Wednesday, October 18, 2017

Multifamily Marketwatch Podcast - October 17, 2017

This week: a Portland Landlord slams Commissioner Eudaly for violating City of Portland social media policy and blocking him from her public Facebook page; the Portland Tribune reports that more than 15% of the cost of new apartment buildings comes from City of Portland fees and development charges.



Check out this episode!

Breaking: Greater Portland Apartment Vacancy Rate Trends Higher (Multifamily NW)

At this morning's Multifamily NW Apartment Report Breakfast the overall fall 2017 vacancy rate for Greater Portland apartment properties was reported at 4.37%, up from 3.71% one year earlier. Here are year-over-year comparisons by submarket:

The survey involved more than 52,500 units at 738 properties.


Monday, October 16, 2017

Oregonian Op-Ed: Eudaly Blocked Landlord's Free Speech in Public Forum

Portland landlord Nishant Bhajaria penned an op ed that appeared in this week's Sunday Oregonian. The piece was critical of Portland City Commissioner Commissioner Chloe Eudaly. Bhajara says when he posted on Eudaly's public Facebook page for evidence that rent control really worked, Eudaly deleted his posts and banned him from the page without explanation, in violation of the City's social media policy.

Bhajaria says it wasn't until he threatened the city attorney with a lawsuit that he was unblocked and allowed to comment. The opinion piece states that while Eudaly and mayor Ted Wheeler claim to embrace diversity, they met privately with "mostly white liberals" who had not registered as lobbyists, and that these groups were "allowed a seat at the table in almost every discussion around housing policy in Portland." Read more.

Bhajaria's previous Op-Ed in opposition to the ordinance requiring payment of relocation fees to renters appeared in the Oregonian on Sunday, February 25, 2017.

Wednesday, October 11, 2017

Oregonian Editorial Board: City Council Is Not Adequately Monitoring Effects of Housing Policies

The Oregonian Editorial Board published a statement yesterday afternoon faulting the Portland City Council for failing to examine the effects of its housing policies. The Board points out that the city has not done anything to track whether the relocation fee ordinance is working, and that the council has relied more on anecdotes than data. The Portland Association of Metropolitan Realtors estimates that 400 single-family properties that were previously used as rentals have been put on the market by owners since the relocation fee ordinance went into effect, but City Council members seem to be shrugging off the impacts of the tightening housing supply. The City Council's lack of reliable data on policy effects is due in part to a failure to establish Mayor Wheeler's promised Office of Landlord-Tenant Affairs, which was a central part of his campaign in 2016. The Board also acknowledges that most of the pain felt by renters is due to a shortage of thousands of housing units, and that many of the city's policies negatively impact the developers who could be building more housing units in the city. The city is reliant on private housing developers to solve the problem, but rising development costs associated with fees, demolition requirements, and zoning and FAR restrictions deter that investment. Read more.

Tuesday, October 10, 2017

Multifamily Marketwatch Podcast - October 10, 2017

This week: Chloe Eudaly's First Right of Refusal ordinance for renters would likely apply to all types of rental housing; Portland developers propose to build up to 2,500 units on Portland's waterfront, including 500 affordable units, in exchange for increased height limits.



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Portland-Area Politicians Not Living Up to Promises on Addressing Homelessness

In 2015, Portland, Gresham, and Multnomah County officials created A Home for Everyone. They stated an ambitious goal of halving homelessness by 2019. During his campaign in 2016, Mayor Wheeler came out with his own ambitious goal - providing all Portlanders with a safe place to sleep by the end of 2018. He believed he could achieve this goal by getting the city and county to fund 1,800 new shelter beds. It is becoming clear, however, that metro-area elected officials are not living up to the promises they made. KGW-TV commissioned a poll on homelessness that found that 57% of Portlanders are dissatisfied with Wheeler and the City Council's response to homelessness in the city. 46% of residents are dissatisfied with Multnomah County Chair Deborah Kafoury's approach to handling problems associated with homelessness. Since 2015, the number of residents who lack permanent housing has increased from 3,801 to 4,177. Residents in East Portland who live in close proximity to the Springwater Corridor multi-use path argue that sweeps of homeless camps have only exacerbated problems in their neighborhoods. Wheeler believes that homelessness in the city is a symptom of a number of problems facing Portland as well as many other major cities. The nationwide housing shortage, the opioid crisis, a lack of mental health and addiction treatment, and unemployment all contribute to increasing homelessness in the city. Addressing homelessness is no easy task, but Portland residents seem to be losing patience with officials who are so far from achieving their own stated goals. 49% of residents surveyed said there are currently people living in tents in their neighborhoods, and public opinion may be turning against leaders who fail to adequately address the needs of housed and un-housed residents alike. Read more.

Thursday, October 5, 2017

Portland City Council Extends Housing State of Emergency, Renter Relocation Fee Ordinance

The City Council voted on Wednesday to extend the Housing State of Emergency by 18 months, and the Renter Relocation Fee Ordinance by 6 months. Mayor Wheeler announced that he plans to propose a permanent replacement for the temporary relocation fee requirements to the City Council by December 6th of this year. Commissioner Eudaly proposed eliminating the exemption to that ordinance for small landlords, but the other commissioners voted that proposal down. They are also considering a "hardship exemption" for some landlords. Renter advocates present at the meeting argued that their rent is going up in other ways, such as being asked to pay utilities. The commissioners plan to look into whether renter utility payments are increasing beyond what landlords are being charged for those services. In the coming weeks, the council will vote on spending guidelines for the affordable housing bond, as well as a pledge to create supportive housing units in the city. Read more.

First Right of Refusal Proposal Would Cover All Types of Rental Housing

The Daily Journal of Commerce published additional details on Commissioner Eudaly's proposal to give tenants the first right of refusal on the sale of rental units. Commissioner Eudaly's Policy Director, Jamey Duhamel, estimates that the proposal is likely to begin hearings in two to three months. It would apply to all types of rental housing, from single family homes to apartment complexes. A tenant or group of tenants would have 60 days to put together an offer, and if they do not do so, the city would have 30 days to submit an offer on the building. If the city declines to submit an offer, the seller would then be able to market the property openly. While Eudaly's office claims that the proposal is based on a similar law in Washington, DC, the DC law gives tenants an opportunity to make an offer that is competitive with any third party offers that have already been received within 45 days of being notified of a pending sale. It does not impose a 90 day delay on the marketing of a privately owned property. Read more.

Tuesday, October 3, 2017

Multifamily Marketwatch Podcast - October 3, 2017

This week: Portland Commissioner Chloe Eudaly wants to give tenants first right of refusal to buy apartment buildings before they hit the market, and Mayor Ted Wheeler to ask for an 18-month extension of Portland's housing emergency, this time requiring agencies to figure out when to end it. 



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Wednesday, September 27, 2017

Bombshell: Chloe Eudaly to Propose Tenant "First Right of Refusal" to Purchase Apartment Buildings Listed for Sale

The Portland Mercury reports today that Portland City Commissioner Chloe Eudaly plans to unveil a proposal that would allow tenants 60 days to determine whether they want to purchase an apartment building that's up for sale, and the City of Portland would have 30 days after that, meaning property sales would be stalled for up to 90 days while an owner waits for the groups to decide. Read more.

HFO Brokers Sale of Happy Valley Apartment Community for $58 Million

HFO Investment Real Estate announced the sale of Latitude Apartments located near Clackamas Town Center mall in Happy Valley for $58 million.

The Latitude Apartments is a gated apartment community consisting of 210 apartments with an average unit size of 1,133 square feet. Built in two phases between 2008 and 2014, the sale represents the second largest apartment transaction for Clackamas County this calendar year.
 
Latitude Apartments consists of 33 three-story apartment buildings and one clubhouse on 6.89 acres across from Clackamas Town Center one of the largest regional malls. The transit-oriented development is convenient to I-205 and easy walking distance to MAX light rail and several bus lines.

“Happy Valley is an affluent, educated area with high employment in healthcare, professional services and retail,” said HFO partner Cody Hagerman. “Latitude Apartments is a great example of well-constructed condo-quality housing that is in exceptionally high demand.”

Latitude Apartments offers its residents numerous community amenities including a dog run and grooming station, electronic parcel lockers, bike repair station, fitness facility, pool, basketball court, and direct-entry garages.

The seller was Bay Area investment firm The Reliant Group and the buyer was global real estate investment company Kennedy Wilson. The sale represents a price per unit of $276,190 per unit or $243.76 per square foot.

City Council to Vote on Extending Housing State of Emergency by 18 Months

Portland's Housing State of Emergency, declared in October 2015 and extended for an additional year in 2016, could be extended by another 18 months. Mayor Wheeler is submitting an ordinance to city council for consideration prior to the October 6th expiration date. The ordinance includes the following provisions:
  • The Housing State of Emergency will be extended by 18 months, until April 4, 2019, unless the City Council chooses to extend or terminate it
  • Affordable housing projects will be subject to Type IIX rather than Type III design review
  • The Portland Housing Bureau and Joint Office of Homeless Services will decide what criteria must be met to end the Housing State of Emergency within 180 days
The mayor's push for this extension is a result of a continued housing shortage in Portland. Rents have continued to rise at a rate of 7% per year, and while the vacancy rate has been increasing it is still under 5% in most of the city. Many of the largest rent increases have been in East Portland, and rents for 1-, 2-, and 3- bedroom units have increased in every neighborhood in the city. Read more.

Tuesday, September 26, 2017

Multifamily Marketwatch Podcast - September 26, 2017

This week: The Tribune turns a spotlight to the City of Portland's dysfunction; hurricane disasters could result in a construction slowdown due to scarcity of workers and increasing materials costs; and six months in -- the inclusionary zoning requirement's impact on apartment construction applications in the City of Portland.



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Monday, September 25, 2017

Multifamily Marketwatch Special

In an interview with HFO partner Greg Frick, Multifamily NW spokesman John McIsaac relates the bureaucratic difficulties facing developers in the City of Portland. Estimates are that 50,000 new apartments will be needed by 2030 to accommodate the nearly 100 people moving to the city every day.



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Wednesday, September 20, 2017

Portland Tribune: 17 Groups from Six Different Bureaus Required to Review Construction Permits

The Portland City Council has begun a review of bureaucratic processes in an attempt to streamline various processes. The hitch? Folks from bureaus overseen by different councilors are often involved in the same projects, making it even more difficult. One example cited by the paper is the simple fact that there's no single phone number for people wanting city services to call, resulting in countless phone calls by the public to the wrong bureaus and even to 9-1-1 for non-emergency help. Read more.

Six-Month Review of Inclusionary Zoning in Portland Shows Slowdown in Land Use Review Applications

The Bureau of Planning and Sustainability released its six month review of Portland's Inclusionary Housing policy, which went into effect February 1st of this year. Prior to the law taking effect, developers rushed to get projects with 20 or more units into the permitting pipeline. That rush to submit plans to the city resulted in a pipeline of 19,000 units, or a four-year supply of new construction. This backlog has led the BPS to determine that the new requirement hasn't caused a slowdown in development activity. The Bureau also does not believe there is a trend of developers keeping projects under 20 units. 5,000 of those 19,000 units have been permitted since February, but since then only 11 projects over 20 units have been submitted. Five of these these developments are affordable housing projects. According to the Portland Tribune, no new land use review applications have been submitted for projects over 20 units during that time. Read more.

Tuesday, September 19, 2017

Multifamily Marketwatch Podcast, September 17, 2017

This week: the Metro council considers new taxes to help pay for affordable housing outside the city limits of Portland; The U.S. Census reports Oregon's median household income rose 6.2% in 2016, after decades of trailing the rest of the United States.



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Amazon to Build New Fulfillment Center in North Portland

Amazon announced that it will build a new fulfillment center in North Portland that will create 1,000 new jobs. The fulfillment center will be located in the Rivergate Industrial District, north of the St. Johns neighborhood near Kelley Point Park. The large site will facilitate the packing and shipping of larger items, and Amazon also hopes it will help the company reduce shipping times within the metro area. The 918,400 square foot site is being developed by Trammell Crow Co. and Clarion Partners, and is part of a designated enterprise zone. Amazon is also planning to open facilities in Salem and Troutdale, which are likely to employ 2,500 full-time workers in total. Warehouse jobs such as the ones that will be coming to North Portland typically pay $13-$23 per hour, and Amazon's warehouse workers are eligible for the same benefits package as other company employees. Amazon also announced last week that it is scouting locations for its new HQ2. While Portland is involved in the competition, its proximity to Seattle makes it an unlikely choice. Read more.

Monday, September 18, 2017

Portland Monthly Report: Four New Downtown Portland Apartment Buildings to Add Nearly 1,040 Units

Portland Monthly reports on four new apartment projects either under construction or awaiting final approval that "could change downtown forever." From Old Town/Chinatown to the Pearl to the heart of the Arts District, these buildings will add another 1,039 living spaces downtown (including about 80 units of affordable housing). With amenities including outdoor pools, decked rooftops with chefs kitchens. and fire pits - but no playgrounds... yet. Read more. 

Friday, September 15, 2017

Metro Council Considers Taxes to Fund Affordable Housing

The Metro Council, which oversees ares of Multnomah, Clackamas, and Washington counties that fall within the UGB, is considering tax measures aimed at funding affordable housing initiatives. The Council is considering a construction excise tax, a property tax measure, or authority to use money generated from property tax increases. The city of Portland already has a 1% construction excise tax, and in November 2016 city voters passed an affordable housing bond measure. Other cities in Metro's jurisdiction have not taken comparable steps to address the shortage of affordable housing units. More than half of severely cost-burdened households in the metro area live outside of Portland, but far fewer affordable units have been built outside city limits. Although development costs are higher in Portland, the city provides better access to transportation and job opportunities than can be found in the suburbs and outlying areas. Metro staff had a meeting to discuss proposals with the Metro Policy Advisory Committee September 13th, and the Council is set to begin discussions with the 24 city councils and 3 county commissions that make up the metro area. Read more.

Thursday, September 14, 2017

Oregon's Median Household Income Grew by 6.2% in 2016

Oregon's median income is now on par with the national median after several decades of lagging behind. The U.S. Census Bureau reports that Oregon's median income is currently $57,532 compared with the national median of $57,617. The last time Oregon's median income was within reach of the national median was in the late 1970s, but the state has since lagged behind due to the decline of the timber industry as well as housing crashes in the 1980s and 2000s. Since the late 2000s, income in the state has been growing at a steady clip, with Portland seeing big gains beginning in 2013. Salem and Bend have begun to outpace Portland in job growth over the last couple of years, and poverty rates in rural parts of the state have been declining. In 2016 the state's median income grew by 6.2%, outpacing every state except Idaho and Massachusetts. Read more.

Tuesday, September 12, 2017

Multifamily Marketwatch Podcast - September 12, 2017

This week: The Portland Unreinforced Masonry Policy Committee holds a final public meeting October 4th and then heads to City Council; Vacancy rates for studios and one-bedroom units are increasing; national economics professors argue that restrictive land use policies are adding drag to the national economy.



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Monday, September 11, 2017

Portland Tribune: Studio Apartments Sit Empty As Renters Seek Larger Units

Three quarters of market rate apartments built in the last five years have been studio or one-bedroom apartments. The Portland Business Tribune reports that many of the new units sit empty as renters look for housing with two or three-bedrooms. Read more.

Thursday, September 7, 2017

City Council to Review URM Policy Proposal October 19th

The URM Policy Committee is set to meet for a final time October 4th, before presenting their policy proposal to the City Council October 19th. The policy will determine what retrofits building owners are required to complete, as well as the timetable for completion. Building owners have expressed concern about the lack of available financing for retrofits, as well as the scope of retrofit projects. Seismic retrofits frequently require tenants to relocate, and landlords who own URM buildings are subject to the relocation ordinance passed earlier this year. The ordinance requires landlords to pay tenants $2,900-$4,500 upon issuing a no-cause eviction. Such evictions would be hard to avoid if the city requires landlords to add steel reinforcement throughout their buildings. Nonprofits, schools, and churches also own several URM buildings in Portland, and Central City Concern is urging the city to provide an exception for affordable housing. The URM Policy Committee is overseen by the Bureau of Emergency Management as well as Mayor Ted Wheeler's office. Read more.

Wednesday, September 6, 2017

Multifamily Marketwatch Podcast - Sept. 6, 2017

This week: lender to the rescue for Portland's pending seismic upgrade requirement? Cap rates continue to decline despite an increase in interest rates. 



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Friday, September 1, 2017

PropertyFit Program Expands to Finance Seismic Upgrades in Multnomah County

The Daily Journal of Commerce reports that the PropertyFit program, which offers 100% financing to building owners and developers for energy-efficiency and seismic upgrades, will be expanding to serve properties throughout Multnomah County. Prosper Portland, Multnomah County, and the Energy Trust of Oregon are sponsoring the program in hopes that it will encourage "mom and pop" owners of unreinforced masonry buildings to perform necessary seismic upgrades. The capital providers for the program include Prosper Portland, CleanFund Commercial PACE Capital Inc., and PACE Equity. Funding can also be used to replace outdated boilers and lighting systems with more energy efficient alternatives. It appears from the website that interest rates range between 5-10%. Read more.

Wednesday, August 30, 2017

Portland Seeks Public Comment on Affordable Housing Bond Framework

The Portland Housing Bureau released a report written by the Affordable Housing Bond Stakeholder Advisory Group, which lays out a plan for how the money should be spent. The affordable housing bond was passed last November, and the city has pledged to use the $258 million dollars it expects to be generated by the levy to build 1,300 units available to households making less than 60% AMI. The Draft Policy Framework includes targeted goals that identify communities the city wants to prioritize for potential new affordable units. The PHB is conducting mail and online surveys, and will be holding hearings on the policy between September 6th and 11th. The final vote is scheduled for October 11th. Read more.

Wednesday, August 23, 2017

State of Oregon Expects to Return $464 Million to Residents

Oregon collected $464 million more in personal income taxes than expected this biennium, triggering the "kicker" rule, which goes into effect when revenue exceeds expectations by more than 2%. The increased revenue is largely do to the strength of the state's economy, which has seen steady growth over the past few years and currently has an unemployment rate below the national average. Oregon's general fund will also receive an additional $87 million. The kicker will not provide a windfall to individual residents, however - the middle 20% of income earners should expect to receive an estimated $91. Read more.

Monday, August 21, 2017

Bend Looking to Encourage Middle-Market Housing

The city of Bend, Oregon has seen a spike in housing costs over the past few years, and is actively looking for solutions that would encourage the building of new units. The Affordable Housing Advisory Committee met in the city last week to discuss some the Bend 2030 Work Group proposals that they may include in their recommendations to the city. Among the proposals discussed were:

-Deferment of development fees or long-term loans for developers building homes for families that make less than 125% area median income
-Tiered system for development fees based on home size
-Measuring density by radius rather than lot-by-lot
-Allowing four-plexes to be built in single-family neighborhoods
-Altering the requirement for open space when a home is built near a park
-Raising allowable lot coverage for multifamily housing from 40% to 60%

Read more

Portland's Central City 2035 Plan Will Have Public Hearings

 Since 2010, the Planning and Sustainability Commission, Bureau of Planning and Sustainability, Bureau of Transportation, and other city agencies have been working on a proposal to update design requirements for Portland's central core. When the final 2035 Plan is implemented, it will affect zoning and height restrictions, FAR, setbacks, and other important design features. The goal of the overhaul is to increase density in the central city, and encourage the use of public transit as well as biking and pedestrian infrastructure. The plan will have its first public hearing September 7th, and the city is expecting a great deal of public input at that time. The final vote will likely be in January 2018, with a March 2018 effective date. Read more.

Tuesday, August 15, 2017

City of Seattle Prohibits Housing Providers From Screening Applicants Based on Criminal History

The City of Seattle has passed 8-0 an ordinance called the Fair Chance Housing Ordinance prohibiting housing providers from screening applicants based on past arrests or criminal convictions.

Landlords are still allowed to screen applicants on employment, credit scores, income ratios and other criteria.

Read a statement on the City of Seattle website.

News Reports: City of Portland Plans to Extend Relocation Assistance Following Landlords' Judicial Appeal

The Portland Mercury quotes Portland Housing Bureau Manager Matt Tschabold as stating the Portland City Council will be asked to extend the relocation assistance for six months and then possibly even longer.

The news comes on the heels of two Portland landlords filing an appeal of a recent judges' ruling allowing the relocation assistance.

Multifamily Marketwatch Podcast - August 15, 2017

This week: The City of Portland considers special tax breaks for projects approved before inclusionary zoning took effect; Mayor Ted Wheeler criticized for lack of action on affordable housing initiatives; and Portland's relatively low rent-to-income cost average.



Check out this episode!

Monday, August 14, 2017

Relative to Income - Portland's Rents are West Coast's Lowest

A new report demonstrates that Portland's rents are the lowest on the West Coast relative to income.

As of the second quarter, Portland's rent-to-income ratio is just a shade under 25%, at 24.96%. The average income in metro Portland is about four times average rents. That is higher than some places, such as Raleigh at 18.77% or Austin at 21.53%, but a lot less than other markets, and less than the national average of 28.99%.

The highest rent-to-income ratio in the country is New York, at 51.33%. Other pricey markets include LA at 42.95%, San Francisco at 38.57% and San Diego at 33.28%. Among major West Coast markets, Portland has the lowest of all rent-to-income ratio.

Source: August, 2017 report from CBRE.


Wednesday, August 9, 2017

Oregonian Report: Wheeler Slow to Deliver on Affordable Housing

Portland mayor Ted Wheeler made the urgency of affordable housing a key part of his 2016 campaign, promising to deliver results quickly. Eight months since his election, not much has happened. Read today's story in the Oregonian.

Multifamily Marketwatch Podcast - August 9, 2017

In this week's news: REIS announces the national vacancy rate; streamlining Portland's design review; affordable housing bill proposed in U.S. Senate.



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Multifamily Marketwatch Special

In an interview with HFO partner Greg Frick, Portland attorney Andy Hahs discusses the 2017 legislative session and Portland's relocation assistance program, which is likely to be modified and extended this year by Portland's City Council.



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Friday, August 4, 2017

Seattle Tightens Rental Inspection Rules on Landlords

The Seattle City Council has reduced the amount of notice that landlords receive before building inspections. The Rental Registration and Inspection Ordinance (known as RRIO) provides for inspections for heating, infestations, leaks, etc. A property must be inspected at least once every decade.

Landlords were previously provided with 60 days' notice on which units would be inspected. Now they will receive a 60 day notice of pending inspection and a 10 day notice of the exact day, but they will not know which units will be inspected.

Previously, landlords could hire a private inspector if they didn't want the city inspector to conduct the inspection, but landlords weren't required to provide the resulting written report. The rules will now require inspectors turn over the resulting report to the city.


Thursday, August 3, 2017

Clark County Tax Appeals Due Beginning August 7

Many Washington State counties have mailed the Value Change Notices for the 2017 assessment for taxes payable in 2018. 

Appeal Deadlines
You have 60 days from the mailing date to file an appeal with the local board. 
  • The state and most counties offer a 60-day appeal window, but some only offer 30 days. 
City of Vancouver - Multifamily Abatement Program
The City of Vancouver has adopted abatement programs for new apartment construction depending on location. Developers and owners contemplating development should be aware of this program. Contact the City of Vancouver at (360) 487-8600 for details. See fact sheet. 

When considering your increase (and it will increase) the focus should be on whether the NOI supports the new value. While there is nothing wrong with trying to mitigate the value increase through an appeal, owners should be judicious with this approach.

Washington has a preference for using the sales comparison approach but also uses the income approach.

Some potential reasons to appeal your assessment
  • Your property has significant deferred maintenance or capital needs 
  • Your property has construction defects
Need help?
Contact your attorney or Christopher K. Robinson at (503) 635-9330 for assistance.

Read more.

Freddie Mac Forecast: Portland Among Leaders in 2017 Rent Growth


Portland will remain among the highest income growth for multifamily in 2017, even as vacancy rates increase. Freddie Mac estimates Portland gross income will increase by 5.7% with a year-end vacancy rate of 5.1%.
 


Download the full mid-year report here.

Rental Occupancy Rates Could Fall in Downtown Portland

Yardi Matrix reports that overall occupancy of stabilized properties in the U.S. was 95.6% nationwide in June, down 20 basis points year-over-year. Annual completions are expected to see a peak in 2017.

Yardi forecasts that as that new supply is absorbed, occupancy rates are likely to fall, especially in construction-heavy submarkets like downtown Portland and Austin's Hyde Park, which have seen occupancy decline by more than 3% in the past year.

Yardi expects the second half of 2017 to have slow rent growth the second half of 2017 with increases more in line with wage growth and increases in supply reducing occupancy. Occupancy rates in Portland and Austin have fallen as much as 80 basis points, according to Yardi.

The company forecasts effective annual rent growth in Portland this year will be 2.5%.

A mid-year report by Fredie Mac Multifamily Research Group forecasts Portland's gross rent growth at 5.7% for 2017, with an end of year vacancy rate at 5.1%.

Tuesday, August 1, 2017

U.S. Census: Portland Rental Vacancy Rate Climbs to 6.7% - Middle of the Pack

The U.S. Census Bureau reports that the rental vacancy rate for the Portland-Vancouver- Hillsboro metro area was 6.7% percent for the second quarter of 2017* -- an increase of 2.8% from Q1. The next definitive report on the area's vacancy rate -- by Multifamily NW -- is due out in October.

Seattle's Vacancy Rate Jumps 2.8%
Census estimated Seattle-Tacoma-Bellevue's vacancy rate has also increased the same amount -- 2.8% in the past three months -- from 1.9% to 4.7%.

The nation's lowest vacancy rates:

Allentown-Bethlehem-Easton, PA-NJ (1.2%)
Fresno, CA (2.2%)
Grand Rapids-Wyoming, MI (2.7%)
Jacksonville, FL (3.2%)
San Jose-Sunnyvale-Santa Clara, CA (3.5%)
Syracuse, NY (3.5%)
San Diego-Carlsbad, CA (3.6%)
Buffalo-Cheektowaga-Niagara Falls, NY (3.7%)
Los Angeles-Long Beach-Anaheim, CA (3.8%)
Worcester, MA (3.8%)

Average National Rental Vacancy Rate
The average national rental vacancy rate for Q2 2017 was 7.3 percent for multifamily dwellings of five or more units -- up 0.6% from one year earlier.

Year-over-year vacancy rates in the western U.S. have climbed from 4.9% to 6.0%.

Click to Enlarge

U.S. Homeownership Rate Increases
After falling to a 26-year low last year, homeownership rates have been increasing. The current homeownership rate in the West has increased the past 12 months by 1%.

Click to Enlarge

*The margin of error for the Greater Portland MSA is 2.9%





Multifamily Marketwatch Podcast - August 1, 2017

This week: housing shortage to possibly worsen by 2030; developers underbuilding to avoid Portland IZ rules; Clark County tax appeals due 8/7.



Check out this episode!

Want to Increase Your Google Map Rankings for Your Apartments?

From the Apartment SEO Blog - learn how to increase your community's Google Map Rankings.

Monday, July 31, 2017

Calculating the Potential Impacts of Inclusionary Zoning Requirements

The Grounded Solutions Network recently launched a tool developers can use to determine if projects built under inclusionary zoning will pencil out. The Inclusionary Housing Calculator was launched at a YIMBY conference in Oakland, and allows users to view pre-populated data for sample projects or customize several property- and market-specific variables to determine the viability of a prospective development. The tool considers a project feasible if it results in at least a 10% profit for developers. Read more.

Thursday, July 27, 2017

Developers Opting-Out of Inclusionary Zoning by Building Fewer Than 20 Units

The Daily Journal of Commerce reports that planning officials in the City of Portland are tracking development trends to see if the city's inclusionary zoning (IZ) policy is driving developers to keep projects to 19 units or less. The policy, which went into effect in February 2017, requires developers to include affordable housing units in projects with 20 or more units. So far, the number of 15-19 unit buildings proposed between February 1st and July 7th has been roughly equal to what it was over the same period in 2016. According to Tyler Bump of the Portland Bureau of Planning and Sustainability, the city is concerned that developers are planning to build 19-unit properties on parcels that could support more density. This would indicate that the IZ policy is working against the interests of the city, which is facing a housing shortage. David Wark, Chairman of the Design Commission, believes Portland should promote incentives for density rather than requiring developers to shoulder additional requirements. Read more.

Wednesday, July 26, 2017

Vancouver Washington Beats Portland With Implementation of Efficient, Electronic Permit System

The City of Vancouver, Washington has one-upped Portland in its implementation of an electronic permit application system. In early 2016 -- about five years after the project began -- Vancouver launched its system that allows businesses to submit digital copies of plans online, rather than physically bringing them to City offices -- where plans have to be physically filed away and can be misplaced. Vancouver's new system was developed by software company Avolve of Scottsdale, Arizona. The city says it is also in the process of an update to the software that will make it even easier. Total cost: about $500,000. The City will make use of the new electronic permit system mandatory by the end of 2017.

Meanwhile, five years into a similar project, the City of Portland has spent $12 million and it is expected to spend at least $1.6 million more. Portland fired its original vendor -- Sierra Systems of Vancouver, B.C. -- last fall. Local news reports indicate costs are expected to climb even higher. Officials hope to implement the Portland system by the end of 2018. 

Note: This story was updated July 27 to include information contained in a July 26th report by the Daily Journal of Commerce which appeared following this posting.

Study: Portland One of the Hardest U.S. Markets to Build Apartments

A new study from Washington DC ranks Portland 21 out of 50 metro areas in terms of difficulty adding necessary new apartments. Topping the list are Honolulu, Boston, Baltimore, Miami and Memphis. Rankings are based on local regulations and amount of available land. Top obstacles to building apartments listed in the report include:

  • Outdated zoning laws
  • Unnecessary land use restrictions
  • Arbitrary permitting requirements
  • Inflated parking requirements
  • Environmental site assessments
Read more in the Portland Tribune.

Tuesday, July 25, 2017

Multifamily Marketwatch Podcast - July 25, 2017

This Week: Low unemployment and lack of construction workers; city of Portland plans to renew the relocation assistance program this October.



Check out this episode!

Monday, July 24, 2017

U.S. Needs 4.3 More Apartments by 2030 to Avoid Even Worse Housing Shortage

The National Multifamily HOusing Council and the National Apartment Association have launched a joint Vision 2030 campaign. The foundation of that campaign is a new academic examination of how many apartments will be needed in the next 13 years.

The upshot: We’ll have to build 4.6 million new apartments between now and the end of 2030 to keep up with growing apartment demand—or risk exacerbating today’s existing housing shortage. Read more. 

Wednesday, July 19, 2017

What to Ask Prospective Tenants

In cities like Portland, a low vacancy rate means landlords and building managers are frequently faced with multiple applications for a single vacancy, and narrowing down the list can be overwhelming. In an effort to simplify the vetting process, the Global Verification Network has put together a slideshow of questions landlords or property managers can ask prospective tenants in order to determine which applicant is the best fit for the building.

7 Questions For Prospective Tenants created by Global Verification Network

Tuesday, July 18, 2017

Friday, July 14, 2017

Portland City Council Passes "Fixes" to Renter Relocation Law

The Portland Mercury reports that the Portland City Council has voted to address some outstanding issues with the renter relocation ordinance. The revisions give tenants 45 days to request payments, up from 14 days, and gives landlords 31 days to provide payment. After a rent increase goes into affect, tenants now have six months to decide whether to give notice that they will leave or choose to stay and repay the relocation money. The Council also closed the "loophole" that allowed landlords who owned their properties under different LLCs to evade having to pay relocation costs. The new revision disregards the form of ownership under which a landlord operates. The law sunsets in October of this year, but the Council is working on a longer-term version. Read more.

Thursday, July 13, 2017

New Multnomah County Property Assessment Law to Go into Effect Oct 10

HB 2008 passed in the Oregon Senate on June 13, and was signed into law on June 22nd. The law, which we wrote about in an earlier post, could change the way that new construction and renovated homes are assessed in Multnomah County. Under the new law, city councils may choose to base property assessments on city-wide rather than county-wide average home values. If city councils within Multnomah County vote to adopt these changes, it will raise taxes on all new construction in those cities. The law goes into effect October 10, and does not apply to anything built before October 10th or before the date cities adopt the ordinance. Although the bill was passed at the state level, it only affects counties with more than 700,000 residents - Multnomah is the only county in Oregon that meets the criteria.

Tuesday, July 11, 2017

Monday, July 10, 2017

Portland Relocation Ordinance Upheld in Court

On Friday, Judge Henry Breithaupt of the Multnomah County Circuit Court upheld the Portland ordinance that requires landlords to pay relocation assistance to tenants facing no-cause evictions or rent raises above 10% in a year. The ordinance is tied to the housing state of emergency declared in Portland in 2015, which expires in October of this year. The City Council could choose to extend the state of emergency or renew the relocation cost ordinance at that time. Read more.

Thursday, July 6, 2017

Oregon Ban on Rent Control Remains Intact

HB 2004, a tenant protection bill initially written to overturn the state's ban on rent control and end no cause evictions, did not go to a vote in the Oregon Senate. Senate Majority Leader Ginny Burdick attempted to negotiate a compromise that limited no cause evictions and addressed some of the landlords' concerns, but in the end all Senate Republicans and at least two Senate Democrats remained opposed to the bill. Senator Knopp of Bend argued that he bill could limit the development of much-needed new housing units, while Jonathan Lockwood, spokesman for the Senate Republicans, argued that the legislature should be addressing land-use laws rather than landlord-tenant relationships. Read more.

Friday, June 30, 2017

No-Cause Eviction Ban Could End Month-to-Month Leases

According to the Willamette Week, Portland Tenants United's Margot Black and John DiLorenzo of the Equitable Housing PAC find themselves on the same side of a tenant's rights issue this week. Though the two outspoken voices are generally on opposite sides of the housing debate in Portland, they agree that HB 2004 is likely to be a death knell for month-to-month leases. In its current form, the bill's restrictions on no-cause evictions only protect tenants who are on month-to-month leases. If it passes many landlords are likely to stop offering those leases, requiring instead that tenants sign a fixed term lease. A spokeswoman for Tina Kotek argues that tenants and landlords will both benefit from the stability created by fixed term leases, but Margot Black disagrees. She argues that there are many instances in which a tenant might need the flexibility of a month-to-month lease, and absent that option would have to pay lease-break fees in the event of a move. Read more.

Thursday, June 29, 2017

Portland Ranks #21 out of 50 Metros on Barriers to Apartment Construction Index

The National Multifamily Housing Council and the National Apartment association commissioned a report from Hoyt Advisory Services ranking the 50 metros based on how difficult it is to build new apartment units. Portland ranked #21 on the list, while Seattle ranked #7 and San Francisco #8. Austin fared much better - it ranked #35 out of the 50 metros. The metro area with the highest barriers to apartment construction was Honolulu. The data is compiled on the We Are Apartments website, where users can search for specific states or metro areas to learn more. For Portland, Hoyt predicts that the metro will add 47,000 new households by 2030, but only 33,230 units are likely to be built by that time. Read more.

Wednesday, June 28, 2017

HFO Sets Record With Oregon Sale

HFO Investment Real Estate has arranged the sale of Brentwood Estates Apartments in Springfield, Ore., for $40.5 million. That sum establishes a new record as the largest dollar figure in history for a Springfield multifamily property transaction.

The sale represents a price of $137,288 per unit and $116.34 per square foot. Read more.

Tuesday, June 27, 2017

Multifamily Marketwatch Podcast - June 27, 2017

This week: Sen. Rod Monroe offers amendments to HB 2004; Laurelhurst fights to keep out the housing crisis; City Councilor Chloe Eudaly criticizes landlords and developers


Check out this episode!

Monday, June 26, 2017

Portland's Economy Booms But Risks Ahead

At this month's HFO Investor Roundtable, State of Oregon Employment Division Economist Christian Kaylor offered an update on Greater Portland's booming economy. While he doesn't see signs of recession ahead, his report included information on a some items items that pose the biggest risks to continued growth.

Friday, June 23, 2017

The Ankeny Apartments Saga, Continued

In April, HFO wrote a blog post detailing the herculean effort developer Landon Crowell has put into getting his 17-unit apartment development on SE 11th and Ankeny approved. After going before the Design Commission five times only to have his project rejected, he appealed the decision to the Portland City Council. In April, the Council delayed giving an opinion, ultimately stating that a final decision would be made May 11th. No decision was made at that time, but this week the net-zero energy, transit oriented development was presented to City Council once again.

On June 22, Crowell presented the Council with a new plan, which incorporates input from the local neighborhood. The new plan eliminates two units, reduces the height of the building, and increases setbacks from neighboring properties. In response, the City Council expressed concerns that he didn't make enough changes, while also arguing that the changes should have gone before the Design Commission prior to being presented to City Council. The Council plans to continue the hearing August 9th, over a year and a half after the developer first requested a pre-application conference in January 2016. Read more.

Thursday, June 22, 2017

Demand for Apartments Projected to Stay Strong as Supply Struggles to Keep Up

New studies by the National Multifamily Housing Council (NMHC) and the Joint Center for Housing Studies at Harvard University predict that demand for apartment housing will stay strong due to population increases, delayed marriages, and the lack of affordable owner-occupied homes. The NMHC study projects that developers must build 325,000 apartment units per year to keep up with the current demand, well above the 2012-16 average of 244,000 units per year. Over the last four years, 1 million new renter households were formed, bringing the total number of renter households to 39 million in the U.S. Along with the increase in demand, high prices for rental housing are exacerbated by the sharp rise in costs for land and construction. Read more.

Sen. Rod Monroe Proposes Amendments to HB 2004

The Portland Tribune reports that Senator Rod Monroe, an East Portland landlord and hold-out vote on HB 2004, has proposed amendments he believes will balance tenant protections with landlord realities.

On the tenant protection side, Monroe proposes:

  • Limiting rent increases to once per year
  • Requiring leases be a minimum of 6 months
  • Requiring landlords to notify tenants at least 90 days before the end of a lease of a rent increase, or of the intention not to renew a lease
  • Requiring tenants to inform landlords of plans to stay or move 45 days prior to the end of a lease

Monroe also proposes limiting the situations in which relocation costs are paid, and removing a ban on no-cause evictions. His proposed changes include:

  • Landlords with more than 5 units would only be required to pay relocation costs if evicting 50% or more of tenants in a multifamily complex in the first year after the landlord has purchased the property
  • Landlords with fewer than 5 units would not be required to pay relocation costs

John DiLorenzo of More Housing Now supports Monroe's amendments, arguing that they would target bad actors while still giving most landlords the option to use no-cause evictions when necessary. Read more.

Wednesday, June 21, 2017

Nike to Eliminate 2% of its Global Workforce

Nike announced it will cut 2% of its global workforce of 70,000 employees - or about 1,400 people. The company has been losing some market share to Adidas and Under Armour (which also have major offices in the Portland area) and is restructuring. Read more.

Laurelhurst is Latest Portland Neighborhood Seeking Historic Designation to Block Development

Laurelhurst has voted overwhelmingly for neighborhood association leaders who are in favor of designating the 425-acre neighborhood as a historic district. Laurelhurst, located in Northeast Portland, is following in the footsteps of Peacock Lane and Eastmoreland, two other upscale neighborhoods that have recently submitted historic designation requests. Residents of Laurelhurst like Mike Parrott hope the designation will "add one more barrier against my street becoming filled with duplexes and my corner lots becoming triplexes." The median home price in Laurelhurst is $750,000, but advocates claim a historic designation is the only way to keep the neighborhood "affordable" for residents. Groups like 1000 Friends of Oregon and the Homebuilders Association are in favor of the Residential Infill Project in Portland as well as HB 2007. They argue that historical designations put the burden of providing housing entirely on less wealthy neighborhoods, which don't hold as much political sway. Read more.

Tuesday, June 20, 2017

Neighborhood Coalition Gets Cash to Clean Up Trash

A coalition of NE Portland neighborhood groups received a grant from the city of Portland for up to $90-thousand dollars in cleanup funds. The year-long pilot project will contract to add a full-time employee to clean-up a 1-square mile area in the Elliot, Lloyd, and Central Eastside Industrial areas. Cleanup will include picking up trash and needles generated by the city’s homeless and heroin addicted. If successful, the Office of Neighborhood Involvement hopes to replicate the program throughout the city. Read more.

Report: U.S. Apartment Market = Full Despite Booming Construction

Axiometrics reports that the average national apartment occupancy rate has reached the statistically significant level of 95%, which was last reached in September, 2016. This is the level at which apartments are considered "full."

Year-to-date rent growth through May is pegged at 2.97%.  Read more.

Multifamily Marketwatch Podcast - June 20, 2017

This week: It's the economy -- higher interest rates, Oregon unemployment reaches a new record low and Amazon will create 1,500 new jobs in Troutdale by next summer.



Check out this episode!

Amazon to Create over 1,500 Jobs in Troutdale Next Summer

Amazon plans to open a $178-million warehouse facility in Troutdale by July 2018 that will create 1,500 new jobs, possibly more, The Oregonian/Oregon Live reports. Read more.

Thursday, June 15, 2017

Portland Tenants United Pressuring Sen. Rod Monroe on HB 2004

Portland Tenant's United (PTU) has been putting pressure on State Senator Rod Monroe to support House Bill 2004, as the bill is likely to fail without the Senator's support. PTU has been contacting Monroe's tenants, hanging signs on the freeway, and demonstrating outside of his church in hopes that he will support increased tenant protections in the state legislature. The group also brought a cardboard cutout of Monroe to a town hall meeting in Gresham that he chose not to attend. Senators Law Frederick and Ginny Burdick have questioned these tactics, calling the group's church demonstration particularly counterproductive. Since the Portland Mercury first reported the group's targeting of Senator Monroe on Tuesday, PTU has withdrawn its support from HB 2004 "in its current form." Read more.

Wednesday, June 14, 2017

Fed Raises Interest Rates by a Quarter Point

The Federal Reserve raised its rates today for the second time in 2017, despite inflation that is lower than the normal target rate. The new range for the Fed's benchmark is 1-1.25%, up from 0.91%. Inflation is currently expected to be 1.6% for the year, below the normal target of 2%. Read more.

Tuesday, June 13, 2017

Multifamily Marketwatch Podcast - June 13, 2017

This week: Lawmakers in Oregon and Washington consider real estate tax increases; Oregon's rent control saga; Amazon to bring 1,500 new jobs to Troutdale; wages vs. rent; and across the country - slowing rent growth.



Check out this episode!

Friday, June 9, 2017

Washington County Housing Summit Addresses Development & Affordability Challenges

A housing summit held in Beaverton last week addressed housing-related issues such as increasing demand for low income housing as well as single family homes in the area. The meeting was organized by Westside Economic Alliance, which aims to encourage economic development in Washington and Clackamas counties. Jerry Johnson of Johnson Economics emphasized that increasing supply will help bring housing prices down, but Brenner Daniels of Holland Development cautioned that developments are facing headwinds such as a restricted land supply, increasing labor costs and development fees, and lengthy permitting processes. U.S. Senator Merkeley spoke at the summit, and assured attendees that he would try to protect federal affordable housing programs from proposed budget cuts. Read more.