Census: Portland/Vancouver Metro Has Nation's Lowest Apartment Vacancy Rate

The U.S. Census Bureau is reporting that the rental vacancy rate for the Portland/Vancouver /Beaverton area was 2.7 percent in the first quarter of 2015 and the lowest vacancy in the nation.

Seattle-Tacoma-Bellevue, WA ranked 26th with a Q1 2015 vacancy estimate of 5.0 percent, up 0.7 percent from the prior quarter.

The nation's 10 lowest vacancy rates were as follows:

• Portland-Vancouver-Hillsboro, OR/WA - 2.7%
• Cape Coral-Ft Myers, FL - 3.1%  (tie)
• New York-Newark-Jersey City, NY-NJ-PA - 3.1 (tie)
• North Port-Bradenton-Sarasota, FL - 3.3%
• Akron, OH - 3.5% (tie)
• Allentown-Bethlehem-Easton, PA-NJ -3.5% (tie)
• Providence-Warwick, RI-MA - 3.5 (tie)
• San Francisco-Oakland-Fremont, CA - 3.6%
• Denver-Aurora, CO - 3.8%(tie)
• Los Angeles-Long Beach-Santa Ana, CA - 3.8% (tie)
• Louisville/Jefferson County, KY-IN - 3.8% (tie)
•  Hartford-West Hartford-East Hartford, CT - 4.0% (tie)
• Tampa-St. Petersburg-Clearwater, FL - 4.0% (tie)
• Boston-Cambridge-Newton, MA-NH - 4.1 (tie)
• Cleveland-Elyria, OH - 4.1% (tie)
• Sacramento-Roseville-Arden-Arcade, CA - 4.3%
• Bridgeport-Stamford-Norwalk, CT - 4.4%
• Minneapolis-St. Paul-Bloomington, MN-WI - 4.4%

The average national rental vacancy rate for Q4 2014 was 7.5% for multifamily dwellings of five or more units, and was 1.9 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.

Click to enlarge

Homeownership rates, meanwhile, have fallen from 65.1 percent at the end of 2013 to an estimated 63.6 percent in Q1 2015, its lowest level in 22 years.

In the Western U.S., homeownership is at 58.5 percent—its lowest level since 1991 (24 years).

[Note: The US Census vacancy estimate is 0.39% lower than the vacancy rate of 3.09% reported by MultifamilyNW in its Spring, 2015 Apartment Report.]

Microunit Update: Rent 200 SF in Downtown Portland for $925

Micro-units—rental apartments about the size of a hotel room—represent a small but growing niche of the real estate multi-housing market.  Read more.

On our blog we wrote previously about microunits coming to Portland. Currently, at the recently completed property known as The Arthur, located on SW 11th between Yamhill and Morrison, 150-200 SF studios rent for $795-$925 per month.

Seattle has 780 micro-housing units recently cleared for occupancy and another 1,598 units in the pipeline.

U.S. Rent Growth at 44 Month High

Anyone who thought the strength that fundamental apartment market metrics demonstrated in 2014 would suddenly change with the new year thought wrong.

Annual effective rent growth, for one, has reached heights not seen in 44 months, reports Axiometrics.

The national annual effective rent growth rate was 5 percent in February 2015, the second time in three months the metric has reached that mark when rounded to one decimal place.

By extending the figure a second decimal place, February's rate of 5.05 percent was 8 basis points (bps) higher than December 2014's 4.97 percent. July 2011 (5.3 percent) was the last time annual rent growth exceeded the February figure.

*Units Magazine, April, 2015.

Reminder: Come Out to Support Oregon Food Bank's Canstruction - Sponsored by HFO

Celebrating two decades as one of the world’s most imaginative food charities, the Canstruction® exhibition and competition invites Oregon’s top architecture, engineering, and construction firms to transform more than 35,000 cans of food into whimsical, wildly inventive sculptures at Pioneer Place in downtown Portland.

Click here to see last year's entries and to donate.

Rent Control: Seattle is fired up

According to a recently published article in the Puget Sound Business Journal, the people of Seattle were heard at City Hall. An overflow crowd of furious renters attended a town hall meeting to speak out against the steep increases in rents.

Will citizens and renters of Portland speak out too about increasing rents? What can an apartment owner do today to prepare if rent control came to Portland?

Call an HFO broker at 503.241.5541 to discuss. We can help. 

Multifamily NW Report: Portland Metro Average Vacancy 3.09%

MultifamilyNW released its Spring 2015 Apartment Report this morning.

Current year-over-year vacancy and rents by area:
[Click on the image to enlarge.]

Notes:

• West Vancouver boasts the lowest vacancy rate of 1.5 percent. 
• Downtown has the highest vacancy of 5 percent, recently increasing as the result of new construction in the urban core.
• Rental incentives appear to be a thing of the past with the exception of new product move-in specials.
• Operating expenses have increased for all property types by 7.8 percent from a year earlier from $4,348 to $4,687 per unit.

Sold! 85-Unit Ivy Lake Court in Portland's Raleigh Hills

Ivy Lake Court is an 85-unit property in SW Portland. This exclusive Raleigh Hills property is conveniently located near major employment centers in Beaverton, Tigard and downtown Portland. Built in 1979, the property has an average apartment size of 785 square feet. The asset features an outdoor seasonal pool, private patios and balconies, on-site laundry, and large closets with additional deck storage.

Once listed the entire HFO office went to work marketing the property and the transaction closed escrow less than 60 days later. 

Whether you're interested in buying or selling apartment property, put HFO's team of dedicated apartment specialists to work for you! Call us today at 503-241-5541 or email service@hfore.com.

Will Portland's City Council Pass a New Energy Performance Reporting Policy Today?

Portland's City Council will hold a hearing at City Hall at 3:30 pm today to vote and determine if Portland will be the 12th city in the nation to mandate energy reporting by commercial buildings.

In December of 2014, the Bureau of Planning and Sustainability introduced the proposal and set the stage for public information sessions, which were held in January of 2015. The policy would replace the current voluntary program of owners to track their energy use and require commercial buildings of 20,000 square feet — and larger — to log and report their energy use. This would be approximately 80 percent of Portland's commercial buildings.

Energy costs for commercial buildings currently top $335 million per year.

Read more details about this potential policy in an article posted in yesterday's Portland Business Journal.

Tell us what you think. Do you support the passing of this policy?

Greg Frick: Eliminating 1031 Like Kind Exchanges Could Chill Real Estate Market

by Greg Frick, HFO Investment Real Estate

Tax-deferred exchanges of certain property types have been a part of the Internal Revenue Code for more than 80 years.

I’ve been in the commercial real estate industry for 23 of them, and for the first time, I’m seeing some of our clients actively making acquisition and disposition decisions based on the possibility that 1031 exchanges may disappear in 2016

Read the rest of this story in today's Portland Business Journal.

HFO Receives Top Sales Firm Award From CoStar for 2014

by Spencer Marona, Managing Director

Congratulations to the entire HFO team for being awarded the 2014 CoStar Power Broker Award: Top Sales Firm for the greater Portland-Vancouver-Hillsboro, OR/WA metropolitan statistical area.  CoStar is a real estate industry data collector, and as a neutral third party, its awards are highly coveted.

This marks the fifth consecutive year and eighth time in the last decade that HFO has received the recognition, which has been awarded annually since 2005.

In addition to the top firm award, Cody Hagerman, Greg Frick and Tyler Johnson were awarded 2014 CoStar Top Sales Brokers, for the Portland-Vancover-Hillsboro, OR/WA metropolitain statistical area, ranking them among the Top 10 Sales Brokers of the year. 

These awards are equally shared and credit is due thanks to the efforts of HFO partner, Rob Marton, the senior management team, brokeage sales team and all client support roles. 

Most importantly, the CoStar Power Broker Awards would not exist nor mean anything without the success of our clients. Each day, HFO is driven by indiviual and collective passions for delivering a superior client experience. 

Washington County Ranks #1 in U.S. Fourth Economy Index

The latest release of the Fourth Economy Community Index (FEC Index, #FECIndex) has released the nation’s top ten mega-sized Fourth Economy Communities. These communities are recognized as the regions ideally positioned to attract modern investment and managed economic growth among  regions with a population over a half million.

The FEC Index considers several county-level measures within five areas: 1) Investment, 2) Talent, 3) Sustainability, 4) Place, and 5) Diversity.

These five areas serve as a foundation for future economic success. Specific indicators include wage and employment growth, education levels, drive times, home values, minority business ownership, alternative measures of employment / entrepreneurship, and population density. The measures are then weighted based on the level of influence they have on both internal and external investment decisions.

Read more about Washington County's #1 ranking in this index.

Forecast: Solid Real Estate Growth Through 2017

This past week, the Urban Land Institute Center for Capital Markets and Real Estate released its latest semi-annual annual ULI Real Estate Consensus Forecast, and it’s predicting solid growth for the real estate industry from this year through 2017.

Read more at Multi-Housing News.

Commercial Real Estate: Multifamily Trends in 2015

Published two months ago, the founder of Bull Realty, Inc. out of Atlanta, GA, Michael Bull posted an informative article on trends multifamily owners and investors should expect to see in 2015:

Multifamily Trends in 2015.

Reis Reports: Apartment Vacancies To Remain Low Despite Construction Boom

In a number of markets, there are cranes building apartments as far as the eye can see. Thankfully, because the market is currently so tight, it will take a number of years before the increase in vacancy stymies rent growth.

A recent REIS report puts it this way: “With the economy and labor market poised to have a strong 2015, we see no reason why net absorption should decline from its current levels for at least the next two years,” the report predicted.

Good news for owners and developers. Read the full article.

What is Portland's Current Ranking for Apartment Rent Growth?

MPF research has completed first quarter data crunching for 2015 and reveals where Portland ranks among the nation's top cities for effective rent growth.

Can you guess?



If you can't watch this video, here are the rankings:

1st Quarter 2015 Apartment Rent Growth Rankings:
1. Denver/Boulder 10.5%
2. Oakland (tie) - 10.2%
2. San Francisco (tie) - 10.2%
4. San Jose - 9.3%
5. Portland - 7.9%
6. Atlanta - 7.5%
7. West Palm Beach - 7.2%
8. Sacramento - 6.7%
9. Fort Worth - 6.4%
10. Los Angeles - 6.2%
11. Las Vegas (tie) - 5.7%
11. Nashville (tie) 5.7%
11. San Diego (tie) 5.7%

MFE: Why Millennials Are Beginning to Move Out of Cities

So much buzz has been generated about Millennials living in urban core cities. However, Ryan Severino, Senior Economist and Director of Research with Reis, a real estate research and analysis firm based out of New York has a different, yet logical view on older Millennials living in cities: they are moving out. Click the link below to read Severino's article.

MFE article.

Apartment Rents: 1Q Rent Growth Soars - Axiometrics

According to Axiometrics, effective rent growth numbers for the first quarter of 2015 are the highest they have been in 3.5 years. Solid job growth and the continuing trend of wanting to rent vs. buy contributed to the first-quarter metrics.

Axiometrics identified 63,846 new apartment units to be delivered in the first quarter of 2015, or 22.8% of the anticipated 280,406 new apartments units expected to be delivered in 2015. Last year, 217,255 units were delivered according to Axiometrics.

Out of the top 25 Metropolitan Statistical Areas of the top 50 MSAs tracked for most apartments - Portland-Vancouver-Beaverton, OR/WA ranked 6th in the first quarter with an 8.2% annual effective rent growth and Seattle-Bellevue-Everett, WA ranked 9th with 6.8%.

For the first quarter of 2015, Portland-Vancouver-Beaverton, OR/WA ranked 6th with a 96.1% and Seattle-Bellevue-Everett, WA ranked 17th with a 95.5% occupancy.

Read the full report.

Where did Portland and Seattle Rents Rank Nationally in March?

For the second month in a row, rents in Portland were the 14th most expensive for major markets, according to the Zumper National Rent Report, March 2015. Seattle remained at number 10 for most expensive rents, after holding the 8th spot for 10 consecutive months.

The Zumper National Rent Report analyzes rental data from over 1 million active listings across the United States. Data is aggregated on a monthly basis to calculate median rents for the top 50 metro areas by population.

For the full analysis - Zumper National Rent Report, March 2015.

HFO wants to know. What would you do with these two pieces of land?

We want to hear from you!

If you had the choice to develop any type of property, which site would you choose and what would you develop?

Pearl District Post Office - 14 acre site

South Waterfront Site - 30 acre Zidell family site 

Respond in the comment section below. 

How's the Economy in Portland, Oregon? Going Strong.

The Portland metro region's unemployment rate was 5.6 percent, almost one percent lower than a year earlier. Over the past 12 months, the region has enjoyed impressive job growth in almost every major industry except construction.

Meanwhile, new data from the Bureau of Labor Statistics shows the median wage in the Portland metro region is about 20 percent lower than in Seattle, but 20 percent higher than Las Vegas, Medford, Bend and Boise. The average job in Portland pays $19 an hour, and there are a wide range of occupations paying much more and much less.

How is the US Apartment Market Doing? In a Word: Robust

MPF Research reports that on the heels of one of its best years in recent history, the U.S. apartment market continued to record impressive demand and rent growth in 1st quarter 2015. Annual rent growth is at 4.6 percent. Occupancy in the top 100 US Markets is 95.4 percent.

New Unit Absorption
In the first three months of the year, absorption of new units has topped deliveries. Over the past 12 months, supply currently lags absorption, with supply coming in at 242,479 units while absorption is at 276,513 units.

Lease Renewal Rates
Lease renewals hit a 10-year high in February with renewals at 54.5 percent.

New Construction - Top 100 Markets
There are still a lot of new units under construction. For the first quarter of 2015, there are 419,555 units under construction in the top 100 markets, which is about 20,000 units than it has been for the previous eight quarters.

2016 Occupancy Forecast
Occupancy is expected to cool only slightly through early 2016.

12-Month Rent Growth Forecast
Market rent growth is expected to slow only slightly. Annual rent growth for the next 12 months is forecast at 3.6 to 3.9 percent.