• HOME
  • ABOUT
  • CONTACT
  • ADVERTISE
  • CURRENT SHOW
CRE Show
  • LISTEN
  • WATCH
  • READ
  • SECTORS
    • Office
    • Retail
    • Industrial
    • Multi-Family
    • Land & Development
    • Medical
    • Hospitality
    • Single Tenant Net Lease
    • Self-Storage
    • Senior Housing
    • Student Housing
    • Restaurant
  • ANSWERS
  • ATLANTA
Back to top

SHARE THIS

Living the Good Life: Multifamily Holding Steady

Date: 05/07/2014

By: Michael Bull, CCIM

Multifamily-250x162The darling of commercial real estate remains, well, darling. Nationwide, apartment rents continue to grow, and the sector maintains razor-thin vacancy rates. While new supply remains a concern in some markets, others are seeing a very healthy ratio of jobs created to new units being delivered. Investor demand continues apace, with bidders driving cap rates down as low as 3 percent for core assets in gateway cities.

Continued Excellence

Stephanie-McCleskyNational effective rent growth for the first quarter was 2.9 percent, which by historic standards is a healthy rate, said Stephanie McCleskey, director of research for AXIOMetrics, on the “Commercial Real Estate Show.” “From 2011 to 2013, effective rent growth was usually 3 to 5 percent,” she said. “However, 2.9 percent is still a great rate.”

The national occupancy rate of 94.4 percent is expected to remain steady even with new supply in the pipeline, McCleskey said. In 2014, approximately 159,000 units are slated for delivery. “New supply is going to peak in 2014, but it will slow a bit after because of rising construction costs,” she added. “We’ve heard from developers who had to turn down deals they were planning because construction costs are too high.” 

Overbuilding is a concern in a few markets, such as Washington, D.C., McCleskey said. For 2014, 15,800 units are expected to come on-line, with only 0.1 percent job growth expected for the city. That’s 0.2 jobs for every new unit delivered in the metro area, she added. On the contrary, Houston is expected to add 81,000 jobs this year and only 16,100 new units, approximately five jobs for every unit being delivered.

Renter Demand

John_IsaksonSince the start of the recession, homeownership has declined from about 70 percent to less than 65 percent. Every time homeownership drops 1 percent, it creates 1.1 million rental households, said John Isakson, CIO of Preferred Apartment Communities. “The market has definitely benefitted from rental household creation with better renters and more stable tenants,” he added.

Mike AltmanDemand has continued to improve during the last three years. “What’s more important is the shift in the quality of the renter pool,” says Mike Altman, CIO of Cortland Partners. “The average renter age is up 3.6 to approximately 37.7 years. They have a higher income, which improves our ability to move rents and the stability of the rent roll overall.”

daniel-andersonMaking sure that a property has good management is the key to its success, said Daniel Alexander, owner of AH Capital. AH Capital buys properties between Class B and Class C and views bringing on new management as part of the value-add opportunity.

Demand should remain strong, particularly with job growth still lagging, Altman said. “Nationwide, we only had 0.1 percent job growth in the first quarter, and people were expecting more like 1.2 percent. It’s constraining renters’ ability to move on to the next type of housing. Five years ago, renters stayed for two to three years. Today’s renters are staying three to five years.”

Growing Competition for Multifamily Assets

Multifamily demand continues to multiply.  “The investment market is very competitive with three or four times as many bidders,” Altman said. “There’s a lot of capital pushing to get into the space.”

Investors of all types, including private, institutional and foreign capital, are bidding on properties. “Cap rates for core properties in gateway cities are lower than 4 percent,” Isakson said.

Nick-HalarisIn the last 12 months, financing for acquisitions has really opened up. “Banks are sitting on $2.5 trillion in excess reserves and have to place that money,” said Nicholas Halaris, owner of AH Capital. “Banks are calling and asking if we have properties today that would have been considered untouchable a few years ago.”

Low interest rates are part of the reason the multifamily market remains so attractive right now, Halaris said. “We view the interest rate environment as a shot clock—the lower the rates, the longer the shot clock,” he said. “As an investor, you have more time to figure out how you’re going to score.”

You’re invited to listen to the show audio on the multifamily market at the new website CREshow.com.

 

 

 
  • Michael Bull, CCIM
  • Show Host
  • Bull Realty, Inc.
  • Website
  • (404) 876-1640 x 101
  •   
      

Michael's brokerage services: Bull Realty.com

Michael's video training: Commercial Agent Success.com

 
 
 

Leave a Reply Cancel reply

 

 

The Commercial Real Estate Show (TM) is protected by trademark and copyright laws. The information from this site and show is not to be copied, distributed, or sold without express written permission from the Commercial Real Estate Show. Because of the limitations of web sites and talk radio shows, the information from this site and the show are not to be relied upon as professional, accounting or legal advice. The show information is for enlightenment and entertainment purposes only and is not deemed reliable for your particular property, situation or location. Consult a referred and licensed commercial broker, accountant & attorney who has entered into a representation agreement with you and knows all the details of your location, property and situation for professional advice. For a professional referral contact the Commercial Real Estate Show at Info@CREshow.com or 888-612-SHOW (7469). All rights reserved. (C) 2014

You are invited to subscribe to the show on your favorite media sites



The Show On Twitter

  • The Commercial Real Estate Show

    @CRE_show

    https://t.co/kJKFHnTSzx https://t.co/kFJuf2JwbW 1 day ago

      
      
      
      
  • The Commercial Real Estate Show

    @CRE_show

    Single tenant net lease investment property expert Nancy Miller shares the latest on cap rate trends, hot tenants,… https://t.co/gLcLgyW0Sa 1 day ago

      
      
      
      
  • The Commercial Real Estate Show

    @CRE_show

    Catch up on this #CREshow as @bbdeconomist discusses her forecast on when rental rates get back to 2019 levels https://t.co/bRek5DLBcd 2 days ago

      
      
      
      
  • The Commercial Real Estate Show

    @CRE_show

    New show twitter friends! https://t.co/ZAOK41seIQ 2 days ago

      
      
      
      
  • Michael Bull, CCIM

    @BullRealty

    Hear @netleaseusa Nancy Miller share the lastest on the single tenant net lease market. @SingleTenant #CRE #Podcast… https://t.co/1zD34lHIeY 2 days ago

      
      
      
      

View more tweets

CONTENT

  • CURRENT SHOW
  • PODCASTS
  • SHOW VIDEOS
  • ARTICLES
  • COMMERCIAL REAL ESTATE Q&A
  • UPCOMING SHOWS

INFO

  • HOME
  • ABOUT
  • HOST
  • SHOW SWAG
  • WHERE TO FIND US
  • TERMS OF USE

NEWS

  • PRESS RELEASES
  • SHOW IN THE PRESS
  • LISTENER COMMENTS
  • LIVE EVENTS

INQUIRIES

  • CONTACT
  • SPONSORS
  • AFFILIATE INQUIRIES
  • ADVERTISING
  • EVENT COVERAGE
  • SOCIAL MEDIA

© Copyright 2019. All Rights Reserved. Commercial Real Estate Show™

Home | Terms and Conditions | Contact Us | Sitemap | Visit Bull Realty