Apartment Wire - 01/05/2017 (Plain Text Version)

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Luxury Market Set to Soften in '17

As the supply of high-end apartment properties in urban markets has increased, concern grows that new development and construction activity could outpace demand. While sector performance had largely quieted those fears over the years, some changes in key market metrics in late 2016 portend a more difficult 2017 for luxury apartment firms.

Concessions are back and rent growth is tepid at best in some metro markets. According to MPF Research, average annual rent growth at high-rise apartment communities slowed to 1.4 percent nationally and, out of the 50 largest apartment markets, seven have posted meaningful year-over-year rent declines while five more are on the brink of turning negative.

But while supply is an issue, new data analysis suggests that there is more depth to demand for high-end product, as there are many renters who can afford higher rent apartments but pay less. (Scroll down for more details on the analysis.)

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MEETINGS

Rice, Romney and More to Speak at Annual Meeting (Jan. 24-26)

Former Secretary of State Condoleeza Rice will join us Wednesday morning while Emmy Award-winning comedian Dana Carvey will provide entertainment during our revamped dinner later that evening. On Thursday morning, we will close out with a conversation Former Presidential Candidate and Governor of Massachusetts Mitt Romney. 

 
And for our Executive Committee members, we’re bringing in Mark King, former CEO of Taylor Made and current CEO of the parent company, Adidas USA, to share his amazing runaround tale in a special session on Tuesday afternoon.

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FINANCE

Apartment Building Buyers Unmoved by Interest Rate Hike

The Federal Reserve raised interest rates by 25 basis points in December, a move industry watchers worried could affect investors’ yield targets and cap rates, slowing the transaction market. But so far, that doesn’t seem to be the case.  [return to top]

DEVELOPMENT

Yimby Nation: The Rise of America's Pro-Housing Political Coalition

Forbes’ Scott Beyer offers a look inside the Yimby movements sprouting up across the nation, delivering what he calls a counter-punch to the “not-in-my-backyard,” or Nimby, mentality and tight regulatory frameworks intent on discouraging new construction.  [return to top]

POLITICS

How Will Mnuchin and Carson Affect Commercial, Multifamily Real Estate?

President-elect Trump’s picks for key finance and housing posts in the new administration are likely to have significant impact on commercial and multifamily real estate. “The coming years will be vitally important to the apartment industry,” said NMHC’s Cindy Chetti. [return to top]

TECHNOLOGY

Growth in Drone Activity Likely to Spur Property Rights Issues

Federal regulations have begun to clear the path for more drone deliveries. As drone shipping takes off, more questions over air rights above private property are likely to surface. Nixon Peabody’s Justin X. Thompson and Garth Bostic explain.  [return to top]

DEMOGRAPHICS

Older Renter Households Will Top 11 Million in the Next 20 Years

Older renter households will grow 83 percent from 6 million in 2015 to more than 11 million in 2035, creating ripple effects for housing, says a new report from Harvard’s Joint Center for Housing Studies.

Get even more insights into these “new hip-sters” with this presentation from 2016 OPTECH.  [return to top]

REGULATIONS

More Affordable Housing Requirements Likely to Come

The U.S. Supreme Court’s decision to pass on a California case earlier this year that challenged inclusionary zoning clears the path for more affordable housing requirements. Here are some ways developers can prepare.  [return to top]

Multifamily Market Dashboard

Many Renters Could Afford More Expensive Apartments

Among apartment renters, the pool of potential upscale renters is substantially larger than the number currently living in upscale apartments, using the standard affordability metric. In fact, in the top 45 metros, there are 1.5 million apartment households that could afford to pay the 90th percentile rent but who currently pay somewhere between the median and 90th percentile rent.

Most of the metro areas on the list also have seen considerable apartment development in recent years. This suggests that resident incomes could be less of a governor on potential new development as some have suggested.

For more insights into upscale renters, including data on previous tenure, household composition, educational attainment and more, read the full Research Notes report


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