Thursday, February 26, 2015

HFO Arranges Sale of Element 170 to Security Properties of Seattle for $39 Million

In this unique transaction, HFO’s in-depth knowledge of the market and long-term relationships with both the buyer and seller allowed it to facilitate bringing the parties together. This extended transaction remained in contract throughout 16 months of construction and lease-up.

The purchaser, Security Properties of Seattle—in a joint venture with PCCP LLC—recognized the excellent rent growth potential of the asset due to the westside’s strong multifamily fundamentals.

Completed in 2014, Element 170 consists of 10 four-story residential buildings and a leasing office/clubhouse spanning nearly nine and a half acres adjacent to the Elmonica/SW 170th MAX station. The property includes studios, one-, two- and three-bedroom units.

The majority of units at Element 170 are flats ranging in size from 617 to 801 square feet and elevator-served. The property’s leasing office/clubhouse includes a fitness center, picnic tables, barbecues, children’s playground, and outdoor pool. These controlled-access pet-friendly apartments features include washers and dryers, wood blinds, and modern kitchens.

Located midway between Tanasbourne Town Center and Cedar Hills Crossing, Element 170 is surrounded by major employers and commercial services. The Nike World Headquarters, Amberglen and Merlo Station Office Parks are all less than two miles away and house employers including OHSU, Tektronics, IBM and Intel.

The property’s walking path connects to Tualatin Hills Park and Rec’s 60 miles of trails with access to 222-acre Tualatin Hills Nature Park. Element 170 was developed by Metropolitan Land Group. 

HFO represented the parties in the transaction.

Read more about this sale in the Portland Business Journal.

Tuesday, February 24, 2015

Airbnb Is Breaking Portland's New Licensing Law, but the City Shows Restraint

Airbnb and similar companies such as Homeaway and Flipkey provide an online service for property owners to rent out their home or apartments on a short-term basis. These companies have stirred up controversy with municipalities across the country regarding the collection of lodging taxes.

As of Friday, February 20, 2015, the City of Portland's new rules of requiring hosts to get permits went into effect, but few have followed through.  The city could impose steep fines on these companies for each day each host is not in compliance, but have yet to flex their muscle. More about this is covered in a recently published article in The Oregonian.

Monday, February 23, 2015

Portland's 2014 Year-End Rental Vacancy Rate Falls, Reflecting NationalTrend

The U.S. Census Bureau is reporting that the rental vacancy rate for the Portland/Vancouver /Beaverton area fell to 2.3 percent in the final quarter of 2014, falling 2.5 percent from Q3.

The Portland metro area tied with the Nashville, TN area for the 5th lowest vacancy rates among the top 75 U.S. Metropolitan Statistical Areas (MSAs).

This estimate has moved below the 3.66 percent vacancy rate reported by the MultifamilyNW Association in its Fall, 2014 survey.

Seattle-Tacoma-Bellevue, WA ranked 16th with a Q4 2014 vacancy estimate of 4.3 percent, down 1.0 percent from the prior quarter.

The nation's 10 lowest vacancy rates were as follows:
  • Poughkeepsie-Newburgh-Middletown, NJ - 0.0%
  • Grand Rapids-Wyoming, MI - 1.6%
  • New Haven-Milford, CT - 1.7% (tie)
  • Raleigh-Cary, NC - 1.7% (tie)
  • Bakersfield, CA - 2.2%
  • Nashville-Davidson-Murfreesboro, TN - 2.3% (tie)
  • Portland-Vancouver-Beaverton, OR-WA - 2.3% (tie)
  • Denver-Aurora, CO - 2.5% (tie)
  • San Francisco-Oakland-Fremont, CA - 2.5% (tie)
  • San Jose-Sunnyvale-Santa Clara, CA - 2.7%
  • Los Angeles-Long Beach-Santa Ana, CA - 3.0%
  • Akron, OH - 3.3% 
  • Minneapolis-St. Paul-Bloomington, MN-WI - 3.4%

The average national rental vacancy rate for Q4 2014 was 7.0 percent and was 1.2 percent lower than a year earlier. The U.S. rental vacancy rate has been falling since 2009. It is at its lowest level since 1993 and far below the 11 percent average vacancy rate of 2009.

Homeownership rates, meanwhile, have fallen from 65.1 percent at the end of 2013 to an estimated 63.9 percent at the end of 2014. In the Western U.S., homeownership is at 58.6 percentits lowest level since 1991.

Sunday, February 22, 2015

HFO-TV: The City of Portland's Comprehensive Plan Update

The City of Portland's Comprehensive Plan Update is open to online and written public comment through March. Learn more in HFO's recent interview with the city's lead urban planner, Eric Engstrom.

Friday, February 13, 2015

CNN Money: Why Is Everyone Moving to Oregon?

by Spencer Marona, Managing Director

And, how are multifamily owners preparing to capitalize on this?

There is a buzz in the Pacific Northwest and I am not talking about Boeing nor the construction work on Amazon's campus. The buzz that I am referring to is coming out of the state of Oregon--the number one state in the country transplants moved to in 2014, according to United Van Lines.

At the epicenter is the Portland/Vancouver/Hillsboro MSA. There are a number of underlying market driving forces causing the mass wave of in-migration. Portland and all of Oregon is known for its beauty, zero sales tax law, and outdoor recreation. In addition, it is arguably the last major MSA on the west coast with a reasonable cost of living and thriving job market. One group riding this wave and capitalizing on the impact--apartment owners.

Axiometrics, an apartment market data and research company dubbed 2014 "The Year of the Apartment". Multifamily investors spent approximately $1.3 billion on purchases in Portland's MSA in 2014. According to Chief Economist and Senior Vice President, Victor Calanog, PhD., with Reis, Inc., Portland's apartment vacancy rate is forecasted to drop to 2.9% in 2015. This number will go up as developers finish construction on new projects, so expect more supply than demand following the typical trend of a 10 year real estate cycle in the next 18-24 months.

If you own one or more multifamily properties in the greater Portland market and haven't recently considered whether you are getting the most of the return on your investment, you probably are leaving money on the table. Achieving a desired ROI for your property depends on what your initial and current investment goals are. As a result, there are four strategies an owner should take into consideration before a purchase, during the hold period, and when exiting. These include:

  • Sell and do a 1031 Tax Deferred Exchange (into 1-3 other investment properties)
  • Sell and pay capital gains ("cash out") 
  • Hold the property and refinance (while interest rates remain historically low)
  • Hold and improve operations (generate more cash flow, position for a sale in the future, etc.)

Many ownership groups have different investment goals than another. Whether your goal is to achieve more cash flow, build equity off of long-term appreciation, diversify your portfolio, create passive income, or a combination of these and more, it boils down two important factors. 1 - Is your strategy aligned with your investment property goals? 2 - Are you working with a team that specializes in multifamily sales/acquisitions and advisory services? 

We can help. Contact an HFO broker to see how our team can advise you with your strategy in 2015 and beyond.

Why Is Everyone Moving to Oregon? (Additional video by

Thursday, February 12, 2015

Community Livability Grant Program May Generate Millions for Local Contractors

The Portland Development Commission recently announced that approximately $830,000 in Community Livability Grants for fiscal year 2014-15 will go to 18 projects in the following neighborhoods:

Gateway Regional Center
Lents Town Center
Interstate Corridor
Old Town Chinatown Neighborhood (Downtown Waterfront & River District)

The grant rcepients must have made good-faith efforts to contract with Oregon-certified minority-owned, woman-owned, disadvantaged or emerging small businesses. PDC estimates $1 million worth of work to such enterprises. The Portland Business Journal also recently reported an addtional $2 million worth of jobs related to the grant winning projects could be generated.

Full list of Community Livability Recipients FY 2014-15

Hotel, Mystery Solved, Datacenters, Pearl District Apartments - The Oregonian's Development Roundup

Get updated on commercial development activity in The Oregonian's Development Roundup, a new weekly post covering a number of interesting and exciting prjoects in the greater Portland market. This edition covers Urban Asset Advisors' proposed 11-story, 137 unit apartment building, the Grove Hotel, Zidell Yards' development in the South Waterfront neighborhood, Amazon's rare yet public announcement of potentially purchasing 11 datacenters in Oregon, the Lloyd District, and more.

Tuesday, February 10, 2015

Portland Metro Job Growth Report for February

Here's the latest news from the State of Oregon Employment Department:

The Portland Metro region created 26,800 jobs in 2014. The vast majority of those jobs were in these areas: 

  • Trade/transportation/utilities
  • Professional and business services
  • Leisure and hospitality
  • Health care
  • Manufacturing
Meanwhile, Multnomah County has been growing by about 10,000 jobs a year over the last four years -- an historically strong growth run for the County.

Clackamas and Washington County, while creating jobs, are growing noticeably slower than they did in the last economic recovery ten years ago.

Monday, February 9, 2015

Topping Off Ceremony Held Today For 657-Unit Apartment Complex at Lloyd Center

American Assets Trust, Inc. and elected officials gathered today in celebration a milestone in the construction of the 657-unit Hassalo on Eighth near Lloyd Center. The "topping off" ceremony for placement of the building's final steel beam took place despite the fact that high winds kept the beam grounded.

Pre-leasing begins in April for the three-building apartment project is scheduled to open this fall. 

Even as construction on Hassalo on Eighth goes on, American Assets Trust is proceeding with plans for an even larger four-building project across the street that could include as many as 1,000 more apartments.

Thursday, February 5, 2015

Portland Leads the Nation in Gentrification

The Oregonian reports that so far this century, Portland ranks as the nation's fastest gentrifying city. You can read more about this in a recently published article in addition to finding a gentrification report on the top 50 cities, by Governing magazine covering potential future consequences of gentrifying neighborhoods that some experts are predicting.

Flurry of Development Activity throughout the Portland Market

The Oregonian has started to track major commercial development projects throughout the greater Portland market in a weekly report.

Status reports and announcements can be found on projects like:

  • 4th & Harrison mixed-use building
  • Vancouvercenter
  • Jefferson Street Apartments
  • Washington High School
  • Replacement Multnomah County Courthouse
  • The 75 
  • Zidell Yards
  • 19th & Overton 
Read more about these projects in The Oregonian's recenlty published, Development Roundup and continue to follow HFO for coverage on these and other northwest multifamily news.

Monday, February 2, 2015

HFO Arranges Sale of Central Eastside Lofts for Nearly $19 Million

HFO Investment Real Estate (HFO) is pleased to announce the recent sale of the Central Eastside Loft Apartments in Close-in NE Portland.