Tuesday, September 30, 2014

Portland's Ranking As a Tech City Jumps From 16th to 8th in U.S.

The Portland Business Journal has just reported that Portland's latest tech boom has landed it #8 on the JLL list of top 10 high-tech cities.

The listing is based on Portland's amenities and high tech clustering, among other things.

U.S. Census: 4,515 Portland Area Multifamily Permits Issued Through August 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 highest level in 17 years.

A total of 4,515 units of multifamily permits are reported as having been granted through August 31, 2014, setting up the potential for over 6,770 permits to be issued this year. That would be 1,000 units more than were built in 2013 and the highest number of apartment permits issued since 1997 when Census reported 7,205 multifamily permits issued.

Monday, September 29, 2014

MPF Research: "Will New Supply Derail Portland's Performance?"

In its latest Portland-centric story, Realpage/MPF Research asked the question: Will the new supply being added in Portland derail recent rent gains? Their answer, in a word, is "no."

Portland’s mid-2014 occupancy rate registered at 97.6%, up 60 basis points from the mid-2013 result. Annual rent growth for new leases is coming in at 7.3%. Combining those two metrics yields an annual revenue growth figure of 7.9%. That’s the fourth-best annual revenue growth stat among the 50 largest metros nationally. 

MPF states Portland won't have a problem absorbing the 6,000 units under construction at the end of Q2 2014 because they are spread out and don't come online all at once. Their larger concern is the fact that income growth lags behind other markets with strong rent growth gains. 

Read more

Saturday, September 27, 2014

How to Get the Energy Star Plaque in Multifamily Buildings

This is a good article from National Real Estate Investor [free registration required] on how to obtain the Energy Star Plaque if you own or are developing a multifamily building.  Call an HFO team member to learn more about how to improve operations for your multifamily asset or if you are considering a disposition / acquisition.

Thursday, September 25, 2014

Complain About Gen Y or Recognize Their Robust Impact on the Housing Market?

by Spencer Marona, Managing Director

Gen Y is making a major impact on the housing market and more than many may realize.  According to Freddie Mac’s latest U.S. Economic and Housing Market Outlook issued on September 15th, Apartment vacancy rates have dropped to its lowest level since 2000.  Sources report that 15% of Millennials live with their parents and 34% have a 4 year college degree. 

Capital will continue to pour into investment properties outside of a significant credit or international crisis. Per a recent Costar article, 'Going forward, Millennials will continue to play a critical role in shaping housing demand over the next five years, according a new report by The Demand Institute. They are projected to spend $1.6 trillion on home purchases and $600 billion on rent, more on a per-person basis than any other generation in the next five years. Millennials will account for one in every four dollars spent on housing over this period.'


Say what you want about Gen Y, but know that if you own a multifamily property, chances are you currently or will be building equity and generating cash flow from this generation.  The question to ask yourself is how you are positioned maximize both- today? 

Contact one of HFO's brokers or investment specialists to see how we can help you with your strategy.

Follow us for more of the latest news and trends on the multifamily market at: http://northwestapartmentinvestor.blog


Tuesday, September 23, 2014

National Rent Growth Reaches 4.1% in August

According to Axiometrics, the apartment sector has just posted annualized effective rent growth not seen in the last two years. Rent growth reached a scorching 4.1% in August, the hottest since 4% in May 2012. Meanwhile, year-to-date effective rent growth stands at 5.5% through August.  Read the full story.

Wednesday, September 17, 2014

Parking Controversy, Expenses and Too Much Parking?


by Spencer Marona, Managing Director

Parking is limited in Portland, Seattle and other major cities. All of us have been frustrated with the game of finding a parking spot.

Perhaps we have enough, but is the price too low? Somebody has to pay for parking—and that somebody is everybody.

Did you know that the average car spends about 95 percent of its lifetime parked? Were you also aware that parking subsidies in the United States are somewhere between 1 and 4 percent of the total Gross National Product?

Interestingly, between 1 and 4 percent of the total GNP is about the same range of what our nation spends on medicare or national defense according to Donald Shoup, Ph.D. Shoup is a professor at UCLA and a leading authority in transportation, a/k/a “The Godfather of Parking.” In a recent Freakonomics podcast titled, Parking is Hell, Shoup discusses some of his startling data points that will change the way you think about parking, urban sprawl, and ineffective city planning. For anyone who has ever complained about parking their car, including myself, this transcript is a must read.

After listening to the podcast and again reading, I am not entirely sure what my position is on parking, but I do know I probably won't complain as much when I cannot find a space.

“I think, you know, 50 years from now, when people look back on New York, and of course other cities, that they’ll say, ‘What did these people think they were doing?” 
– Donald Shoup, Ph.D.


Tuesday, September 16, 2014

Millennials Forecast to Control $7 Trillion in Liquid Assets by 2020

Millennials are also known as Generation Y
According to the Forbes article "The Recession Generation: How Millennials Are Changing Money Management Forever," Millennials currently own $2 trillion in liquid assets and that number is expected to reach $7 trillion by the end of the decade.  By 2020, Millennials will make up approximately 36% of the adult population.  Currently, 34% of them have a 4 year college degree.

Not only do Millennials want to remain mobile, but many of them saw their parents or know of someone that took a big hit during The Great Recession. Very few believe they will get much, if anything from social security. This is translating into arguably the savviest generation ever in our country with savings and investment managment.

Apartment owners are taking advantage by selling and exchanging to create more cash flow or ease of management,  holding and refinancing with low interest rates to diversify their portfolio, holding and improving operations to generate more cash flow or cashing out and expediting their retirement.

Many Millennials are choosing to remain single, and for the first time ever, single people make up the majority of the adult population. 

Monday, September 15, 2014

Real Estate Executives Bullish on Fundamentals. Apartments Facing Unprecedented Demand.

DLA Piper just released its “State of the Market Survey” at its 12th Global Real Estate Summit, and of the commercial real estate executives surveyed, 89% were “bullish” on the prospects for the US economy. This was slightly higher than last year, when 85% responded optimistically, and even higher than in 2007, when 77% did so. Typically, respondents stated that their good feelings came from the massive amount of capital now available for investment or the economy has strong fundamentals.
"With the two largest generations (Baby Boomers and Gen Y) exiting and entering the workforce, we are entering an unprecedented time for demand of apartment units needed.  It is an optimal time for apartment investors to analyze their investment strategy in order to maximize values and capitalize on returns".  - Spencer Marona, HFO Managing Director.
Click here to read the rest of the GlobeSt.Com article "CRE Execs Feeling Bullish." 

How Interest Rates Impact Multifamily Values


Higher interest rates are not ideal for investors, but they are a sign that the economy is recovering and the unemployment rate is decreasing.  As the debt markets shift, it is critical for apartment investors to stay on top of analyzing and improving operations in order to increase their NOI growth.  Just increasing rents as cap rates continue to compress will not maintain property values.  Read more. 

Tuesday, September 9, 2014

Portland Metro Job Growth Outpaces Entire West Coast

The State of Oregon Employment Department reports that the Portland Metro region's employment growth for the past 12 months was 3.1 percent. Area job growth ranks 9th fastest among the top 50 US metros and is the fastest on the entire west coast.  The area unemployment growth now stands at 6.1 percent, down from 7.2 percent last summer.


Five Cities Where Developers are Overbuilding

According to the National Real Estate Investor and REIS, there are at least five cities where apartment growth is significantly outpacing demand. 

These markets include Charleston, S.C., Austin Texas, Charlotte, N.C., Washington D.C. and Raleigh-Durham, N.C. Read the full story [requires free registration].

Friday, September 5, 2014

Portland Lands High-Paying Tech Jobs Downtown & Competes for Hundreds More


The Business Journal reports today that Aruba Networks plans to open an office in downtown Portland that could eventually employ several hundred in high-paying tech jobs. Read more.

An earlier report in  the Business Journal indicated that Portland remains on a short list of several companies and is being considered by several others for relocating. Read more.

Wednesday, September 3, 2014

Latest PSU Real Estate Quarterly Confirms Portland's Strong Apartment Market

In its multi-family housing report, the PSU Center for Real Estate reports that apartments in the Portland metro market have the fourth highest rate of rent appreciation and one of the lowest vacancy rates in the country, which is tough news for renters, but good news for developers and investors.

Apartment buildings in Portland are selling for a relatively high capitalization rate compared to larger markets, which is also attractive to buyers. 

Monday, September 1, 2014

Multifamily Grows as Home Price Gains Slow

The National Multifamily Housing Council and the National Association of Realtors reported that single-family homes show slowing price increases as the fundamentals for multifamily remain solid.  Read the article.