Monday, September 30, 2013

U.S. Census: 4,352 Metro Area Multifamily Permits Issued Through Aug. 31

An analysis of statistics provided by the U.S. Census bureau by HFO shows that multifamily construction permits for the Portland metro area are on track to reach their second highest level in over 15 years.

A total of 4,352 units of multifamily permits are reported as having been granted through August 31, 2013, setting up the potential for over 6,500 permits to be issued this year.

If the pace of the first eights months of this year holds, it would be the second highest number of apartment permits issued since 1997 when over 7,200 permits were issued.

*Multifamily permits of 5+ units

Multifamily & Commercial Debt Increases by $25.6 Billion (1%) in Q2

A strong appetite among investors to put their money to work in commercial and multifamily mortgages led to an increase in the level of outstanding mortgage debt. In the second quarter, banks increased their holdings of commercial and multifamily mortgages by $16 billion; Fannie Mae, Freddie Mac and FHA increased their multifamily holdings and guarantees by $5.6 billion and life insurance companies increased their commercial and multifamily holdings by $4.0 billion.

Click to download the Mortgage Banker's Association full report.

CoStar to REITS: Current Turnover Rates May Require Lower Rents

CoStar reports existing institutional renters are accepting elevated rent levels as the new normal and/or haven’t found a better alternative … yet.
"As another September approaches and more new construction hits the market, REITs’ revenue maximization products will have to adjust their dials to deal with the new competition. And if they are to maintain the current turnover rate, rents will likely have to fall."
Click to read CoStar's complete article. 

Friday, September 27, 2013

"Interest in multifamily construction still soaring" according to HFO Investment Real Estate

From DJC Reports
2013 is shaping up to be a banner year for apartment construction.
According to an analysis by HFO Investment Real Estate, construction permits for multifamily projects in the Portland-metro area are on track to reach their highest total in more than 15 years. HFO reported that permits were granted for 3,854 units through July 31. At that pace, the total for 2013 could top 6,600 – the most since 1997, when there were 7,200.
HFO Partner Greg Frick said that room exists for more multifamily construction. Last year, in the city of Portland, 1,612 permits were issued for apartments, according to the most recent quarterly report from Portland State University’s Center for Real Estate. This year, by May, 1,119 were issued.
Last year’s numbers were about even with 2004, but they were just a fraction of the permitting activity between 2005 and 2008.
Frick said one reason for the pickup this year is that some developers who were burned during the recession needed time to regain their financial footing. Now, with new equity in hand, cap rates at low levels, and interest rates potentially on the rise, developers are rushing to start their projects.
And young people in particular – are choosing to rent rather than purchase homes.
“There is a segment (of the population) now where the idea of the American dream is not homeownership,” said Frick. “I think it’s flexibility.”

Thursday, September 26, 2013

Report: Blue Line MAX Offers Nation's Best ROI for Rail, Spurring Billions in Development

A report by the Institute for Transportation and Development Policy states that the Metropolitan Area Express (MAX) Blue Line has generated $6.6 billion worth of development.  In addition to reducing highway congestion, MAX has added jobs and revitalized the eastside and westside corridors. The report also concludes that high speed bus lines offer even better ROI.

Click to download the full report.

Monday, September 23, 2013

Freddie Mac: Apartment Rents to Outpace Inflation, and P.S., There's No Multifamily Bubble

CoStar reports this morning that Freddie Mac has stated that there is no bubble in the value of multifamily properties.

From CoStar:
"Many investors have made note of the cap rate compression in the multifamily space. The American Council of Life Insurers (ACLI) reports cap rates on apartments with new mortgages made by life insurers have fallen, dropping from 8.9 percent in the first quarter of 2003 to 5.77 percent in the second quarter of 2013, a 35 percent decline and the lowest recorded by ACLI since the series’ inception in 1965.
"Yet Freddie Mac's chief economist Frank Nothaft said he believes housing values remain linked to market fundamentals and that cap rate compression in the multifamily sector may have bottomed.
"The decline in cap rates and growth in rents (adjusted for inflation) are key fundamentals that explain the rise in apartment values over the past decade,” said Nothaft. “Seen through this lens, the rise in property values appears to be consistent with overall economic forces, and the slower appreciation over the past year reflects the bottoming of cap rates. Cap rates are expected to gradually move higher in the coming year as long-term yields move higher, and rents are likely to outpace overall inflation, leaving apartment values firm and on solid ground."
Click here to read the full story. 

Thursday, September 19, 2013

Is NOW the Best Time to Sell?

New and established investors are looking to capitalize on a sector in which interest rates remain low and supply is trying to catch up with demand.

According to CoStar, sales volume of apartments hit $65.8 billion in 2012, just short of the record $66.2 billion in 2005. 

"Record prices paid on trophy assets suggest we're not too far from reaching the top of the upturn.

Will selling today reward you with a trifecta? Read more in Multifamily Executive. 

Wednesday, September 18, 2013

Portland Metro Apartment Construction Permits on Track For a Record Year

An analysis of statistics provided by the U.S. Census bureau by HFO shows that multifamily construction permits for the Portland metro area are on track to reach their second highest level in over 15 years.

A total of 3,854 construction permits are reported as having been granted through July 31, 2013, setting up the potential for over 6,600 permits to be issued in 2013. If the pace of the first seven months of this year holds, it would be the second highest number of apartment permits issued since 1997 when over 7,200 permits were issued. 

Multifamily Executive: Trulia Reports Portland #2 For Apartment Rent Growth

There's yet another report about Portland's rising rent rates.  On August 14 we reported that Axiometrics pegged the Portland/Vancouver metro rent hikes at 6.7% year-over-year.  Then on August 28th, MPF Research said the through June 30, 2013 the year-over-year increase was 4.4%.  Now comes a third report, from Trulia, ranking Portland's apartment rent increases at 9.1% - the second highest in the nation behind Seattle. How are your rents doing?

See the Entire Top 10 Cities for Apartment Rent Growth

Tuesday, September 17, 2013

National Experts Agree: Portland Apartments on a Hot Streak. . .

According apartment analytics company MPF Research:

"Portland’s apartment market will continue to rank among the top-tier achievers nationally in the near term, ongoing building activity remains fairly restrained. Properties under construction at the end of 2Q total just over 3,000 units, translating to inventory growth of about 1.7% over the next 18 months or so. Those additions should be easy to digest in a metro where the Bureau of Labor Statistics reports that employment growth is progressing at an annual rate of about 24,000 positions, or 2.4%."
Read the full story. 

Monday, September 16, 2013

276 Units Slated For Construction @ East Burnside Bridgehead

"Block 67" at the east end of the Burnside Bridge (E. Burnside & NE 3rd) will be home to 276 apartment units as part of a 21-story mixed-use building.  A total of 16 floors of apartments will rest atop a  5-level podium with commercial space and above-ground parking for 200 cars.  Project costs are estimated at $74 million.

Tyler Johnson Joins Providence Cancer Center Leadership Cabinet

HFO Investment Real Estate Partner Joins Providence Cancer Research Leadership Cabinet
HFO is pleased to announce that partner Tyler Johnson has joined the Providence Hospital cancer center leadership cabinet at the Robert W. Franz cancer research center.  Leadership cabinet members work through advocacy and philanthropy to connect the community with the researchers at the research center in the Earle A. Chiles research institute.

Congrats Tyler!

Photo: Greg Frick Accepting HFO Corporate Philanthropy Award

HFO Partner Greg Frick poses with youth award winners at the Portland Business Journal annual Corporate Philanthropy luncheon last Wednesday.

Wednesday, September 11, 2013

Apartment Owners' Confidence in HFO Propels Firm to Top Spot Among Portland-Area Corporate Philanthropists

Since 2008 HFO has ranked as one of the Portland metro area's top corporate philanthropists.  But the truth is, it's our clients that are making a difference. 

Each time HFO closes a transaction on behalf of a client, the firm makes a contribution to the charity of our client's choice.

HFO ranked tenth in corporate giving for companies with revenue less than $50 million.


On behalf of our clients and our team, we're pleased to support these, and other, local charities:
  • Big Brothers/Big Sisters Columbia Northwest
  • Boys and Girls' Aid Society
  • Chelsea Hicks Foundation
  • Community Partners for Affordable Housing
  • Disabled American Veterans
  • Doernbecher Children's Hospital
  • Guide Dogs for the Blind
  • Historic Preservation League
  • Human Solutions
  • New Avenues for Youth
  • Oregon Food Bank
  • Paralyzed Veterans of America
  • Raphael House
  • Salvation Army
  • Stand for Children
  • The Campaign for Equal Justice
  • The Dougy Center for Grieving Children

Tuesday, September 10, 2013

Signs Point to Tighter Vacancy Rates in the Pacific Northwest

When the Q3 Census Bureau vacancy rates come out expect they will show Portland still among the nation's lowest.

United Van Lines has released its annual tally of most popular destinations.  This year was the busiest residential moving season since the recession.  And guess what?

The Pacific Northwest and Northern California are the fastest-growing and most popular destinations.  San Jose, Portland, San Francisco and Seattle are among the top for in-migration.
"Portland is experiencing unprecedented growth attracting a range of millennials and retirees relocating for amenities such as public transit, green space, local arts and a vibrant urban culture."  --Michael Stoll, economist, professor and chair of the Department of Public Policy at the University of California, Los Angeles.
Residential moves for summer 2013 were up 8.5 percent year-over-year. 

Which cities had more people moving out than in? New York, Chicago, and St. Louis.

Monday, September 9, 2013

Oregon's Tech Sector Powers State Growth

oregon economic recovery good for multifamily
High Tech in Oregon today employs nearly 90,000 people.  The Oregon employment department says the industry has an $8.4 billion in payroll. The number of those employed has nearly climbed back up to the 93,000 High Tech workers employed in July 2008 before the recession hit. 

High Tech wages are more than double the state average at $94,000 vs. $44,300.  Back in the 1970's Tech jobs paid about 10 percent more than the state average wage.  Since then, while wages in other industries have stalled, High Tech paychecks have continued to increase.

Back in the 1970's, the heydays of the wood products industry, it was wood products that paid out 12 percent of all Oregon wages. Today that distinction goes to High Tech.

Geek out on all the details! Click here to read more of the State of Oregon Employment Department's special report.

Groundbreaking on largest-ever multifamily project in Portland set for Sept. 17

Apartment construction
The San Diego-based American Assets Trust plans construction of a trio of buildings on three adjacent "superblocks" in the Lloyd District. With 670 units, the Lloyd District project will be the largest single multi-family project in Portland history. The only larger project in the entire Portland metro area is the 711-unit affordable housing project Quatama Crossing in Beaverton.

This project will be the largest single multifamily project in Portland history. Some work has already started at the location but official groundbreaking set for Sept. 17.  The trio of buildings vary, and include:

  • A five-story building with possible ground-floor grocery store, and four floors of apartments above.
  • Six-story apartment building with ground floor retail
  • 21-story apartment with retail facing the MAX line on Holladay street.  

The projects would include 1,200 underground parking stalls.
Read coverage in The Oregonian.

Slated for Construction - Burnside Bridgehead
E. Burnside Street Bridgehead includes "Block 67" between 2nd and 3rd scheduled for construction in early 2014.  Key Development plans four floors of structured parking, one floor of commercial/amenity space, and 16 floors of market-rate residential apartments. Nearby "Block 75" includes two 1/4 block, seven-story towers with affordable work and live-work space.

Trending in Living - Students Renting By The Bed
Last week, the Pacific Northwest College of Art opened ArtHouse, a 130-bed student residence that rents by the bed in apartment units consisting of varying numbers of bedrooms. A similar project opened about a year ago -- the 16-story 980-bed University Pointe at College Station near PSU.

Tuesday, September 3, 2013

Owners Concerned About New Oregon Law on Section 8 Vouchers

A law taking effect in Oregon next summer prohibits apartment owners from discriminating against renters based on source of income.  Aimed at protecting recipients of Section 8 Vouchers, the law may or may not actually result in any kind of change in the market. 

We asked Phil Owen, past President of the Rental Housing Association of Greater Portland, for his thoughts.  Click below to watch our interview.

Click here to download a PDF of the summary of legislative changes made in Oregon this last session.

Apartments Adjacent to Ross Island Bridge Open mid-September

The 118-unit Emery apartment building will open in mid-September and as the Business Journal reports, has secured its first retail tenant - a bakery. The project is the first project that is part of the Zidell 33-acre mixed-use development.

Read More.

10 Months of Continued Employment Gains in Salem Metro

The State of Oregon Employment Department reports that the Salem metro area (including Marion and Polk counties) saw employment increase in July for the 10th month in a row.  Construction added 700 jobs (an 11 percent increase); in addition to construction an additional 1,700 jobs were added in the private sector, largely in the accommodation and food services.

Government jobs declined steadily beginning in the summer of 2010 but recorded slight gains in May, June and July.

Oregon's Weekly Earnings Rise During Economic Recovery

For many Oregonians, weekly earnings expanded over the past four years. In June, for Oregon's private nonfarm payroll workers, weekly earnings averaged $775.55. This was up from the June 2012 figure of $743.09, a gain of $32.46, or 4.4 percent.

Read More.