HFO's Advice for Buyers and Sellers of Multifamily Properties in the Portland, Oregon / Vancouver, Washington Area

Greg Frick recently responded to investor questions submitted to HFO by the Rental Housing Journal. Below are the questions, with responses:

Q. What advice do you give to an owner when they are considering putting a property on the market?

A. Find a firm that knows how to listen. By listening to what your goals and objectives are, a good broker can help put a plan together that will help achieve your goals. Be careful of those who might just tell you what you want to hear! The person you work with should listen to you, and be willing to tell you when, given all the circumstances involved, it's not in your best interest to sell your property. When you're sure the time is right, choose a brokerage team with the experience, knowledge and skill to implement an effective plan of action.


Q. What advice do you give a prospective investor when they are considering buying a property?

A. You need to have someone working for you with the expertise to analyze the properties in terms of valuation and operations. In any transaction, it's "surprises" that come up that prevent a sale. You will be best served by working with an expert who can identify potential surprises and find solutions in advance.

You'll also want to work with someone who is not afraid to tell you whether what you're hoping to find is in line or out of line with the market. Portland metro multifamily properties typically are not trading at cap rates above 7.5% and above. A buyer coming into this market sometimes needs to be educated on whether their expectations in terms of return and pricing are realistic.

Look for a firm that doesn't push you into a deal because it benefits them. Find someone who does what's right for you. A client can get the most out of a broker/client relationship when they are acting in sync over the long term.Brokers are always on the front lines of what properties are coming to market.The more they know about you and your investment goals, the more great opportunities will come knocking at your door!

Portland State Spring 2014 Multifamily Report Released

In its latest edition of the Center for Real Estate Quarterly Report, PSU's multifamily market analysis indicates that 189 multifamily projects have been recently completed, are under construction, or proposed, accounting for approximately 22,800 units across the Portland/Vancouver metro area. A local appraiser predicts that despite this recent uptick in new apartment construction, the market will not become overbuilt.

Read more. 

Portland: Predicted Top Rent Growth Leader for 2014

Among the rent growth leaders nationally, nearly all have seen significant increases in construction. However, Portland has a very manageable projected inventory growth rate of 2.4% in 2014. It is this manageable number of new supply that has MPF Research predicting that Portland could end up as one of the top revenue growth leaders in 2014.

Is ApartmentRatings.Com Finally Creating a Positive Impression of Apartment Living?

In his latest blog post, author Brent Williams discusses recent trends on the rating site ApartmentRatings.com.

"ApartmentRatings.com's approach to reputation management has dramatically improved over the last year. The website just released some very important statistics: The number of active properties that had a “Recommend” score above 50% grew an astounding 18% during 2013 to 68%.  In other words, since we are talking about industry averages, it’s as if the very idea of apartment living got an incredibly large perception boost.  

"Although the multifamily industry is constantly improving, it is safe to say that the industry as a whole didn’t suddenly have an operational epiphany leading to an 18% increase in customer satisfaction in just one year."  

Read the full article on Multifamily Insiders.

Costar: Dramatic Changes in Multifamily Supply & Financing Ahead

For the top 54 U.S. metros, CoStar Group forecasts more than 240,000 new multifamily units will be added in 2014, and a combined nearly 350,000 units in 2015 and 2016. Those projections are on top of the more than 200,000 new apartment units developers added between 2012 and 2013. 

The supply wave already is affecting some market indicators, including gradual reductions in rental growth and increases in vacancy, according Luis Mejia, CoStar’s director of U.S. research, multifamily. The aggregate fourth quarter 2013 CoStar data for 50-unit-plus properties shows a year-over-year effective rent growth pattern that is consistent with increasing competition. As landlords adjusted concessions to lure renters, annual effective rent growth declined from 4.9% in the first quarter to 2.7% in last quarter of 2013, after peaking above 7% in 2012.  

At the same time too, strengthening economic momentum in 2014 could bolster apartment performance in the coming year. It's possible that rising employment growth could offset much of the supply risk from the dramatic rise in apartment construction. 

The new construction cycle and nascent rise in renter household formations may herald a new phase of expansion for apartments.

Read the full story. 

Planning for One Million New Portlanders By 2040

Attending a discussion this morning about where we are going to put another million people in Portland metro by 2040. The consensus was: there's lots to do to prepare!

Portland's Year-End Vacancy Rate from Census, Plus All the Expert Forecasts on Vacancy & Rent Growth for 2014

The U.S. Census Bureau is reporting that the Portland/Vancouver /Beaverton vacancy rate rose from 2.1 percent in Q2 and Q3 2013 to 4.6 percent in the fourth quarter, a half percent below where it ended up atthe end of 2012. 

The Portland metro area tied with Rochester NY for the 14th lowest vacancy rates among the top 75 U.S. Metropolitan Statistical Areas (MSAs). This estimate has moved above the 3.11 percent vacancy rate reported by the MultifamilyNW Association in its Fall, 2013 survey.

Seattle-Tacoma-Bellevue, WA ranked #11 with a Q4 2013 vacancy estimate of 4.0 percent, down 0.4 percent from the prior quarter.

The nation's 15 lowest vacancy rates were as follows:

• Poughkeepsie-Newburgh-Middletown, NJ - 0.0%
• Springfield, MA – 0.9%
• Oxnard-Thousand Oaks-Ventura, CA – 1.9%
• San Jose-Sunnyvale-Santa Clara, CA – 2.7%
• San Francisco-Oakland-Fremont, CA – 3.2%
• Albany-Schenectady-Troy, NY – 3.4%
• Pittsburgh, PA – 3.5%
• Worcester, MA – 3.7%
• Toledo, OH – 3.8%
• Raleigh-Cary, NC – 3.9
• Seattle-Tacoma-Bellevue, WA – 4.0%
• Milwaukee-Waukesha-West Allis, WI – 4.2%
• San Diego-Carlsbad-San Marcos – 4.4%
• Portland-Vancouver-Beaverton, OR-WA – 4.6% (tie)
• Rochester, NY – 4.6% (tie)
• Baton Rouge, LA  - 4.7%

The MSA's with the five highest vacancy rates were as follows:

• Las Vegas-Paradise, NV - 13.5%
• Birmingham-Hoover, AL – 13.8%
• Austin-Round Rock, TX – 13.9%
• Tulsa, OK – 14.1%
• Memphis, TN-AR-MS – 15.8%

Average national rental vacancy rates for Q4 2013 was 8.2% and was 0.5% lower than a year earlier and 0.1% lower than Q3 2013. The rental vacancy rate has been falling fairly consistently since 2009. It is at its lowest level since Q1 2001 and far below the Q3 2009 high water mark of 11.1%.

The Census Bureau statistics compare to private research firms Axiometrics' and Red Capital Research (RCR) as follows:

Portland Metro Vacancy Rate – Forecasts	Red Capital Research	Axiometrics	Reis*	Multifamily NW	US Census
2012	2.3%	4.9%	3.4%	3.7%	Q4 5.2%
2013	2.5%	4.3%	3.0%	3.11%	Q4 4.6%
2014	2.8%F	5.1%F	3.2%F	-	-

*4 Quarters, averaged

F = Forecast                 

Portland Metro effective rent growth estimates & forecasts

Effective Rent Growth – Forecast	Red Capital Research	Axiometrics	Reis	MPF Research
2012	5.0%	4.0%	3.8%	4.4%
2013	3.3%	5.7%	3.7%	6.6%
2014	3.4%F	3.4F	3.6%F	4.8%F

F=Forecast

Apartment Residents in NE Portland Lose Potential New Grocer

Due to neighborhood opposition, Trader Joe's is cancelling plans to build a new store on NE Alberta. Details reported by The Oregonian.