Friday, October 31, 2014

Zillow Ranks Portland as a Top 10 City for Trick-or-Treating

Portland continues to keep in stride with other growing markets, but this time it involves: ghosts, ghouls, miniature pro athletes, witches, goblins, superheroes, Disney Princesses, Dracula, zombies, Frankenstein, Power Rangers, spiders, Dora the Explorer, firemen, Transformers, monsters, mermaids, The Lego Movie characters, Elvis, bats, creepy crawlers, parents with flashlights and more.

Zillow ranks Portland as a top 10 city in a recent study for trick or treating. Statistics used to assemble the Trick-or-Treat Index included population density, Walk Scores, crime, and median home values.

The top five neighborhoods to take your little ones trick-or-treating:

Mount Tabor

On behalf of the HFO team, I wish everyone a frightening, fun, and safe Halloween!

Thursday, October 30, 2014

Oil Industry is Driving Investors Towards Temporary Housing

by Spencer Marona, Managing Director.

With the oil industry booming in Texas and other parts of the country, investors are finding a unique opportunity in workforce housing. I am curious to know how they are underwriting their exit strategy, then again that goes for any investor. You can read more about this in a recently published Costar article.

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Wednesday, October 29, 2014

Mid-Term Elections Will Impact Multifamily Market [Video]

Mid-term elections will have a big impact on the multifamily according to a senior vice president of multifamily for the National Associations of Home Builders. The message at Realshare was: do your homework and know who the candidates are prior to voting. Watch Video.

Apartment Living: It's Not Just for Millennials

by Spencer Marona, Managing Director.

With the amount of new apartment deliveries, experts expect to see an balance with occupancy levels due to the demand of apartment residences with Millennials and Baby Boomers.  

"Investors leveraging demographic trends will often be able to amplify rental returns and home price appreciation, particularly when it comes to trends in the baby boomer and millennial generations, which combined account for approximately 147 million people -- more than 60 percent of the US adult population," said Daren Blomquist, vice president at RealtyTrac, in a prepared statement. Read more in a recently published GlobeSt. article.

Tuesday, October 28, 2014

U.S. Census: Portland Apartment Market Vacancy At 4.8%

The US Census bureau reported today that the Portland area's Q3 2014 vacancy rate was 4.8%, up from 2.1% a year earlier. The report comes on the heels of an October 15th MultifamilyNW Apartment Report indicating a rise in area vacancies to 3.66%.

Metro areas found to have the lowest vacancy rates included Denver (2.5%), San Francisco (2.8%), San Jose (3.0%), Boston (3.6%), New York (4.0%), Los Angeles (4.3%) and Seattle (4.4).

Meanwhile, U.S. homeownership reportedly fell from 65.3% in Q3 2013 to 64.4%, the lowest in 19 years, and in the West, ownership was at its lowest level in 17 years, at 59.4%.

You can download the entire Census Bureau report here. 

Monday, October 27, 2014

Spokane: Mixed-Use Retail With 24-Apartments In the Pipeline at Kendall Yards

Greenstone Corp. begins the development in Kendall Yards of Highline II, a mixed-used property consisting of ground floor retail and 24 apartment units. Retailers are expanding, out of state banks are claiming their stake and more news on institutions acquiring commercial property in Spokane.  Read more about ‘The Dirt’ in a recently published edition ofthe Spokane Review.

Saturday, October 25, 2014

News Roundup: It's Gonna Get Noisy in the Pearl

The Business Journal featured a full page cover story this week on the current and upcoming apartment construction in the Pearl District.  [Note: Reading complete story requires subscription.]

The NY Times meanwhile, recently wrote another story about why more people of all ages, especially the Millennials, are renting, not buying.

It was nice to be interviewed for a Daily Journal of Commerce story on Friday. I discussed with the DJC the fact that through September of this year 187 apartment buildings with five or more units have sold in the Portland market. Read the DJC story [requires subscription] or watch for the full HFO report in our Apartment Investor Newsletter winging its way next week to your mailbox!

Friday, October 24, 2014

Secondary Markets Offer Higher Yields

by Spencer Marona, Managing Director

In my previous post, I specialized in identifying higher yields in tertiary markets. Tertiary is defined as 'third in order, importance, or value', according to Merriam-Webster's Dictionary. The terms 'secondary market'  and 'primary market' are somewhat subjective. Either way, tertiary and secondary markets are offering higher yields to investors looking to place capital. Read more about secondary market yields in a recent GlobeSt article.

Chasing Yield into Tertiary Markets

by Spencer Marona, Managing Director

On a daily basis, I struggle to find a news publication that is not reporting on a commercial property sale, let alone a record price if the asset was in a core market. With low interest rates and foreign capital pouring into this country, apartment owners often have their choice of buyers in which to sell their properties, and for record breaking prices. Many of these owners are unable to reinvest their proceeds into the same market and still generate the same amount of cash flow, as well as higher return on their investments.

As a result, the search for investment opportunities expands geographically in what we call "chasing yield." Tertiary markets such as Corvallis and Eugene, OR benefit from this rippling effect.

Another market experiencing significant interest from outside investors and institutions is Spokane, WA. Part of this is due to the proactive commitment of the city to work with local and out-of-market institutions that want to grow their businesses. One example of these efforts include the city council's consideration of a proposal from The University of Washington to lease the former Spokane Visitor Information Center at Main Avenue and Brown Street-one of the hottest sections of downtown Spokane; in the heart of Cougar country. More can be read about this in a recently published article in the Spokane Review.

In addition, Spokane County has seen evidence of job growth as well as drop in unemployment rate. In July, Washington Trust purchased the Ridpath Annex to accommodate future workforce growth. The city's Comprehensive Plan, 'Vision 2020', is in full gear with a number of projects online, including 'Target Investment Plan' and 'Shaping Spokane'.

At some point, interest rates will increase and foreign capital will stop pouring into our economy at its current rate. Record prices will plateau and opportunities will be missed. There is no better time than now for multifamily investors to consider the returns that can be achieved in secondary and tertiary markets.

In the July edition of Multifamily Executive, the article "Multifamily's Top Secondary Markets" identifies Portland, OR as one of the top secondary markets in which to invest in. According to one of the insiders, Ryan Severino, an economist for New York–based market research firm Reis, Portland was his choice for hottest secondary market.

"Based on Reis projections, Portland is expected to have the highest effective-revenue growth of any non-gateway market," Severino said in the article.

"Moreover, not only are [Portland's] fundamentals projected to perform well, but the presence of the technology sector bodes well for the metro area...Technology is clearly one of the drivers of the U.S. economy, and in October Intel announced that it was planning a $3 billion capital investment for a massive expansion of its facilities in the metro area.

Additionally, local industries are expected to drive demand in the housing market as the city's largest companies grow. Global conglomerate Nike, which is based in Portland, is expected to expand, with a $125 million capital investment."

Many investors hold back on investing in tertiary markets due to the fear of the unknown. Do your homework, but most importantly hire a broker with experience in selling apartments in these markets. However, be cautious of hiring a broker who has a track record of dealing with only local buyers. In order to achieve the highest price and best terms with the most qualified buyer, exposure to the right buyer pool often means exposing the property to out-of-market investors. You can read more about best practices for investing in tertiary markets in a recently published MFE article.

Is it time to chase yield and capitalize on the current state of the market? Is your broker or their firm actively representing investors and owners in tertiary and core markets with a team of experts behind them?

HFO's team has a combined experience in commercial real estate of 145 years. Contact us to help create a plan for 2015 with your investment goals and visit us our website to see a list of recent closings and current listings.

Wednesday, October 22, 2014

City of Portland Releases Draft Regulations Approving Short-Term [AirBNB] Rentals in Apartments

The office of the mayor has released its recommended draft for short-term rentals in multi-dwelling structures. The rules require approval by a landlord or homeowner association. Tenants must submit a notarized signature of the property owner or homeowner association and comply with all the rules.

A public hearing on the issue is scheduled for November 19th at 2pm at Portland City Hall.

Lights, Camera, Action! Oregon's Top In-Migration by Occupation

Cullen Hoback, Suzanne Owens-Duval, crew: "Freedom State"
Surprise! California leads the in-migrants to Oregon with a net in-migration of about 15,000 per year from the Sunshine State. The largest out-migration was to Washington state -- Oregon loses about 3,400 more residents to Washington than it gains.

The most surprising piece in the table below is "Arts, Design, Entertainment, Sports & Media" occupations. Although this comprises only 5 percent of 2012 employment in Oregon, it is showing net in-migration of 1,100 people each year.

It's possible a big chunk of those Californians are in Arts, Design, Entertainment, Sports & Media.

Office and Administrative Support12,8268,9883,838
Food Preparation and Serving9,5156,1133,402
Education, Training, and Library6,1703,5402,630
Healthcare Practitioners and Technical5,2723,1402,132
Personal Care and Service4,4322,8561,576
Transportation and Material Moving5,5043,9871,517
Farming, Fishing, and Forestry2,0165881,428
Community and Social Services2,2841,0651,219
Building and Grounds Cleaning and Maintenance3,6632,4561,207
Arts, Design, Entertainment, Sports, and Media3,4192,2721,147
Computer and Mathematical3,1982,1101,088
Business and Financial Operations3,3022,2221,080
Architecture and Engineering2,1491,354795
Protective Service2,0201,248772
Life, Physical, and Social Science1,5561,120436
Construction and Extraction Workers4,4013,966435
Installation, Maintenance, and Repair2,3681,993375
Healthcare Support1,7601,569191

Source: Oregon Office of Economic Analysis

Tuesday, October 21, 2014

Portland Plans for 5,000 New Apartments Along 82nd Avenue

For the first time in 35 years, Portland's planners are busy reworking the city's comprehensive plan. In doing so, they're trying to figure out what areas of town should become more dense. They're looking at channeling growth into downtown, the South Waterfront, Lloyd District and other business districts,neighborhood centers and commercial strips--including nearly 5,000 more apartments on 82nd Avenue.

Read the full story in the Portland Tribune.

HFO Earns Top Spot Among Portland-Area Corporate Philanthropists

The Portland Business Journal has named HFO Investment Real Estate a top Corporate Philanthropist for 2014, an honor the company has received annually since 2008!

The truth is, it's our clients that make the 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.

On behalf of our clients and our team, HFO is pleased to have contributed over $32,800 in cash, and 256 volunteer hours to these, and other, charities in 2013:

  • Big Brothers Big Sisters Columbia Northwest
  • Boys & Girls Club
  • Campaign for Equal Justice
  • Cancer Research Institute
  • Community Partners for Affordable Housing
  • Doernbecher Children's Hospital
  • Guide Dogs for the Blind 
  • Humane Society
  • Mittleman Jewish Community Center
  • Northwest Pilot Project
  • Oregon Public Broadcasting
  • Providence Medical Foundation 
  • Portland Public Schools Foundation 
  • Self Enhancement 
  • Share 
  • Union Gospel Mission

Monday, October 20, 2014

7,000+ New Units Annually in Portland for at Least 2 More Years

The Portland market may be on track to add 7,000 new apartment units each year between 2014 and 2016, and there may be even more than that on the way.

"What we know about and can talk about is around 25,000 units either under construction or planned for the region [through 2016]. There are even more that I can't talk about." -- Jerry Johnson, Johnson Economics Consulting.

Download slideshow - click here. 

Read more in the Portland Business Journal.

Some of those planned units will be the somewhat controversial 200 square-foot microunits that appeal to young renters.

Sunday, October 19, 2014

Costar Group: Increase in Private Multifamily Financing in First Half of 2014

by Spencer Marona |

According to Costar, investors continue to be aggressive in the multifamily market with sales ($1 million and with five units plus) being reported by Costar COMPs data the first three quarters of this year at $64.29 billion vs. $56.93 million for the same period last.

Their was a lower volume of mortgage loan purchases from Freddie Mac, Fannie Mae, and the Federal Housing Administration versus the private market. Read the article.

Multifamily Sector Benefiting from a 'Perfect Storm' According to Experts

by Spencer Marona, Managing Director.

The combination of low interest rates, easier access to capital, financing, a not fully recovered economy, Baby Boomers and Millennials, have multifamily experts at RealShare APARTMENTS 2014, an industry apartment conference in Los Angeles this past week saying that the multifamily sector is in good shape. You can read more about RealShare and several experts' opinion in a recent article. [Requires free registration.]

Is your property maximizing its value?  Are you achieving your investment goals or unsure?  Is one or several of the actions below on your mind as we approach the end of 2014 and into the new year?
  • Selling 
  • Buying 
  • Holding and improving operations
  • Diversifying your portfolio
  • Consolidating assets
  • Establishing a succession plan
  • Refinancing
  • 1031 Tax Deferred Exchange
Now is the time to educate what alternatives may be the best course of action, particularly if there are multiple family decision makers involved as the holidays approach.  HFO's team has a combined experience in commercial real estate of 140 years. Contact us to help create a plan for 2015 with your investment goals and visit us our website to see a list of recent closings and current listings.

Wednesday, October 15, 2014

Rents in Portland Up Past 12 Months, Says Multifamily NW

MultifamilyNW's latest report shows these numbers for rent increases from fall 2013 to 2014. 

HOWEVER, it is important to note that while rents are indeed increasing, the exact rate ranges between 5-12% depending on the particular report that you're looking at. The fall 2014 Apartment Report surveyed 54,282 units and the fall 2014 report surveyed 55,567 units. There was a significant shift in survey participation and the most recent survey includes thousands of brand new units with higher rents. HFO believes these rental rates are being skewed by new construction.

Click here to download the MultifamilyNW Fall 2014 Apartment Report.

Monday, October 13, 2014

Q3: More Sales vs. Refinances and Multifamily Lead the Way

Chicago Title of Oregon reports a spike in sales vs. refinances and approximately 30% of the sales were multifamily in Q3 of 2014. Read more in a recent release from the Portland Business Journal.

How is your investment asset positioned for returns in 2015? Reach out to one of the HFO team members to discuss your investment goals and strategy to ensure you are maximizing value.

Friday, October 10, 2014

Revitalization: Vancouver Waterfront Milestone is Celebrated

by Spencer Marona, Managing Director

Prior to the 1940s, and for most of the city's history, the waterfront in Vancouver along the Columbia was where the action was at. With shipyards, sawmills, wharves, the waterfront buzzed with life. A transition occurred during the 40s, resulting in the waterfront becoming a giant sawmill for Boise Cascade.

Fast forward to the new millennium and another transition is underway. After a decade of planning, many cheered on the roof of City Hall in Vancouver as the $1.3 billion development began work on deep utility lines. President and owner, Barry Cain, of Gramor Development, responsible for developing some of the region's larger mixed use projects, has another one on his hands.

Credit is due to David Hansen, founder and owner of Hansen Design, a northwest architecture firm. Hansen is responsible for the strategy, graphic design and master use plan of The Waterfront Vancouver. His unique approach and experience has allowed him to work on projects around the globe. Other local master use plans include the Hillsboro's Tanasbourne Master Plan and South Hillsboro Town Center as well as Portland's South Waterfront design.

Congratulations to the City of Vancouver and those responsible for making this happen.

Thursday, October 9, 2014

CoStar Group: Year-Over-Year Apartment Sales Tracking 35% Higher

With vast amounts of investor capital allocated to chase after all types of commercial real estate, especially multifamily and office assets, sales of U.S. commercial property are projected to total about $415.1 billion for the four-quarter period ending with the third quarter of 2014. That represents an increase of about 8% over the previous four-quarter period, according to early CoStar COMPs sales transaction data. 

The $19.7 billion and counting logged in the third quarter in legacy markets tracked by CoStar is 35.4% higher than the same period a year ago. Additional multifamily COMPs recorded by CoStar for the third quarter could raise that figure to nearly $23 billion. 

Report: Number of Workers + Wages Increasing For Portland Residents

By Christian Kaylor
Workforce Economist
Oregon Employment Department

Every county in the Portland metro region has seen an increase in the number of residents who are working since 2010. The City of Portland stands out with relatively faster growth in the working population. This suggests residents of the City of Portland are recovering from the recession relatively faster, though these workers may commute outside the city for their jobs. Multnomah County is showing some of the strongest growth in the region with 11,100 new jobs over the last 12 months, significantly more than Washington County (+2,600) and Clackamas County (+1,300) combined.

As the region attracts new jobs and workers, a question naturally arises: Do the new jobs pay well?  In Clackamas County, wages (adjusted for inflation) for residents working full time are unchanged at about $50,000 a year since the 2010 recession. Workers living in Washington and Clark County have seen a noticeable decline in real wages. Conversely, wages for workers living in Portland have increased strongly in the economic recovery.

Wednesday, October 8, 2014

Has the Multifamily Sector Reached a Tipping Point?

by Spencer Marona, Managing Director

While secondary and tertiary markets continue to perform, cap rates in many urban cores are reaching unprecedented lows, particularly in gateway cities. With the influx of capital pouring into the economy, experts are giving a 50/50 view on the current state of the market. 

Are we at the beginning of another down cycle? Are investors ready to deal with the ripples that lead to decreased property values: vacancies and less cash flow? Or do we have a another 12 – 18 months of continued growth and more stability? 

Either way, there is no time like now to prepare for better or worse. More can be read in a recent article in Real Estate Forum.

Contact one of our team members to advise you on your investment strategy at (503) 241-5541. 

Thursday, October 2, 2014

Don't Put All of Your Eggs in One Basket

by Spencer Marona, Managing Director

A tsunami of social media has been sweeping through spinning out many startup tech companies. The revenue generated by these companies is produced through successful advertising models as well as selling their 'big data'.  Many of us remember the dot-com bubble and the Great Recession still haunts most in this country. Both were awful. I cannot count how many times I heard clients, family, and friends say that they would have invested differently.

My point is that investors who have the majority or all of their investments in stocks, bonds, cash, mutual funds, etc. may think they are being conservative, while unknowingly increasing their risks.  In addition, if you are an owner of one investment property, when was the last time you seriously considered the acquisition of another for diversification?

In a recent NREI article titled Five 'Whys' for Commercial Real Estate Investing, CEO of Everest Income Property, David J. Lynn Ph.D., outlines five credible benefits for investing in commercial real estate:
  1. A large investable universe,
  2. Income returns,
  3. Lower volatility,
  4. Diversification, and
  5. Inflation hedging.
I am not an expert in social media, nor am I an economist, but we have all heard that "history repeats itself".  My position is simple"don't put all of your eggs in one basket" if you own one investment property and are able to place capital in another. Similarly, consider investing in an investment property to diversify just as you would with multiple companies in the stock market vs. one.

And yes, I recognize the irony of my post being read via social media. 

Call one of the HFO team members to discuss your investment strategy and whether you are positioned to minimize risk with maximum returns.

Wednesday, October 1, 2014

Realpage/MPF Research: U.S. Apartment Completions at 14-Year High

Research released from market analysts at Realpage MPF Research shows one of the highest levels for new apartment supply in years. With the apartment supply increase, how will this affect the growth of market demand? Occupancy continues to tighten and rent growth continues to accelerate despite the introduction of more supply. Read more.