac projects 2015 vacancy rates of just 2.8% and year-over-year rent growth of 4.1%. The average cap rate has fallen below 5% for recent transactions and refinancing, but investors looking for small- and mid-cap value-add opportunities at marginally higher cap rates than to the north in Los Angeles and Orange County may find that forays into San Diego bear fruit.

To read more on San Diego and other top multifamily markets, download the full version of the 2015 Multifamily Market Update report.

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It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors with more than 180 locations in 200 markets.

Portland, OR | 2015 Top #CRE Markets to Watch: Multifamily

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2015 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Portland, OR

Portland: 2015 Multifamily Markets to WatchPortland has established itself as a magnet for Millennial households, which in turn has contributed to its very tight rental market. About 7,000 units were delivered in 2014. Still, the multifamily vacancy rate in Portland ended the year at less than 3%. While Freddie Mac expects additional deliveries in 2015 to push vacancy rates up, the agency additionally projects a 3.8% increase in rental rates. Oregon’s land-use restrictions ensure that construction is overwhelmingly in-fill, which fits the Millennial preference for urban living.

The economic and labor market drivers of apartment demand in the Portland area are robust. Among last year’s milestones, November 2014 saw the single largest monthly job growth for Portland since 1990. Intel, which just negotiated a 30-year tax break in exchange for an extraordinary $100 billion investment in semiconductor equipment and facilities at its Hillsboro campus, anchors the high-tech industry in Portland, while Nike received final approvals to expand its Beaverton campus in order to accommodate the addition of 2,100 jobs. German solar panel producer, SolarWorldAG, is set to expand its Hillsboro facility, adding 200 jobs. Small- and medium-sized businesses are flourishing as well, with 57% of the Inc. 5000 list of fastest growing companies calling Portland home.

To read more on Portland and other top multifamily markets, download the full version of the 2015 Multifamily Market Update report.

multifamily_thumbnail

It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors with more than 180 locations in 200 markets.

Oakland, CA | 2015 Top #CRE Markets to Watch: Multifamily

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2015 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Oakland, CA

Oakland: 2015 Multifamily Markets to WatchThe rapid gentrification of some of San Francisco’s most iconic and hitherto relatively affordable neighborhoods has forced many recently priced-out residents to look eastward across the Bay to Oakland. They are not alone, but instead have been joined by some investors who are skeptical of San Francisco’s record low cap rates.

By late 2014, surging demand for apartments pushed rent growth in Oakland to nearly 7.0%, according to Chandan Economics’ tracking of mortgage-financed properties. Supporting continued increases, Freddie Mac projects Oakland’s multifamily vacancy rate will hover just above 3.0% in 2015, barely higher than San Francisco. Developers are working to meet demand. The Temescal/Telegraph neighborhood is seeing a flurry of development activity as investors bet that this area can compete with Berkeley’s Gourmet Ghetto and attract young renters. Deliveries will peak in 2016, relieving some of the upward pressure on rents.

Relocations from San Francisco are not the only drivers of multifamily performance in Oakland. The local economy is strong, supporting local demand that is independent of the Bay Area’s market interplay. The employment picture in the Oakland area has brightened considerably: the unemployment rate peaked at 16.5% in 2009, above the state-wide number, but has since declined to 5.9%, below California’s current 6.5% rate.

To read more on Oakland and other top multifamily markets, download the full version of the 2015 Multifamily Market Update.

multifamily_thumbnail

It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors with more than 180 locations in 200 markets.

Nashville, TN | 2015 Top #CRE Markets to Watch: Multifamily

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2015 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Nashville, TN

Nashville: 2015 Multifamily Markets to WatchThe Nashville metro area added more than 25,000 jobs in 2014, with the largest gains in construction (up 10.1% year-over-year) and professional services (up 7.1%). The recent announcement that Google Fiber will expand to Nashville promises to breathe additional momentum into the already hot tech industry. Unemployment sits at just 5.0% in one of the nation’s post-crisis secondary market success stories. With a healthy outlook for demand, Nashville’s challenges are overwhelmingly on the supply side. With nearly 4,500 new apartment units expected by the end of 2015, largely at the top-end of the market, rent growth is projected to slow in the near-term. For buyers with a long investment horizon, the robust outlook for Nashville’s demand drivers and its relatively higher cap rates may present opportunities to capitalize on a short-term slowdown in fundamentals that will give others pause.

Not to be ignored, there are emerging concerns about affordable housing opportunities in an area where nearly 1 in 5 residents lives below the poverty line. A grassroots affordable housing alliance is pushing for Nashville to adopt inclusionary housing measures, working to ensure that a share of new housing units are reserved for low- and middle-income tenants. The implications for market-rate multifamily development remain unclear, but the public debate bears monitoring over the next year.

To read more on Nashville and other top multifamily markets, download the full version of the 2015 Multifamily Market Update report here.

multifamily_thumbnail

It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest com

Miami, FL | 2015 Top #CRE Markets to Watch: Multifamily

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2015 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Miami, FL

Miami: 2015 Multifamily Markets to WatchIn spite of its relatively mixed economic and job market trends, the Miami region boasts some of the nation’s strongest multifamily fundamentals. The vacancy rate in the fourth quarter of 2014 was less than 4%, according to Chandan Economics’ tracking of mortgage-financed properties, and increased only slightly in the first quarter of 2015. The tight market has supported annual rent growth of more than 6%. Investors should factor slower gains in underwriting potential investments. A moderating pace of rent growth, in part reflecting new inventory of 5,000 units in 2015, characterizes the near-term outlook.

One of the key sources of capital for the renewal of Miami’s economy and real estate market has been foreign capital, from Latin America, and also from France and Russia. Unfortunately, it is unclear whether foreign investment will keep to its strong pace over the next year. If nothing else, the stronger greenback has rendered US assets significantly more expensive than just 12 or 24 months ago. Local and national players could uncover opportunities to buy value- add opportunities during a lull in cross-border capital inflows.

To read more on Miami and other top multifamily markets, download the full version of the 2015 Multifamily Market Update report here.

multifamily_thumbnail

It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors with more than 180 locations in 200 markets.

Houston, TX | 2015 Top #CRE Markets to Watch: Multifamily

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2015 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Houston, TX

Houston: 2015 Multifamily Markets to WatchThe nation’s energy capital has been rattled over the last year by lower energy prices, though experts disagree on how significant the impact will be on Houston’s increasingly well- diversified economy. Some companies in the oil exploration, production, and drilling businesses will undoubtedly make cuts in 2015. There is no avoiding that five of Houston’s top ten employers are in the oil industry.

While demand may soften, Houston’s most daunting challenge is its pipeline of new apartments. Nearly 30,000 multifamily units were under construction as of the first quarter of 2015, with completions projected to exceed 15,000 units by year’s end. Chandan Economics projects that Houston’s ratio of new jobs to units delivered will slide to below 4.5% in 2015, less than half the national average.

While higher-end construction projects clustered in Houston’s downtown neighborhoods could falter, the suburban multifamily market has a relatively thinner development pipeline and may be better positioned for further rent gains in 2015. Vacancy has evaporated in the mid-tier of the market as many Class B properties have found their way out of the inventory, sometimes through strategic repositioning. Cap rates on these assets are relatively high, affording opportunities for income-oriented investors betting on Houston’s long-run growth record.

To read more on Houston and other top multifamily markets, download the full version of the 2015 Multifamily Market Update report here.

multifamily_thumbnail

It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors with more than 180 locations in 200 markets.

#CRE Trends and Market Update 2015 | Multifamily

Multifamily Market Outlook

Apartments’ Exceptional Resilience

2015 Multifamily Market Update: Markets to WatchFlouting expectations that new supply would slow the pace of rent gains, the apartment sector over the last year has shown exceptional staying power. Strong rental demand, particularly amongst Millennials, has allowed most markets to absorb new supply without significant disruption to growth in property income. As of the first quarter of 2015, national rent growth and occupancy rates were near their cyclical highs. The former has actually accelerated, with year-over-year increases in asking rents hitting 3.8% in 2014 and 4% on a seasonally adjusted annualized basis in the first quarter.

The view that the apartment sector is benefiting from a fundamental change in how young Americans think about homeownership has factored into investors’ readiness to bid aggressively on core and non-core properties. Prices have surpassed their historic highs, lifted by apartments’ favorable risk profile and an abundance of low-cost debt and equity. Across all markets, the national average cap rate declined to 5.5% in 2014. Debt yields have also fallen to approximately 8% as borrowers assume more debt. Life companies, banks, conduit lenders, and specialty lenders are all competing on price and structure with the venerable agencies—Fannie Mae and Freddie Mac—that account for the largest share of all multifamily financing.

Investors are rightfully enthusiastic about the long-term return profile of the apartment sector but they should also be cautious in evaluating the current investment climate. Over the next year, some of the underlying conditions that have defined post-recession apartment investing are set to change. At least on the margins, older Millennials will revisit opportunities for homeownership as housing markets stabilize further. In particular for those that start families, the appeal of the suburbs will grow: in the hierarchy of amenities, new parents may find that a good elementary school will suddenly matter as much as anything on offer in the urban core.

2015 Multifamily Market Update: Multifamily Unit ConstructionApart from the demographic of cyclical factors that may influence household preferences for renting or owning, there are other risks to the apartment sector that must be considered carefully. Most obvious is the challenge of new supply. While the national numbers (and recent history) point to a level of new inventory that may be absorbed in stride, some markets will inevitably overbuild. In some markets, rent slow-downs have been concentrated in downtowns, reflecting the concentration of new development in a tight geographic area. Where the outlook for income growth is more measured, properties may also exhibit greater sensitivity to eventual changes in the interest rate environment.

Multifamily Market Statistics in 2015

Construction activity in the apartment sector continued to climb throughout 2014. Measured in terms of dollar spending, multifamily development activity reached $43.5 billion last year, up from $32.2 billion in 2013, and a low of just $14.7 billion in 2010. Though the year-over-year pace of increases in spending have slowed, there is still exceptional momentum in new development. Recent completions offer an incomplete gauge of the market’s capacity to absorb new space. As of the first quarter of 2015, units currently under construction are approaching their highest levels in thirty years, since the mid-1980s. The largest development pipelines are in the Texas market, including Austin, Dallas, and Houston, and in New York and Washington, DC. Relative to market size, however, Denver and Seattle will have to absorb their fare share as well.

2015 Multifamily Market Update: Natl Apt Construction Spending2015 Multifamily Market Update: Apt Construction Spending Change

After slowing to a still-impressive pace of 3.5% in 2013, asking rent growth jumped to 3.8% in 2014 and has kept to a  strong seasonally adjusted pace in the first quarter of 2015. Market observers had expected that new supply would push both occupancy rates and rent growth slightly lower, but those projections have not proved out. With most markets running at occupancy rates above their long-term averages, concessions have virtually disappeared, with the result that effective and asking rents are not significantly different. The leading markets for rent growth in the first quarter included in Denver, New York, San Francisco, San Jose, and Seattle. Notably absent from the top of the league tables, rent growth is now lagging in Boston and Washington, DC, one of the few gateway or primary markets to see fundamentals falter on the wave of new supply.

2015 Multifamily Market Update: Apt Asking Rents2015 Multifamily Market Update: Apt Asking Rents Change

Measured across the breadth of small suburban garden apartments at one extreme and the largest urban high-rise properties at the other, multifamily cap rates declined to a national average of 5.5% in 2014. Cap rates fell another 10 basis points to 5.4% in the first quarter of 2015, within range of their all-time lows. Cap rates in the most contested markets, including New York and San Francisco, are now typically in the range of 4% to 5%.

Investors have expressed concerns about a possible bubble in the apartment market, but that has not dissuaded buyers from pushing transaction volume to new highs. In spite of wider-than-average spreads, investors are girding for an increase in interest rates that will exert drags on value. The stronger the prospects for income growth, the more resilient properties should be in the face of higher costs of capital.

2015 Multifamily Market Update: Apt Cap Rates2015 Multifamily Market Update: Apt Cap Rate Spread

Market Cap Rates

Value-weighted national average apartment cap rates fell to 5.5% in 2014, marginally lower than a year before. Market average cap rates ranged from below 5% in selected gateways and primary markets to above 6% in secondary markets and markets where transaction activity was dominated by suburban garden apartment properties. The lowest cap rates were recorded in New York City, principally in Manhattan and the Brooklyn and Queens waterfronts, where investment demand from domestic and cross-border buyers has pushed asset prices to record-highs. Detroit was the only major market to register an average cap rate above 7% in 2014.

It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason — we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors, with more than 190 locations in 500+ markets.

To download the full 2015 Multifamily Market Outlook report, click here.

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Phoenix, AZ | 2015 Top #CRE Markets to Watch: Multifamily

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2015 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Phoenix, AZ

Phoenix: 2015 Multifamily Markets to WatchThe glut of foreclosed single-family homes now available for rent in the suburban submarkets of Phoenix has not weighed significantly on the downtown apartment scene. Reflecting the depth of the local market’s economic downturn and the challenging path to recovery, however, asking rent growth in Phoenix had been relatively slower than in gateway and other primary markets. The dynamic changed over the last year and a half as vacancy rates fell below 5% and rent growth kicked into high gear, rising nearly 7% in 2014 and at an annualized rate of 7.2% in the first quarter of 2015. The outlook for Phoenix over the next year remains bright, given a limited pipeline of new apartments and healthy job growth.

As cap rates for the best-performing assets have fallen to cyclical lows, developers in the area have more readily snapped up value-add opportunities in urban in-fill locations. Given their relatively high cap rates, property makeovers may offer a compelling buy for investors, provided they have strong operational capabilities.

To read more on Phoenix and other top multifamily markets, download the full version of the 2015 Multifamily Market Update report here.

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It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors with more than 180 locations in 200 markets.

Atlanta, GA | 2015 Top #CRE Markets to Watch: Multifamily

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2015 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Atlanta, GA

Atlanta: 2015 Multifamily Markets to WatchAfter several years of lagging economic growth, Atlanta proved itself a late bloomer in 2014. Jobs are key to apartment demand and Atlanta is coming into its own. The metro area is generating jobs again, pushing total employment higher by 2.4% in 2014. Illinois-based insurer State Farm announced it would add 3,000 jobs in its national operations center, currently under construction in the northern suburb of Dunwoody. Medical cloud-based services provider, athenahealth, is building out a new 75,000-square-foot loft office space in Atlanta’s Old Fifth Ward neighborhood, and is reportedly looking to add 600 new positions in 2015. To the north, in Alpharetta and Cumming, where the apartment vacancy rate has slipped below 3.0%, financial services technology provider Fiserv is consolidating its 2,000 Atlanta-area employees into a new $41 million campus, and looking to add 500 additional jobs over the next five years.

Like Atlanta’s broader economy and labor market, the apartment sector is also earlier in its current expansion than other metro areas, offering selective opportunities for investors concerned about buying into a mature cycle. Effective rents increased by more than 7% in 2014 and overall vacancy dropped to 6.2%, from 6.7% in 2013. The affluent neighborhood of Buckhead has the lowest vacancy rate, estimated at 3.0%. These trends are not sustainable over the long-run, particularly as renters’ wage and salary growth rates are lower than rent increases, but it will be a soft landing for the best properties as income growth moderates.

As new construction brings an additional 6,500 units online in 2015, rent growth is expected to slow in Atlanta’s core neighborhoods. Atlanta’s apartment market also faces competition from substitution into its highly affordable housing market. According to the National Association of Realtors, qualifying income for a single-family home with 10% down is less than $33,000, compared to $43,500 nationally.

To read more on Atlanta and other top multifamily markets, download the full version of the 2015 Multifamily Market Update report here.

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It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors with more than 180 locations in 200 markets.

Austin, TX | 2015 Top #CRE Markets to Watch: Multifamily

Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Multifamily Markets to Watch. Not the largest or the most actively contested markets, the 2015 Multifamily Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

Top Multifamily Market to Watch: Austin, TX

Austin: 2015 Multifamily Markets to WatchFollowing sustained growth in demand from strong migration to Austin, apartment effective rents as of the first quarter of 2015 were more than 30% higher than in 2010. Developers have responded in force to the persistence of rent growth over the last half-decade. Deliveries exceeded 9,000 units in 2014 and another 8,000 are expected in 2015. Even in the context of Austin’s strong job growth numbers, the pipeline is deep. Axiometrics estimates that Austin had roughly three new jobs for every multifamily unit that came online last year; of the most active investment markets, only Washington, DC had a weaker ratio.

With significant new supply, the occupancy rate in Austin has fallen slightly and landlords in a few submarkets have increased concessions and other incentives in order to attract tenants. Local economists and real estate professionals have mixed views on what the shift in the balance of supply and demand will mean for rents in late 2015, with estimates ranging from 5% year-over-year growth to projections of short-lived flatlining or declining property income. Most prognosticators agree that centrally located neighborhoods will continue to show rental growth in spite of the concentration of new inventory in the urban core. Suburban submarkets could see smaller increases or even some effective rent decreases due to concessions. The underlying demand drivers in Austin are strong, however. The market ranked 6th in a recent Forbes list of Top 10 Labor Markets, with an unemployment rate below 4%, and a growth rate in the local economy of roughly 5%. For investors with longer time-horizons, that leaves room for rent growth to pick up again in the medium-term, offsetting the market’s current aggressive pricing.

To read more on Austin and other top multifamily markets, download the full version of the 2015 Multifamily Market Update report here.

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It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisors with more than 180 locations in 200 markets.

Portland, OR | 2014 Top CRE Markets to Watch : Apartment

Sperry Van Ness International Corporation’s (SVNIC) 2014 Top Markets to Watch Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2014. Today we are delving into the 2014 Top Apartment Markets to Watch. Not the largest, or the most actively contested markets, the 2014 Apartment Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

TOP APARTMENT MARKET TO WATCH : Portland, Oregon

portland-415957_1280Multifamily construction has ramped up gradually in Portland, enabling landlords to grow rents even as new supply comes closer to matching the demand for apartments. After two years of adding some 2,000 multifamily units annually to the local inventory, and with a vacancy rate falling to near 3 percent, developers have stepped up the pace and will likely deliver 3,000 apartments in 2014. That accelerated construction activity will be enough to stabilize the vacancy rate and slow rent growth at existing properties. Portland’s enviable quality of life, including outdoor attractions and an expanding cluster of amenities catering to an urban lifestyle, continues to support outpaced job growth. Technology employers, and the service industry jobs that grow around the technology workforce, will help Portland to add about 30,000 jobs in 2014, similar to 2013’s employment growth. With only modest rent growth likely as apartment construction gains momentum, Portland offers opportunities for income investors, and some value-add plays remain for investors willing to invest in significant property upgrades.

To read more on Portland, and other top multifamily markets, download the full version of the Top Apartment Markets to Watch report below.

It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisers with more than 180 locations in 200 markets.

Download the Top Trends and Markets to Watch Reports

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Office Trends and Markets to Watch
Industrial Trends and Markets to Watch
Retail Trends and Markets to Watch
Commercial Real Estate Trends and Markets to Watch

Las Vegas, NV | 2014 Top CRE Markets to Watch : Apartment

Sperry Van Ness International Corporation’s (SVNIC) 2014 Top Markets to Watch Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2014. Today we are delving into the 2014 Top Apartment Markets to Watch. Not the largest, or the most actively contested markets, the 2014 Apartment Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

TOP APARTMENT MARKET TO WATCH : Las Vegas, Nevada

las-vegas-411190_1280Apartment developers are playing a game of chance in Las Vegas. Encouraged by the first increase in average rents since the Great Recession and a recent improvement in the vacancy rate, projects in the pipeline could deliver as many as 3,000 multifamily units in 2014, a tenfold increase from the previous year. Granted, the local population will increase by 2.7 percent this year alone, making it one of the fastest growing U.S. cities. Yet this market must dig itself out of a deeper housing hole than most, and still has a ways to go. The apartment vacancy rate of 9 percent is more than 10 basis points above the historical average. Average rents have only recovered to 80 percent of the pre-recession peak, and thousands of single-family homes remain on the rental market. The nascent recovery merits some development but is unlikely to float all boats in 2014.

To read more on Las Vegas, and other top multifamily markets, download the full version of the Top Apartment Markets to Watch report below.

It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisers with more than 180 locations in 200 markets.

Download the Top Trends and Markets to Watch Reports

Chandan-Apartment-CoverApartment Trends and Markets to Watch
Office Trends and Markets to Watch
Industrial Trends and Markets to Watch
Retail Trends and Markets to Watch
Commercial Real Estate Trends and Markets to Watch

Houston, TX | 2014 Top CRE Markets to Watch : Apartment

Sperry Van Ness International Corporation’s (SVNIC) 2014 Top Markets to Watch Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2014. Today we are delving into the 2014 Top Apartment Markets to Watch. Not the largest, or the most actively contested markets, the 2014 Apartment Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

TOP APARTMENT MARKET TO WATCH : Houston, Texas

houston-499802_1280Houston’s multifamily market has been on a two-year high—and lenders are ready to take it down a notch. Construction will add nearly 11,000 units in the Energy City by the end of 2014, more than 6,000 of which will be in a handful of high-end urban submarkets, growing inventory in those neighborhoods by more than 6 percent. With the remaining 5,000 or so units to be completed elsewhere in the city, however, the overall vacancy rate of about 6 percent is unlikely to shift appreciably until 2015 or beyond, and remains low for this market. Houston’s appetite for apartments is growing nearly twice as fast as the pace of construction, which is expected to add 10,000 units annually in 2015 and 2016. Nevertheless, some lenders concerned over the recent volume of development in Houston have tightened underwriting for construction loans, which could create a competitive advantage for investors with other sources of capital.

To read more on Houston, and other top multifamily markets, download the full version of the Top Apartment Markets to Watch report below.

It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisers with more than 180 locations in 200 markets.

Download the Top Trends and Markets to Watch Reports

Chandan-Apartment-CoverApartment Trends and Markets to Watch
Office Trends and Markets to Watch
Industrial Trends and Markets to Watch
Retail Trends and Markets to Watch
Commercial Real Estate Trends and Markets to Watch

Denver, CO | 2014 Top CRE Markets to Watch : Apartment

Sperry Van Ness International Corporation’s (SVNIC) 2014 Top Markets to Watch Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2014. Today we are delving into the 2014 Top Apartment Markets to Watch. Not the largest, or the most actively contested markets, the 2014 Apartment Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

TOP APARTMENT MARKET TO WATCH : Denver, Colorado

denver-69207_1280Denver will add nearly 50,000 jobs in 2014, with much of the growth occurring in high-paying energy, financial services, health care and bioscience industries. Employment growth of almost 4 percent in 2013 and a similar gain expected this year make Denver one of the nation’s fastest-growing job markets. Multifamily rent grew at a remarkable 6 percent in 2013. The addition of 10,000 new units this year will expand the apartment inventory by more than 3 percent, however, enough to slow annual rent growth to a more modest 4 percent. Nearly half of the apartments under construction are in the central business district, where the renovated Union Station is set to open later this year. Existing and planned light rail lines offer development opportunities, as well as value-add plays for investors able to upgrade and reposition existing, older properties in these growth corridors.

To read more on Denver, and other top multifamily markets, download the full version of the Top Apartment Markets to Watch report below.

It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisers with more than 180 locations in 200 markets.

Download the Top Trends and Markets to Watch Reports

Chandan-Apartment-CoverApartment Trends and Markets to Watch
Office Trends and Markets to Watch
Industrial Trends and Markets to Watch
Retail Trends and Markets to Watch
Commercial Real Estate Trends and Markets to Watch

Dallas, TX | 2014 Top CRE Markets to Watch : Apartment

Sperry Van Ness International Corporation’s (SVNIC) 2014 Top Markets to Watch Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2014. Today we are delving into the 2014 Top Apartment Markets to Watch. Not the largest, or the most actively contested markets, the 2014 Apartment Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

TOP APARTMENT MARKET TO WATCH : Dallas, Texas

DallasCombine low taxes, mild winters and a business-friendly climate with Dallas’ central location relative to both U.S. coasts, and it’s easy to see why this North Texas metro is enjoying annual economic growth of more than 3.5 percent. Reports early this year that logistics technology firm Omnitracs Inc. may bring as many as 1,000 jobs to the Dallas central business district simply added to the list of more than 50 major employers that have relocated to the metro area in the past two years, adding jobs and fueling population growth that will top 2 percent in 2014 alone. Renters in the Dallas-Fort Worth metro absorbed more than 16,600 apartment units in 2013, more than any other U.S. market, yet average vacancy of approximately 5.5 percent is well below the 10-year historical average of around 8 percent. While these fundamentals suggest good development prospects, the metro is also turning out apartments far faster than any other major market, completing nearly 13,000 units in 2013. That new supply could temporarily hamper rent growth in some submarkets.

To read more on Dallas, and other top office markets, download the full version of the Top Apartment Markets to Watch report below.

It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisers with more than 180 locations in 200 markets.

Download the Top Trends and Markets to Watch Reports

Chandan-Apartment-CoverApartment Trends and Markets to Watch
Office Trends and Markets to Watch
Industrial Trends and Markets to Watch
Retail Trends and Markets to Watch
Commerical Real Estate Trends and Markets to Watch

Boston, MA | 2014 Top CRE Markets to Watch : Apartment

Sperry Van Ness International Corporation’s (SVNIC) 2014 Top Markets to Watch Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2014. Today we are delving into the 2014 Top Apartment Markets to Watch. Not the largest, or the most actively contested markets, the 2014 Apartment Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.

TOP APARTMENT MARKET TO WATCH : Boston, Massachusetts

BostonBoston’s position as a top multifamily investment market (just behind New York and San Francisco) has pushed asset pricing to record highs and made construction an attractive alternative for investors. Local builders and institutional developers from around the country are cranking out new multifamily product here at the rate of about 4,000 units per year. That is well behind the pace of new household formation, which will be nearer to 7,000 annually over the next several years here. A falling vacancy rate, currently near 4 percent, has sparked spectacular rent growth of 20 percent or more over the past five years, although rents may plateau as new projects deliver large blocks of space and add vacancy. Much of the new construction is taking the form of large urban towers, answering the demands of well-paid, highly educated young knowledge workers attracted to Boston’s 24-hour culture.

To read more on Boston, and other top office markets, download the full version of the Top Apartment Markets to Watch report below.

It’s a different world out there.

It requires a different kind of commercial real estate firm working on your behalf in order to be successful. The Lipsey Company has ranked the Sperry Van Ness® organization as one of the most recognized commercial real estate brands in the US for a reason—we know how to deliver a certainty of execution for our clients. Sperry Van Ness International Corporation is one of the largest commercial real estate franchisers with more than 180 locations in 200 markets.

Download the Top Trends and Markets to Watch Reports

Chandan-Apartment-CoverApartment Trends and Markets to Watch
Office Trends and Markets to Watch
Industrial Trends and Markets to Watch
Retail Trends and Markets to Watch
Commerical Real Estate Trends and Markets to Watch

5 for Friday with Steve Martin of Sperry Van Ness/Martin Commercial Group

This week, our 5 for Friday features Steve Martin, CCIM, CPM, Managing Director with SVN/Martin Commercial Group.

Steve Martin, CCIM, CPM, Managing Director, SVN/Martin Commercial Group
Steve Martin, CCIM, CPM, Managing Director, SVN/Martin Commercial Group

 1.   What is your geographic market and product specialty?
We have two offices with one in Evansville, IN and the other in Indianapolis, IN. Our geographic market is primarily from Indianapolis to Evansville, IN through Western KY down to Nashville, TN. My product specialty is apartments although my team does a fair amount of NNN in our as well.

2.  What’s your latest best practice tip that you can share?
Keep your technology simple and yet effective. I love technology and yet it is easy for technology lovers, like myself, to look at the capabilities and forget about the difficulty of implementing it when multiple people are involved. The biggest challenge is learning how to effectively use technology to improve our business instead of using it because it is the latest and greatest gadget. We are working hard this year to make our technology effective but simple for our team’s success.

3.  What’s been the biggest change over on how you run your business in the past decade?
There are two major changes for me. First, I have become a firm believer in Richard Flint’s mantra, “Behavior Never Lies”. Whether it’s clients, employees, advisors, friends, family or just “people”, I have changed my approach to business by watching their behavior more and listening to their spin less.

Secondly, we are changing to a much more collaborative accountable & mobile organization and believe we will be paperless by the end of 2014. This requires totally different management styles and business approaches than paper and filing cabinets has in the past.

4.   What business book do you like to recommend to your colleagues?
I have a “Mastermind Group” of people of a similar age with many of the same business issues but in unrelated, non-competitive industries. We meet every month and always have a book that is part of our self-examination of the members of the group. We started with “Good to Great” by Jim Collins and it is a staple of our discussions and actions. It has paid great dividends for everyone in the group. Our current book is “The 4 Disciplines of Execution” by Sean Covey. It is likewise making a great impact and I recommend it highly.

5.    What’s a fun fact that not everyone knows about you?
I have only had one job other than owning The Martin Group of Companies and it lasted 6 months after college & then my Father and I embarked on building an apartment development company.  That was 36 years ago and I am blessed to work with my father everyday for the past 36 years.  In addition, I asked my wife to fill in for us in accounting for a few weeks 14 years ago but I’ve never stopped her temporary job!  Lastly, our third generation (Alex & Andy) is now joining us in our Indianapolis office and we are most excited about the future.

 

*All Sperry Van Ness offices are independently owned and operated.

Top Trends in Secondary CRE Markets

Diane Danielson Sperry Van Ness
Diane Danielson, Chief Platform Officer, Sperry Van Ness International Corp.

Earlier this month we released our Top Trends and Markets to Watch in 2013 Report. Our goal with this publication is to look at trends beyond the largest commercial real estate markets like NYC, Boston, SF, LA and Washington DC. Many of those markets have been in recovery mode, and as a result, future opportunities will likely reside in some often-overlooked markets.

Of course, not every secondary and tertiary market is seeing the light at the end of the tunnel just yet, but if you read through our 2013 Markets to Watch Report, you’ll be able to identify certain factors that could lead to CRE opportunities with upside. Below is a quick overview of a few of the trends we are seeing.

Large-scale infrastructure projects

In 2015, the widening of the Panama Canal will be complete, allowing larger ships to pass through its locks. This has set off a race to dredge ports along the Eastern seaboard.  Industrial properties in areas around ports able to receive these larger ships like Miami, New York/New Jersey, Jacksonville and Charleston and Savannah stand to benefit.

Energy-related growth

Newly discovered gas reserves and recent advancements in drilling and extraction technology have paved the way for significant economic growth and investment opportunity in places like Louisiana, Ohio, western Pennsylvania and West Virginia.

Demographic shifts

With an aging Boomer population moving into retirement, and generation Y (the Boomer’s kids) facing an extended period of adolescence and underemployment, we are going to see a shift in attitudes about housing. Even if they could take over their parent’s McMansions, they might not want to be in that market.  Gen Y (or Millennials as they are also known) are more environmentally conscious and value-oriented.

This is a generation that is attracted to mixed-used developments along transportation lines (not all of them can afford cars when they have the weight of student loans) and nearby retail and entertainment. In big cities like Boston, they are attracted to 300-sf mini-units, with zipcar parking and shared communal space.  However, not all can afford big city prices. This presents a good opportunity for those secondary markets with emerging high-tech communities.

With lower costs of living, and lower barriers of entry for new high-tech companies (many of the companies developing apps don’t need to be right in Silicon Valley anymore to attract talent), markets like Austin, Texas; and Florida’s new tech corridor  (from Orlando to Tampa) stand to benefit.

These are only a few of the trends that we cover in our 2013 report that may be affecting your local Apartment, Office, Industrial or Retail markets.

Review or download the Sperry Van Ness® Top Trends and Markets to Watch in 2013.

Read more on the 2013 Markets to Watch Report at National Real Estate Investor.

By Diane K. Danielson, Chief Platform Officer, Sperry Van Ness International Corporation.

All Sperry Van Ness® offices are independently owned and operated.

Multifamily #CRE Focus on Houston/Harris County, Texas

More Expansion in All Sectors

The Houston, Texas apartment market is the fourth largest in the country with nearly 600,000 units. Looking at the real estate drivers, it’s easy see why there’s so much demand. More than 90,000 jobs were added in 2012. New construction of offices in the energy corridor, a new Exxon campus in Harris County, and new apartment construction throughout the Houston area has created a large employment demand that’s expected to be strong for at least the next two years. The Houston Consolidated Metropolitan Statistical Area (CMSA) has gained about 90,000 jobs per year since 2011 which creates a demand for 18,000 new apartment units per year.blog1

Average Class A cap rates have continued to decrease since mid-2010, from 7% to a low of 5.5% in 2012. During the same time average sales prices increased from $50,000 to $66,000/unit. Cap rates for 2013 are projected to stay about the same for Class A properties at about 5.4% to 5.6%. Values will tend to increase as much as 10% due to new demand from job growth and the lagging supply of new product which should cause rents to increase. Class B cap rates should range from 7.0% to 7.5% and Class Cs at 8% to 8.5%. Now is the time to sell before we go into “hypersupply” foreseen in about 18 months.

Vacancy Trend Shows 0.8% Improvement in 2012

Decreasing vacancy rates is one characteristic of the “expansion cycle.” Overall occupancy for all classes has improved 0.8% from year end 2011 to year end 2012. Based on the projected job growth for 2013, net occupancy should increase 1.0% in 2013. A projected 13,000+ units will come on the market in 2013.

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High Absorption/Low Construction

While the characteristic of  the expansion phase is high absorption, Houston saw an absorption in 2012 of about 12,250 units. The first half  of 2012 was a positive 7,141 units with a positive 5,112 units absorbed in the second half. This year, we should see an increase in absorption to as much as 16,000 units. Construction remained moderate in 2012 with 5,457 units constructed. Construction for the past 3 years (2010-2012) has averaged 5,222 units. In 2009 construction peaked at 19,330 units. Construction projections for 2013 anticipate as many as 13,000 units to be completed. At year end 2012 there were 12,785 units under construction and an additional 7,792 units proposed.

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Employment Growth

Our fourth characteristic in defining the expansion cycle is a market that shows moderate to high employment growth. As you can see from the Employment Growth chart, Houston has seen a large increase in employment growth in the last three years with last year increasing to 90,000 net new jobs after a negative 102.8 thousand lost in 2009. Basically, we have recovered the 2009 losses in the last three years. Jobs are projected to increase in 2013 to about 91,000. Historically Houston absorbs 1 new unit for every 5 new jobs.
About 16,000 units are expected to be absorbed in 2013. In 2012 there were 198 garden apartment sales in the Houston CMSA – up 13% from 2011. Projections for 2013 are 250 properties based on Houston’s peak years.

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Rental Rates and Rent Concessions…

As seen from the Rental Rate chart, in the last two years rental rates in the Houston area have increased about 9.4% or 4.7% per year.
Rental rates are expected to rise in 2013 for Class A & B apartments 4.7% above that of the 2012 levels. Rent concessions are almost non-existent except in the low end Class C & D properties.

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Top 6 Lenders of Garden Apartments in 2011-2012

 1. Holliday Fenoglio Fowler

880 units

$161,266,000  Total Volume

2. Wells Fargo Bank

2,207 units

$118,095,000 Total Volume

3. CBRE Multifamily Capital

1,832 units

$114,537,111 Total Volume

4. Jones Lang LaSalle

2,822 units

$105,663 Total Volume

5. Berkadia Commercial Mortgage

1,208 units

$84,100,000 Total Volume

6. Metropolitan Life Insurance

960 units

$72,090,000 Total Volume

Is it Time to Buy or Sell?

The best time to buy in Houston was the fourth quarter of 2010 to the 4th quarter of 2012 if you had money to rehab and could wait for the upside.  Well the upside is here and expected to continue in the Houston CMSA through 2017 based on job growth and a 3-year lull in new construction.  It is definitely a seller’s market and good properties are hard to find.  If you are looking for an increasing income in a dynamic market, it is time to buy or build.  As an owner it is time to think about selling in the next 12 months.

Prepared by:

Bill Forrest, Sperry Van Ness® Forrest Group
Bill Forrest, Sperry Van Ness® Forrest Group

Bill Forrest

MAI, Managing Director

Sperry Van Ness | W Forrest Group

Houston, Texas

*All Sperry Van Ness® offices are independently owned and operated.