Sold! 48 Units in Beaverton, OR

HFO is pleased to announce the sale of Parker Beaverton Apartments in Beaverton, OR. Congratulations to HFO brokers Rob Marton, Tyler Johnson, and Greg Frick and the rest of the HFO team!

Sold! 240 Units in Vancouver, WA

HFO is pleased to announce the sale of Aspenridge Apartments in Vancouver, WA. Congratulations to HFO brokers Tyler Johnson and Rob Marton and the rest of the HFO team!

RealPage Reports Nation's Lowest Quarterly Rental Vacancy Rate Since 2000

The National Multifamily Housing Council reported this week that the apartment market continues to experience record levels of demand. The demand, coupled with delayed construction timelines and limited supply, is resulting in historic levels of occupancy and rent growth.

Vacancy Rate Measures Were Mixed
RealPage’s national vacancy rate for investment-grade apartments fell 20 bps in the first quarter of 2022—and 2.1 percentage points from the first quarter of 2021—to 2.4 percent. This marks the lowest quarterly vacancy rate since RealPage began recording in 2000. All regions, except for the West, experienced a decrease of 20 bps in vacancy rates, while vacancy rates in the West remained unchanged at 2.3 percent.

The U.S. Census Bureau’s rental vacancy rate for all apartments (in buildings with five or more units) rose 60 bps in the first quarter of 2022 to 7.0 percent, down 1.3 percentage points from the prior year.

Summary:

• Construction Starts: Up
• Permits: Falling
• Completions: Falling
• Absorptions: Climbing
• Rent Growth: Strong
• Transaction Volumes: Moderated

Wall Street Journal - Rising Interest Rates Concern Apartment-Building Owners, Renters

The Wall Street Journal reports rising interest rates and purchase prices are reducing return rates for apartment investors, due in part to the dramatic increase in purchases during the pandemic. 

"The annual volume of rental-apartment purchases almost doubled between 2019 and 2021, according to CBRE Group Inc. In the first quarter of 2022, investors spent $63 billion on apartment buildings, the highest figure on record."

The steep increase in interest rates this year has created "negative leverage," meaning landlords make less money on their buildings than their banks, which the WSJ notes "hasn’t been this widespread since the subprime crisis when defaults on apartment-building debt soared." 

However, according to the WSJ article, we are not headed toward the defaults of the subprime crisis, as investors today are less indebted, and multifamily rentals remain an appealing and stable investment asset. 

Read more at WSJ.com

Sold! 37 Units in Vancouver, WA

HFO is pleased to announce the sale of Anderson Estates at 538 NE Anderson St. in Vancouver, Washington. Congratulations to HFO brokers Greg Frick and Todd Tully and the rest of the HFO team!

Portland to Increase Electric Car Charging Requirement for Multifamily Buildings

The Portland Bureau of Planning and Sustainability (BPS) has proposed an amendment to the Portland city code that would require new multi-unit residential buildings to provide electric car charging capacity for at least 50% of onsite parking spaces. This would be an increase from the currently required 20% threshold required for buildings over five units. 

The language of the amendment clarifies the rule will only apply to buildings that provide onsite parking.

Read more at BikePortland.org.

Tacoma's Tax-Incentive Program Results in More Housing Construction

The Tacoma News Tribune reports that two more new apartment projects have received tax exemptions this month from the Tacoma City Council with another scheduled for its presentation tomorrow, May 24. 

A total of 476 new units in two separate projects were approved on May 3rd. 

• 13th & Fawcett: 277 market rate units in two buildings over nine parcels; $84 million project with 292 parking spaces, fifty-eight (58) studios, one-hundred forty (140) 1-bed 1-baths and seventy-nine (79) 2-bed 2-bath units. The 10-story property received an eight year exemption from property taxes on the assessed improvement value.  
• Cornus House will consist of 199 units at 2502 Pacific Avenue, including 40 units of rent-restricted housing in exchange for  a 12-year property tax exemption. The 159 market-rent units will feature seventy-three (73) studios, seventy-five (75) 1-bed 1-baths, and eleven (11) 2-bed 2-bath flats. 

Willamette Week: Multnomah County's Program to House the Homeless off to Slow Start

Willamette Week provided an update this weekend on the Multnomah County House the Homeless program. It resulted in interest from 54 landlords with the potential to place fewer than 400. So far, though, only four apartments are in lease negotiations and no one has yet been housed.

According to the paper, the county's window for applying closes on June 30th.

Note: this story has been updated. Willamette Week incorrectly reported the application process closes on June 1st. It closes for landlord applications on June 30th. 

ApartmentList.com Migration Report: Portland Still Popular, but Seeing Turnover

 ApartmentList.com published its Q1 2022 Renter Migration Report, which tallies the number of searches its users execute for housing in each metro area throughout the U.S. 

Portland ranked 90th among the 119 metros recorded, with 37.4% of searches inbound, meaning the searcher was seeking housing in the metro, while 27.5% of searches were from searchers living in Portland and seeking new housing. The somewhat close percentages indicate "the market is popular, but experiencing high turnover," according to ApartmentList.com. 

Portland also popped up as the top destination for searchers in Seattle, WA. 

Visit ApartmentList.com for a searchable list of the full results. 

Portland Receives Grant to Clean up Potential Locations for Affordable Housing

The Business Tribune reports that Portland has received a federal grant to clean up sites where former land use involved pollution or hazardous substances, focusing on areas where affordable housing could be developed. 

The three-year grant targets sites in areas of East, North, and Northeast Portland. The lots, dubbed "brownfields," have contaminated soil or water caused by previous users, like gas stations, warehouses, or industrial facilities. The Tribune notes that previous EPA grants have been used to fund the revitalization of 70 former brownfield sites in Portland that now house parks, retail and nonprofit spaces, and 770 affordable housing units. 

The $500,000 grant from the EPA will be used for site assessments, developing cleanup plans, and fostering community engagement through the city's existing brownfield program.

Read more at PamplinMedia.com.

Home Forward Has Almost 500 Housing Vouchers From Last June; Obtains $2 Million Cash Bailout for Unpaid Rents

Last week, Multnomah County released a homeless count stating the county had (at least) a 50% increase in the number of people sleeping outside or in vehicles. And today, Willamette Week reports that the local public housing agency Home Forward is still struggling to deploy almost 500 emergency housing vouchers it received a year ago even in the face of receiving a $2 million federal windfall for rent debt. The issue of "why a voucher can't be used to pay back rent" seems vexing. Read more.

Some U.S. Cities Work to Slow Surge in Single Family Home Rentals as Portland, Seattle Lose Them

Elected leaders in Stockbridge, Georgia passed a moratorium on building single-family homes for rent last year. Officials in Newark, New Jersey, are also opposed to single-family rentals. At the same time, government bureaucrats in Dallas are researching options to cap how much property real estate investors can buy. 

Efforts to regulate rentals in many cities, though well-intentioned, appear to be backfiring. For example, a recent ECONorthwest report revealed the Portland metro area lost a total of 6,417 single-family home rentals between 2015 and 2020. Similarly, The City of Seattle lost 4,858 single-family rentals between 2018 and 2021. Rental housing providers cite increasing government regulations of rentals coupled with rising home values as reasons for the losses, which are serving to exacerbate the lack of rental housing available.

Washington State to Evaluate Options to Purchase or Lease Federal Way's former Massive Weyerhaeuer HQ

Washington State has entered into an agreement with the Industrial Realty Group of Los Angeles to potentially use the 340,000 SF former Weyerhaeuser HQ building in Federal way for learning, workforce training, and economic development. The proposed use would support residents and organizations in South King County and Northeast Pierce County. 

A separate plan calls for adding a corporate park on 63 acres of the 400-acre campus. The Woodbridge Corporate Park would consist of new buildings for potential tenants including life science, biomedical, tech, research and development, and industrial uses. The expansion plans would create thousands of jobs on the campus located behind tree buffers keeping it invisible from the former headquarters. 

-from news reports.

Portland YTD Average Home Price Exceeds $600,000

The average year-to-date home price in Portland surpassed $600,000 — a historic high for the market — according to the most recent monthly Market Action report from Regional Multiple Listing Service. The report notes the average metro sale price has increased 11.3% YTD, from $543,900 to $605,600 as of April 2022. 

The report also provides average submarket sale prices for multifamily properties. Metro regions with the highest average multifamily sale prices are: 

• Lake Oswego / West Linn: $1,361,500
• Milwaukie/Clackamas: $1,055,300
• N Portland: $1,043,900

The data supports another recent report from SmartAsset, a financial advising website that calculated the price-to-rent ratio among major U.S. cities. At 27.62, Portland ranked eighth on the list behind several California cities, Seattle, and Austin, but still landed squarely in the "more favorable to rent" section of Trulia’s Rent vs. Buy Index, the threshold used in the SmarAsset analysis. 

Renters Opting to Renew as Market Tightens

Despite rising rents, tenants are choosing to renew leases in favor of seeking new housing, according to property management software provider and apartment market research group RealPage. 

The company reports that over 57% of market-rate renters with expiring leases chose to renew over the past 12 months, a 3.5% annual increase and higher than the pre-COVID retention rate. 

Those leases were signed at rates 10.7% higher than those they replaced, while new renters paid an average of 18.7% more than previous residents of the same units. 

However, the company notes that rents are growing much faster among the Class A and Class B segments, which cater to higher-earning tenants. Rents for Class A and Class B buildings grew 11%-12% over the last year, supported by increasing renter income. A household signing a market-rate lease this month reported an average household income over $75,000, 14% above the average in April of last year. 

Class C tenants experienced lower rent growth — 7.1% — and were more likely to remain in place, with 65% of Class C renters renewing leases in the last year compared to only 53.4% of Class A tenants.  

RealPage's Jay Parsons, vice president of the company and head of Economics & Industry Principals, writes: 

"Public narratives around affordability too often conflate two very different issues. The real crisis is a severe shortage of affordable housing for lower-income renters who’ve never been able to afford market rate, even prior to COVID. We need substantially more housing of all types, but especially affordable housing – which requires more public support and more government funding.

But in the market-rate apartment sector, there is no macro affordability crisis – not yet anyway. There’s ample demand for rentals at today’s price points because of rising incomes; and as a result, apartments are more full than ever, and renters are paying the rent."

Read the full analysis at RealPage.com. 

Multnomah County Advises Indoor Masking; Recommendation Stays in Place Until Cases Drop

Multnomah County health officials are strongly urging people to wear masks indoors as cases of COVID-19 and hospitalizations rise. 

According to county health officials, the recommendation is not a mandate and will remain in place until cases and hospitalizations drop, though a specific threshold for lifting the guidance was not provided. 

“We are not asking employers, organizations, or event planners to do anything differently; this is a message for individuals, especially those who are at high risk of severe COVID,” said Multnomah County Health Officer Dr. Jennifer Vines in a public statement published May 11th.

The CDC upgraded Multnomah County from "low" to "medium" community-level spread last week as cases in the region continue to rise. The Portland Tribune notes daily cases in Oregon have returned to mid-December levels, which began to increase as the omicron variant spread. 

The Multnomah County website advising on precautions to take given the bump to medium community-level spread assures "we do not have plans for more mandates or closures right now," but advises community members resume indoor masking, small outdoor social gatherings, and open windows when possible.  

Rent Growth Report, April 2022 for Pacific Northwest

Yardi Matrix reports rent growth as follows for the Pacific Northwest 

For year-end 2022
Seattle - 6.7%
Portland - 7.6%

Year-over-year for April, 2022
Seattle - 14.8%
Tacoma - 12.4%
Portland - 13%

Portland Developing Climate Standards for Existing Multifamily Buildings

Andrea Durbin, former director of Portland’s Bureau of Planning and Sustainability (BPS) who stepped down on April 6, 2022, gave an interview with the World Wildlife Fund this week about the city's efforts to address various socio-environmental issues through the ongoing Climate and Health Standards for Existing Buildings project.

In the interview, Durbin notes multifamily and commercial buildings are the city's largest emitter of carbon and mentions her former department's ongoing efforts to enact climate and health standards for commercial buildings. The project seeks to establish minimum climate and health standards for Portland’s existing apartments, condos, and other commercial buildings.

The BPS has worked in conjunction with the city's Build/Shift collective to create "a policy concept that focuses on reducing carbon emissions from existing buildings while improving rental housing to be healthier, more affordable, and resilient to future climate disasters."

BPS describes examples of the proposed existing building standards policy, but cautions not all standards will be applicable in all cases. Potential standards might include: 

• Requiring increased ventilation standards to reduce airborne diseases
• Limiting carbon emissions by improving energy efficiency or increasing renewable energy supply
• Making buildings and communities more resilient to power outages
• Setting maximum indoor temperature for heatwave resilience

In April 2022, BPS reported "stakeholder engagement for the development of a city ordinance launched in February. BPS will convene two working groups in April and May: one focused on tenants, and the other on building management and ownership." 

After meeting with the key stakeholders in working groups, BPS plans to release a draft ordinance for public comment, likely in the summer. The BPS website for the project describes key stakeholders to be consulted as building owners and managers, tenant advocates, community organizations, climate advocates, building scientists and engineers, and public health experts.

The project will also create standards for smaller rental apartment buildings with the goal of reducing household energy use and ensuring low-income communities of color benefit from climate action.

Thus far, BPS and the Build/Shift Collective have proposed a set of standards ("HEART" standards) to establish minimum requirements for existing smaller rental apartments that are intended to address:

• Healthy housing
  Example: Require natural gas stove ventilation to improve indoor air quality.
• Equitable energy
  Example: Limit carbon emissions for apartments, condos and commercial buildings by improving energy efficiency or increasing renewable energy supply.
  Example: Reduce energy cost burden for low-income tenants. 
• Anti-displacement
  Example: Prevent risk of displacement when improvements are made.
• Resilience
  Example: Make buildings and communities resilient to power outages. 
• Temperature 
  Example: Set maximum indoor temperatures for heatwave resilience.

After the working groups have discussed key decision points for the policy, BPS will prepare a draft

ordinance for public comment. The March 2022 draft policy concept advises that the timeline for taking an ordinance to Council will be determined after stakeholder engagement and public review.

Working Group Details: 

1. Building Working Group focused on impacted property owners: April 13, April 27, May 11, and May 25

2. Tenant Working Group focused on renter priorities: April 20, May 4, May 18, and June 1

Each group will meet four times every other week on Wednesdays from 12-2:30 p.m.

These working groups will inform key decisions like:

• applicable size thresholds for various building types;
• minimum health standards or building systems required to improve occupant health and safety;
• and options for compliance pathways.

Portland Rents Are Up, But Not as Much as the Rest of the State

Apartment List reports the following average year-over-year rent increases for April, 2022:

United States: 16.3%

Oregon Statewide Average: 11.5%

Hillsboro: 18.7%
Beaverton: 17.5%
Eugene: 16.5%
Vancouver, WA: 12.3%
Portland, 7.5%

Washington 
Bellevue - 21.5%
Renton - 18.8%
Kent - 17.5%
Everett - 16.1%
Auburn - 16.1%
Seattle - 16.0%
Federal Way - 15.2%
Puyallup - 14%
Lakewood - 10.9%
Tacoma - 8.4%

Read more about Apartment List's new methodology and its attempt to exclude a bias towards luxury units, which skews these numbers higher.  Whether or not these numbers reflect reality is the subject of debate, but they do provide an interesting look at which submarkets may be trending higher than others at this moment in time. 

Sold! 18 Units in Portland, OR

 

HFO is pleased to announce the sale of the 5350 SE 18th Ave. Apartments in Portland. Congratulations to HFO brokers Greg Frick, Jack Stephens, and Lee Fehrenbacher, and the rest of the HFO team!

NMHC April 2022 Survey: Demand Continues to Grow, but Rising Interest Rates Spur Concerns About Cost of Capital

The National Multifamily Housing Council (NMHC) released the results of their latest Apartment Market Conditions survey, which is based on data compiled from quarterly surveys of NMHC members. The end-April data shows demand for multifamily units continues, but inflation and corresponding rising interest rates have led to heightened concern about the cost of capital. 

The survey showed Market Tightness ratings remained above the breakeven level of 50 for the fifth consecutive quarter, at 60 compared to 69 in January, while Sales Volume declined to breakeven at 50. Equity financing dropped from 67 to 35, and Debt Financing declined from 36 to 9.

Debt financing became less available for the third quarter in a row, and equity financing was less available for the first time in six quarters. While survey results indicate NMHC members are divided on whether the availability of debt financing has changed, a whopping 83% responded it is a worse time to borrow now than it was three months ago.

Read the full survey results at NMHC.org.

Activists Pushing for More From Tacoma's Ambitious and Ongoing Housing Density and Rezoning Process

The City of Tacoma is deep into a project known as "Home in Tacoma." This project will implement new policies through zoning, design standards, affordability, and anti-displacement steps, along with actions to support development. A project overview can be found here (6 pages).

The Tacoma City Council adopted Phase 1 of the project in December of 2021. Phase 1 directs the following 

• A housing growth scenario map, 
• Comprehensive Plan Changes (78 pages) to encourage the development of higher-density housing
• These changes include revisions to zoning maps to increase density
• Removes "Single Family Residential" from the zoning code and replaces it with a "Low-scale residential" designation that includes up to 10-25 dwelling units net per acre.
• Removes "multi-family" designation and replaces it with "mid-scale residential" providing 15-45 dwelling units per net acre.
• Retains "Multi-Family" high-density designation of 45-75 units per net acre.
• Adoption of near-term Code Changes (24 pages)
• Adoption of the city Housing Action Plan  (87 pages)
• Phase I Amendment to Comprehensive and Land Use Regulatory Code Mitigated Determination of Environmental Nonsignificance (383 pages)

City planners and specialists are currently updating three chapters of the One Tacoma Comprehensive Plan to implement the above changes.

Activists calling themselves the Home in Tacoma For All movement are complaining that this process simply does not do enough. They seek the following:

• Rent control
• Tenant right of first refusal to buy a property
• 6-month mandatory notice of rent hikes with easy-break leases
• Relocation assistance that is equal to three-months rent for increases above 10%
• Force developers to build 25% of units in larger new developments permanently affordable or pay into a fund that would be used for affordable housing (known elsewhere including Portland, Ore., as Inclusionary Housing)
• Creation of a social housing developer that would use money from the city's budget and bonding capacity to increase public development of housing for thousands of publicly-owned mixed-income units. (A similar initiative is underway in Seattle) 
• Ban natural gas from new residential construction
• Require building to highest standards of sustainability
• Fully subsidize retrofits from gas to clean energy

GlobeSt.com: What Multifamily Can Expect From the Government Before the Midterm Elections

GlobeSt.com interviewed Cindy Chetti, the National Multifamily Housing Council senior vice president for government affairs, about the potential actions Congress might take in the remaining 15 in-session weeks before midterm elections. 

Chetti identifies five areas where congressional action could have a significant impact on the multifamily industry: 

1. Revitalized efforts to end or severely restrict a number of tax strategies popular among CRE professionals. GlobeSt.com notes democrats could theoretically pass a bill in the Senate with a simple majority, but it's unclear if their entire caucus would support it.

2. A refined version of the Build Back Better bill that is reportedly likely to focus on issues other than housing, like climate change and tax reform. 

 "As communities struggle with inadequate transportation, poor drinking water quality, sewage, and other public systems, they are increasingly looking for ways to pass these costs to developers by making project approvals contingent on infrastructure investments," Chetti says. "This translates into higher rents for households and does nothing to address the underlying shortage of affordable housing."

3.  Potential climate change regulatory actions that could require additional costs for developers.

4. COVID-19 relief efforts that could be required to maintain the multifamily industry in the face of continued outbreaks. 

5. The U.S. Innovation and Competition Act, which would provide funding to increase the production of semiconductors.

“Given the global shortage of semiconductor chips and our industry’s reliance on chips for smart home and security tech within apartment communities, this legislation is critical," Chetti notes.

Read the full analysis and interview at GlobeSt.com.

Low Inventory, High Demand for Multifamily Housing Continues in Portland Area

HFO co-founder and partner Greg Frick was interviewed this week by the Business Tribune regarding the recently released Spring 2022 Multifamily NW apartment report, which found housing production continues to trail demand and has led to migration out of Portland's urban core. 

"In terms of what we're seeing for investors, incomes and rents in some markets have definitely gone up," Greg Frick said. "Broadly, we've seen a lot of increase, especially in some outlying areas."

The Tribune story continues to discuss the barriers to construction in the metro, including the contentious Inclusionary Housing program and the cleanliness of Portland's neighborhoods.

 "(We) keep correlating homelessness to affordability, but we need to look at studies from addiction to mental health," the Tribune quotes Frick saying. "Yes there's an affordability component but it's not a large segment of what's out there. Frankly, there are ways you can see that proven, and if we want to address the problem, there seem to be inconsistencies between policies and results."

Read the full Business Tribune story at PamplinMedia.com.

Wall Street Journal: How Not to Build Affordable Housing (Hint: Inclusionary Zoning)

Headline: "Pittsburgh repeats a mandate that failed in Portland, Oregon"

Pittsburgh has just mandated inclusionary zoning to the entire city.  

Opinion of the Wall Street Journal Editorial Board, May 4, 2022

Bad ideas never die; they merely move to a new city. Witness Pittsburgh’s adoption of an affordable-housing rule that will lead to . . . less affordable housing.

On Monday the mayor signed an ordinance passed unanimously by the City Council to expand the city’s inclusionary zoning requirements. Developers building 20 or more units in the gentrifying Bloomfield and Polish Hill neighborhoods will have to set aside at least 10% for affordable housing. Under the rules, a designated studio apartment could rent for no more than $742 a month, though the average rent for one is $1,300 in Pittsburgh, according to the housing search website Rent.com.

This regulatory imposition comes as the cost of building materials is up 8% since the start of 2022, according to the National Association of Home Builders. Prices are up 33% since the start of the pandemic.

Some developers will respond to the Pittsburgh mandate by building more luxury apartments to offset the cost of the ones they have to rent for artificially low prices. Others will avoid the requirement by building apartments with fewer than 20 units. And some may choose not to build apartments in the neighborhoods where the zoning requirements are in effect—or in Pittsburgh at all. None of this will increase the city’s stock of affordable housing.

Pittsburgh tried inclusionary zoning in the Lawrenceville neighborhood beginning in 2019. The pandemic months that followed make it difficult to quantify the effect, but proponents attribute the creation of 40 affordable housing units to the zoning requirements. However, “all 40 of those units were created with government subsidy, so they would have been created without inclusionary zoning,” says Jim Eichenlaub, executive director of the Builders Association of Metropolitan Pittsburgh.

In contrast, inclusionary zoning forces developers to set aside affordable housing whether or not they receive government incentives, so “the other 90% of the units have to subsidize that cost,” Mr. Eichenlaub says. “They are making the developer and the owners of those units, or renters, absorb those costs. Effectively, it’s a tax on housing.”

And when you tax something, you get less of it. Portland, Ore., introduced inclusionary zoning in 2017. Permits for residential buildings with 20 or more units plummeted 64% in 25 month as developers went smaller to get around the mandate. The nonprofit Up for Growth concluded that “rather than increasing the number of affordable units,” the zoning scheme “appears to be diminishing the supply of housing at nearly all income levels.”

Now Pittsburgh is following Portland’s folly, and families will pay for how politicians distort the housing market.

ULI Report: Climate Migration and Real Estate Investment Decision-Making

The Urban Land Institute in construction with Heitman real estate investment management group have released a report on the impact of climate migration in real estate investment decision-making. This 36-page report posits that many real estate investors are not fully incorporating climate migration in their decision-making. The report explains the need for proactive approaches that recognize the risk of investing in areas where populations are likely to decline due to out-migration. 

The report provides a framework for investment best practices and indicates pathways to action for investors of all stages to help identify key markets to prioritize for more assessment with an overall goal of improving investment performance and avoiding risk.

Washington Passes First Statewide All-Electric Heating Mandate

Grist.org and the Spokane Spokesman-Review report the Washington State Building Code Council voted last week to adopt a revised energy code requiring most new commercial buildings and large multifamily buildings to install electric heat pumps to warm air and water, the first legislation of its kind nationally. The 

The code revision follows the state legislature's decision to target a 70% reduction in the amount of energy consumed by nonresidential buildings by 2031. 

While numerous cities and towns have already effectively banned gas in most new buildings, and California enacted a building code change last August strongly encouraging builders to install electric heating over gas, Washington is the first state to require electric heat pumps, though the code allows exceptions for hospitals, research facilities, and buildings where gas is required for “specific needs that cannot practicably be served by [a] heat pump.” 

Opponents of these policies in the gas industries say these emissions goals can be achieved by using lower-carbon fuels. In Washington, local builders' associations reportedly protested the construction challenge the code will impose. 

Similar proposals will be considered by the council over the next few months for the residential section of the state energy code. 

Read the Grist story at Grist.org and the Spokesman-Review coverage at Spokesman.com.

CrowdStreet Ranks Multifamily #1 CRE Asset Best Positioned to Withstand Inflation

CrowdStreet analyzed common commercial types and ranked them across a spectrum based on the level of control owners have over NOI and asset value. 

1. Multifamily - Short leases that roll over; liquidity due to institutional preference, and widely available and inexpensive fixed-rate agency debt.
2. Self-storage - adjustable rents, 
3. Hotels
4. Co-working
5. Senior housing - 
6. Industrial
7. Medical offices
8. Office
9. Retail
10. NNN Leased assets
    

News Roundup: US Rent Growth | Oregon's Confusing Payments Practice | Plus: 5 Summer Maintenance Items

Apartment list reports that rents in the United States increased an average of 0.9% in April with rent vacancies at 4.6%. Read more on the Rental Housing Journal website. 

Oregon has extremely confusing application of payments requirements for rental owners that can result in significant problems for landlords who handle partial payments improperly, as attorney Brad Kraus explains.  

What five maintenance items should be top of mind before summer? 

1. Anything involving things you need where the supply chain may be an issue
2. Maintenance supplies for your pool and spa, if you have one
3. Communicate early and often with residents about what to do in a heat emergency
4. Conduct a HVAC system check - including filters
5. Landscaping - resetting watering and replenishing plants
   

Tiny Sumner, WA to get 267 New Multifamily Units

Sumner Washington will be home to two new multifamily assets next spring. The Tacoma News Tribune reports that one site will feature six three-story multi-family buildings with a rec center and pool, parking, and landscaping with open areas. Half of the units will be two bedrooms. The other project to the east will be of similar design and layout with a mix of one- and two-bedrooms and studios. The property owner is hoping to have at least 20 percent of the 162 deemed affordable. Completion is set for the spring of 2023. An additional 105 units are planned nearby in the Nemeth Mixed-Use Development Action project. Sumner has a current population of 10,600.

Tacoma: Rents Are Cheaper Than Bellevue, But Still Rising

The Tacoma News Tribune reports that rents are climbing in Tacoma, not just for market-rate units but for those approved as part of the city's 12-year multifamily property tax exemption program. Apartment List claims Tacoma's month-over-month rents were up 1.1 percent in April, compared with a 0.9 percent increase nationally. According to the service, that ranks Tacoma's rent growth right in the middle of the nation's 100 largest cities, with a year-over-year increase of 8.4%, down slightly from about 11 percent a year earlier. 

Apartment List reported Bellevue's rents shot up 21.5% in the past year, the fastest in the Puget Sound region. Affordable units rents also increased because the Housing and Urban Development increased 2022 area median incomes at $101,800 for a family of four, up from $91,100 one year earlier. That allows rental housing providers to increase rents between $152 and $220 for units rented at 80% AMI and $131-$188 higher for units rented at 70% of AMI.