Sold! 70 Units in Corvallis, Oregon

Santana Court is located adjacent to Oregon State University. The resident profile is predominately students due to its location, but the asset was rented as market-rate by the unit—not by the bedroom. The sellers had completed extensive interior and exterior updates throughout the property over the previous 10 years. Updates included a new roof, exterior paint, railings, and seal coat.  Santana Court’s owners of the prior 30 years decided to sell off their multifamily holdings. The asset was offered for sale with a sister property—the Arcade Apartments. HFO managed the process by seeking out investors with interest in the Corvallis area and owners of student housing throughout the nation.  Our extensive relationships with financially qualified investors enabled us to locate a motivated and well-qualified buyer eager to acquire assets in Corvallis.

HFO Sponsors Rocking Strong Hood-To-Coast Team

HFO is pleased to announce that its Hood-to-Coast sponsored team, the Purple People Eaters, placed #310 out of 490 teams in the competition. This strong group of women ran the 129-mile trek in 33 hours, traveling in a Suburban and running three race legs each with no break!

Congratulations to Melilssa Marton and company for another successful year.

Portland URM Policy: Vote on Building Warning Signs Originally Set for Sept. 12th at Portland City Hall - Rescheduled to 10/3

In June of this year, the Portland City Council released its recommendations for its staff in creating a policy for mandatory seismic retrofitting of unreinforced masonry (URM) buildings in the city.

Among those recommendations was a direction to:

...develop a placarding ordinance, with an effective date of March 1st, 2019 and enforced by Portland Fire and Rescue with an appeal process administered by the Bureau of Development Services, for all URM buildings that are not retrofitted to a level expected to prevent collapse in an earthquake and that placard shall be no smaller than 8 by 10 inches and shall state clearly in a conspicuous place at the entrance of the building printed in not less than 30-point bold type: "This is an unreinforced masonry building. Unreinforced masonry buildings may be unsafe in the event of a major earthquake.", and return to Council for adoption within 3 months. 

As proposed, a similar warning would be required in all rental agreements. The proposal is scheduled for a vote at the Portland City Council meeting on Wednesday, September 12, 2018, at 9:45 am. 

The vote has since been rescheduled to October 3 at 2 pm.

Commissioner Chloe Eudaly has been supportive of this requirement, saying, "Every tenant and occupant has a right to make an informed decision on whether they want to live in an URM."

Owners of URM buildings have pushed back against these requirements, arguing that the city should not be penalizing buildings that are up to code. Furthermore, the city's list of URM buildings is not entirely accurate - some of the buildings included on the list have already been upgraded. For those that have been upgraded, engineers from the city are not always available to verify this

Local attorney and URM building owner Walter McMonies, who served on the City's URM Task Force, points out that the URM Policy Committee advocated for positive reinforcement, rather than public shaming. According to McMonies, "Imposing negative placarding on all listed URMs as of March 1, 2019, will stigmatize buildings that may not even be URMs and will make it much more difficult for the owners to market or lease units, obtain mortgage financing, sell their building, etc." 

A cost estimate from the City of Portland finds that the median cost of retrofits for Class 3 buildings would be $48 per square foot (costs range from $43 to $65 per square foot). But as McMonies points out, banks are wary of lending to URM buildings. The city's PropertyFit program could help fill some of the funding gaps, but capital providers involved in the program still have discretion over whether they will choose to invest in a retrofit.

City staff has been instructed to return to the Council with a final URM retrofit policy for adoption by June 2019.

City Observatory: Increasing the Housing Supply Helps Prevent Displacement

In his City Observatory blog this week, economist Joe Cortright examines the link between displacement and restrictions on housing supply. He uses neighborhoods in Oakland and Washington DC as case studies, charting how housing costs have changed over time in areas that have increased their housing supply compared with those that enacted NIMBY policies. He argues that if neighborhoods that fear displacement stop building housing, it will not stop new residents from showing up. Read more.

Sold! 86 Units in Springfield, Oregon

The Evergreen Townhomes (1993) are all duplex townhomes featuring an attached, direct-entry garage, and washer/dryer hook ups.  The majority of the 43 buildings are on individual tax lots (with the exception of two buildings sharing one lot).

Managed by the same owner for over 20 years, the Evergreen Townhouses’ rents significantly trailed the market. HFO marketed the asset as an opportunity to reposition the property. We worked to help investors understand the Eugene/Springfield area’s history of steady rent growth, resulting in a multiple competing offers and a successful sale. For additional information on this listing call an HFO broker at (503) 241-5541.

New Zoning for Mobile Home Parks to Take Effect Immediately

The Portland City Council approved a new zoning designation for mobile home parks yesterday. Mayor Wheeler introduced the proposal, which was supported by Commissioners Fritz and Eudaly. The public hearing and vote only took a half hour during Wednesday's meeting. 56 of the 57 mobile home parks in the city fall under the new designation, and 52 of those will be able to increase the density of homes on site. Owners of those parks can sell their density rights to apartment owners elsewhere in the city. Commissioners hope that this new zone will be an obstacle to redevelopment of parks, and help keep tenants in their homes. Read more.

Sold! 24 Units in Lake Oswego, Oregon

This was a family owned asset with lots of long-term tenants and many below-market rents. The biggest challenge was managing the sale process—there are large amounts of potential investors due to the small amount of product available in Lake Oswego.

The previous owner self-managed the property, and had strong relationships with current tenants. HFO was able to shield tenants from disruption during the selling process. Because of our extensive relationships within the market, we located a buyer able to finance the project notwithstanding its low NOI. For more information about this listing, call an HFO broker at (503) 241-5541.

Vote on New Mobile Home Park Zone in Portland to be Held Wednesday

The Portland Tribune reports that the Portland City Council is expected to vote on an ordinance re-zoning the city's mobile home parks on Wednesday, August 22nd. Advocates of the change hope that it will act as an impediment to redevelopment, and help keep residents in their homes. Critics argue that it will not protect tenants from evictions or space-rent increases. According to the Tribune, the Council is likely to approve the plan. Read more.

Sold! 43 Units in West Linn, Oregon

Robinwood Court (1978) was a property that had large amounts of deferred maintenance, low rents, and mismanagement by its long-time owner. The challenge was finding a buyer who had the expertise to handle such an extensive rehabilitation project and strong enough financials to obtain financing. HFO used its extensive knowledge of active buyers in the marketplace to find an investor who fit the criteria and who was able to take on a complicated project. For more information on this transaction, contact an HFO broker at (503) 241-5541.

Increase in Housing Supply Doesn't Just Help the Rich

City Observatory's Joe Cortright disputed the premise of a recent Washington Post article, which claimed that building new housing only results in lowering housing costs for the rich, at the expense of lower-income renters. Cortright uses data for Portland from ZRI to show that highest tier rents are the most volatile - since 2015 that market segment has seen the highest rates of increases and decreases - but middle and low tier rents have followed a similar trajectory as large numbers of new units have come on line. Read more.

Sold! 19 Units in SE Portland, Oregon

Swan Court (1942) was on the market for an extended period due to the unique unit sizes. Ultimately, HFO was able to generate multiple offers for the seller. For more information about this transaction, contact an HFO broker today at (503) 241-5541.

HFO's Podcasts are Now on Spotify

You can now find Multifamily Marketwatch on Spotify!

New Supply Easing Rents in Portland, but Slowing Development Activity Could Reverse the Trend

The Willamette Week reports that a number of newer luxury apartments in Portland's Central City are offering concessions to renters, and in some cases even lowering rent, in order to fill vacant units. As large numbers of new units are coming on line, they are becoming harder to fill. While renters at the lower end of the market are still scrambling to find affordable options, rent growth for that segment of the market was only 2.3% year over year as of June 2018 - a far cry from the double digit rent increases seen in 2015 and 2016. But as the market balance begins to swing toward renters, developers and investors are becoming less confident about projects in the city. According to Lisa Bates of Portland State University, the same "Econ 101" principles of supply and demand that predicted rents would go down as new supply increases mean that development activity is likely to slow until rents go back up. Read more.

Sold! 12 Units in Gresham, Oregon

HFO sold the 12-unit Green Tree Apartments (1970) to the seller in 2016. The new owner was able to make improvements over a two-year period, and when he was ready to sell the asset he returned to HFO for assistance. In just a short period of time he was able to obtain a return on investment of 17%. To learn more about this transaction contact an HFO broker today at (503) 241-5541.

City of Portland Releases Final Draft Tenant Screening Ordinance - Hearing Set for October 18, 2018

Commissioner Chloe Eudaly's office has circulated a final draft copy of a renter screening proposal that would take away an apartment owners' right to protect tenants and their families from individuals convicted of felonies and some misdemeanors.

Convicted felons and others convicted of misdemeanors would be allowed to rent within three years of the date of sentencing or one year after release from confinement, and include:

• Drug dealers | Drug manufacturers
• Sex offenders
• Robbers | Burglars
• Stalkers
• Domestic abusers | Assailants

Read the full draft ordinance here. 

To comment, call or email:

Mayor Ted Wheeler
mayorwheeler@portlandoregon.gov

503-823-4120

Commissioner Chloe Eudaly

503-823-4682

Chloe@PortlandOregon.gov

Commissioner Amanda Fritz

Amanda@portlandoregon.gov

503-823-3008

Commissioner Dan Saltzman

dan@portlandoregon.gov

503-823-4151

Commissioner Nick Fish

nick@portlandoregon.gov

503-823-3589

The item is tentatively set for public hearing on Thursday, October 18, 2018. 

City of Portland Releases Draft URM Placard and Tenant Notice and Ordinance for Adoption 8/16/18

On June 13th, the City Council asked City staff to draft an ordinance requiring URM owners to place a placard on buildings that have not been retrofitted to prevent a collapse in a major earthquake and notify tenants. Attached is a draft of the proposed ordinance along with a summary of the proposed changes to Title 24.85 which contain these provisions.

The Bureau of Development Services (BDS) will be providing this information to the Development Review Advisory Committee (DRAC) at their regular meeting this Thursday, August 16th, from approximately 9:15-9:35 AM. (please see the attached agenda).  Please note that due to limited time and accommodations, it will not be possible to take questions or public testimony at this meeting beyond the time allotted in the agenda.

The City Council is tentatively expected to consider the ordinance at their meeting on September 12, 2018, where it is expected that public testimony will be accepted.  If you would like to provide comments in the meantime, please send an email to BDS.URMBuildings@portlandoregon.gov

If you receive this notice as a forward and want to be informed of future actions related to URMs, you can email a request to URMS@portlandoregon.gov.  For questions about the ordinance, please contact Amit Kumar (amit.kumar@portlandoregon.gov) or Nancy Thorington (nancy.thorington@portlandoregon.gov) with BDS.

Mark Fetters, Sr. Management Analyst

City of Portland, Bureau of Development Services

(503) 823-1028

mark.fetters@portlandoregon.gov

Hours: Mon. – Fri., 8:00 a.m. – 5:00 p.m.

Happy Valley, Bend Top the List of Oregon's Fastest Growing Cities

The Oregonian ranked Oregon's fastest growing cities using Census data. The rankings are based on population growth between 2010 and 2017. Happy Valley was the fastest growing city in Oregon, with an astounding growth rate of 46%. Bend came in second with a growth rate of 23.3%. Rounding out the top five were Wilsonville (23.2%), Independence (16.7%), and Sandy (15.6%). Portland's strong growth rate appears now to be largely outpaced by its suburbs - the city came in 12th on the list with a growth rate of 10.7%. In all, 34 Oregon cities grew at a faster rate than the US as a whole during this period. Read more.

Sold! 20 Units in Portland, Oregon

Built in 2003 the Springwater Place Apartments consisted of two-story condo-style buildings, featuring 3-bed and 2 ½ bath units with garages, individual gas hot water heaters and gas forced air furnaces. The property was owner-managed with rents significantly under market. Utilizing our relationships, we secured a buyer with the wherewithal to close on the property with its low, in-place income. For additional information on how the HFO team can help you with advice on your multifamily investment contact a broker today at (503) 241-5541.

Sold! 10 Units in Portland, Oregon

The Hassalo Duplexes (1963) included three duplex houses, one single family residence, and one tri-plex. Most of the buildings were on individual tax lots. The Hassalo Duplexes were managed by their original owner/developer. As a result, rents significantly trailed the market, and it was clear the property would benefit from professional oversight.

HFO used its extensive knowledge of the market to validate assumptions on the property’s rent growth potential. Our team used its extensive network to locate a buyer with the financial wherewithal to obtain financing on a property with a lower than expected NOI. For additional information on this transaction contact an HFO broker at (503) 241-5541.

Portland's Planning and Sustainability Commission is Making Big Changes to the Residential Infill Plan

Portland's Planning and Sustainability Commission is working on changes to the proposed Residential Infill Plan, which it hopes will encourage the development of "missing middle" housing in the city. Changes include a tiered system for building square footage, which would allow single family homes up to 2,500 square feet, duplexes up to 3,000 square feet, and three- and four-plexes up to 3,500 square feet. Four-plexes will also be allowed on all lots, and properties with at least one affordable unit will qualify for a square foot bonus. Areas covered by the plan will also now extend east of 82nd Avenue. Read more.

Sold! 80 Units in Gresham, Oregon

Grant View Court (1965) offers a combination of one-story garden flats and traditional two-story apartment flats. The property has been updated with new windows, paint, signage and seal coat. A number of apartments also have new flooring, counter tops, and cabinet faces.

The sale of this property was challenging due to the existing financing that had to be assumed. The loan resulted in an LTV of 63% and did not allow for secondary financing. Through HFO’s strong marketing efforts, the sale was arranged with a 1031 exchange buyer and was a win for all parties involved.

Tenants Withholding Rent at Southeast Portland Apartment Complex in Largest Rent Strike in Decades

The Willamette Week reports that the tenants of the Holgate Manor apartment complex in Southeast Portland plan to withhold rent beginning August 1st, due to rent increases and construction at the property. In January of this year, the property owner offered up to $5,200 to tenants who wanted to leave the property, more than is required by the city's renter relocation fee ordinance. Portland Tenants United held a vote among Holgate Manor tenants on July 30th - 21 of 53 households voted to join the rent strike. Read more.