Seismically Retrofitting Portland's Unreinforced Masonry Buildings - Part 3

HFO partner Greg Frick interviews Carmen Merlo, director of the Portland Bureau of Emergency Management about a proposed City of Portland ordinance to retrofit old brick buildings that appears headed for the City Council in the spring of 2016. Merlo discusses the reasoning behind the recommendations.

Should Oregon Thank California for its Current Growing Pains?

by Spencer Marona, Managing Director

Oregon’s historic campaign slogan of “Welcome to Oregon – Please Enjoy Your Visit” seemed to reappear recently—in a new and vitriolic form—as residential For Sale signs were tagged with “No Californians” stickers. For those who want economic expansion, it seems important to step back to ask ourselves: “Do we really want to bite the hand that feeds us?”

On September 22nd, Josh Lehner, with the Oregon Office of Economic Analysis (OEA), posted an online report which commented on Oregon’s economic outlook. His statement included this:

Migration is vital to Oregon’s economic health. It is one of the two primary reasons Oregon outperforms the typical state during an economic expansion…Americans want to live in and move to Oregon…our state’s ability to attract skilled, young working age households is a huge economic benefit.

True to Lehner’s statement, an estimated 128,000 new residents migrated to Oregon in 2014. The U.S. Census Bureau reports one out of four (roughly 32,000 people) are moving to Oregon from California. Low cost of living, a wider array of employment opportunities and superior quality of life are among the enticements that caused Oregon to lead the nation, in 2014, for in-migration. The arrival of Californians, among residents from other states, is nothing new.

According to Rich States, Poor States, published by The American Legislative Exchange Council (ALEC), $6.5 billion moved from California to Oregon between 2003 and 2013. This influx of capital, alongside growing in-migration, has impacted employment growth and the state’s booming multifamily market.

Portland continues to lead the nation in effective rent growth, at 14.3% year over year as of October, 2015 according to MPF Research. Driving heightened rents are a high level of sales transactions for multifamily properties.

Between the start of 2014 and September, 2015, almost one fifth of all multifamily properties of eight or more units were purchased by California buyers. According to CoStar, those buyers paid $1.25 billion in aggregate value for property in the greater Portland-Vancouver-Salem markets. New residents and multifamily investors from California have affected Oregon’s multifamily industry–and our economy as a whole–through these investments.

These investment funds might not be pouring into Oregon’s economy without an analysis of Oregon’s sustainable employment market. Companies like Apple, eBay, Google and Under Armour are claiming Oregon ground, as companies like Nike undergo significant expansions. These companies and others are gambling on the hope that newly created jobs will be filled. With increased employment opportunities comes new demand for living spaces.

Other industries, such as retail and education, also feel a positive effect from this growth. More employed workers spend more money–thus creating a flywheel effect.

The multifamily market has a less positive flipside. The impact of California capital and in-migration may become too much of a good thing. According to the Oregonian, potential residents have awaited 22,000 new apartment units to be delivered since 2012. As well, vacancies are practically non-existent. The demand for rental units is so strong that Portland’s City Council declared a housing state of emergency on October 7, 2015.

Rents in the Portland-Vancouver market have skyrocketed due to its extraordinary 97% occupancy rate. This has caused an increase in the homeless population. The Oregonian reporting an approximate 1,800 people live on the streets in Portland.

The ultimate impact of these stresses on the rental market remains to be seen. The Portland City Council recently increased the notice period to evict or raise rents from 30 to 90 days for rents over 5%.

As job growth continues, and Californians plant their money in Oregon, our golden age of apartment investments seems poised to continue, regardless of outside pressure.

Can't find an apartment? Oregon's vancancy rate was nation's lowest, data show - OregonLive.com

New figures from the U.S. Census Bureau show that in 2014, Oregon's rental vacancy rate was 3.6 percent. That's lower than the 2014 rate for any other U.S. state, including Washington D.C. and Puerto Rico. 

Read the full story on OregonLive.com.

Vancouver Housing Authority offers $100 For Each New Section 8 Tenant Lease

The Vancouver Housing Authority is offering an incentive to landlords who sign on new tenants with Section 8 vouchers. The incentive was created to help offset the cost of paperwork required at the initiation of a lease and resulting delays in lease start dates.

For information on the program please contact the Vancouver Housing Authority at (360) 993-9563.

Report: Multifamily Rents Steady in November, Hottest Markets Show Signs of Deceleration

According to YardiMatrix November 2015 data, Portland (14.7%) and San Francisco (11.0%) once again led the pack in year-over-year data. Ongoing hot markets include Sacramento (10.7%), Seattle (9.5%), Atlanta (8.9%) and Denver (8.5%).

In recent months, however, some of the Western tech-oriented growth markets have been showing signs of slipping and rent growth has been led by warm-weather metros in the South and Southwest, including Miami, Phoenix and the Inland Empire.

Rentals Comprise Most New Housing Units in Portland Metro

Data made public last week by the U.S. Census Bureau provided the first-ever snapshot comparing five-year periods between 2005-2009 and 2010-2014.

Most new Portland-area housing units are rentals. Read more in The Oregonian.

Citing Rent Crisis, The Oregonian Sets Community Forum for Wednesday, December 9

Today's Oregonian carries an advertisement for a community event from 6:30-8pm at The Cleaners at Ace Hotel.

The event subhead asks: "Is Portland Becoming a Gated City?"

The forum will be moderated by Oregonian editorial board members and includes panelists Dan Saltzman, Portland city commissioner, Sam Chase, Metro Councilor, and Dike Dame of Williams and Dame Development.

Registration required.

What Is the Hottest Market in the Country?

Is it San Francisco, Seattle, New York, San Jose, San Diego, Boston or Los Angeles?

Nope. It's Portland, Oregon.

Recently, Axiometrics stated that the Portland-Vancouver-Hillsboro Metropolitan Statistical Area has been the hottest market in the country for the second half of 2015. Several facts lend credibility to this statement including Portland's comparison of rents among other major West Coast markets, Portland's average hourly wage vs. the national average, and that more than one out of four residents is a millennial between the ages of 25-34 (the "cool" crowd).

Portland's average monthly effective rent of $1,336 in October is still lower than neighboring West Coast markets like Seattle, San Francisco-Bay Area, Los Angeles and San Diego. It is the highest in the United States among Axiometrics Top 50 Markets based on number of units.

This would partially explain the surge of new migrants who continue to flock to the City of Portland, where the average hourly wage is $1.67 more than the national average according to the Bureau of Labor Statistics enabling renters to get more bang for their buck with a $289 advantage.

The Bureau of Labor Statistics also reported a 3.3 percent bump in job-growth rate over the national average of 2 percent with 36,000 jobs added at the end of September.

Consequently, many Portland apartment developers and owners are smiling knowing their year-over-year average rent was $148 higher than in October of 2014. This translates into $53,280 per year of potential additional revenue for an owner of a 30-unit.

Read more about why Forbes ranked Portland No. 18 in its list of "Best Cities for Millennials" and other indicators that "Portlandia" is the hottest market.

Update on Nearly 2,000 Additional Apartments Planned Near Lloyd Center

The Portland Design Commission recently approved plans for 944 units near Lloyd Center known officially as Oregon Square. The project involves four buildings ranging from 11-30 floors in height. Plans call for 708 parking spaces with an additional 200 parking spaces for retail customers, along with 1,647 stalls for bicycles. Read more about the design and details of this development.

Meanwhile, in response to plans by the Lloyd Center/Cypress Equities and southern California developer Bob Bisno, Regal Cinemas has filed suit. Regal claims its lease is good for another 11 years and does not want to give up its existing building and associated parking, which brings in $6.3 million in annual revenue. Cypress Equities and Bisno had announced plans to develop 980 apartment units with retail and parking for 873 cars.