Apartment in Pacific Beach on Felspar Sold

Thursday, March 15, 2012

The nine-unit apartment in Pacific Beach at 2269 Felspar St., San Diego 92109, has been sold for $1.59 million, cash.

The buyers were James and Anna Tam, 11376 Bluebird Way, Corona 92883. The Tams then transferred title to T&S 22 LLC, a California limited liability company. 

The sellers were Jerry Michael Suppa and Christine Marie Suppa, trustees of the Suppa Family Trust. 

James V. Carter, senior managing director and principal, Apartment Realty Group (ARG) represented the sellers. 

The apartment consists of eight one-bedroom units and one three-bedroom, two-bath units. 

The property has four open parking spaces in the front, and four tuck under/carport spaces with storage lockers in the rear.

The apartment occupies a 6,251-square-foot lot.

Source: SanDiegoDailyTranscript

USC forecast: Rents expected to climb in SD

Written By Lily Leung

April 4, 2012

Average rents in the San Diego area rose 4.3 percent in 2011 and are expected to rise at a slower rate in the next year, according to a preview of USC's multifamily report on Wednesday. Vacancy rates locally also are expected to go up.

Some of the factors in play that may impact rental rates this year include high gas prices and an overall decline of San Diego home prices, based on a presentation by Tracey Seslen, an assistant professor of clinical finance at USC's school of business. 

"Things are not doing well for SoCal for the first couple of months in employment; we have to keep an eye on that," said Seslen, who presented a sneak peek of the multifamily report from USC's Lusk Center for Real Estate, at the Lodge at Torrey Pines on Wednesday.

The report said vacancies in the San Diego area are expected to rise 0.7 percentage points over the next year and 1.3 percentage points over the next two years.

Last year, San Diego showed a stronger growth in rental demand as unemployment fell. Average rents increased 4.3 percent, the second largest increase in the Southern California markets analyzed in the report. Los Angeles was first, with an increase of 6.2 percent. San Diego had the highest occupancy rate at 96.8 percent.

That was the case in almost all of the 40 submarkets tracked in the report, which shows a vast improvement in rental demand from two years ago, when only 3 out of 40 submarkets showed rental increases, Seslen said. 

It's still unclear if falling home prices will take away from rentership. A key factor is employment.

The full Casden report will be available next week as preliminary numbers are ironed out.

Source: UT San Diego 

Are apartments good investments?

San Diego County market relatively healthy, spurred by returnees from Riverside, wariness to buy

 Written by Roger Showley

Nov. 15, 2011

Ocean Village apartments in Oceanside were one of the largest and most recent multifamily projects to change hands in the third quarter, CoStar Group reported. The sale price on the 33-unit project, including retail space, was $11.75 million. The project was originally built as condos but is expected to be handled as a rental for the time being, said the buyers, MG Property Group. — CoStar Group

San Diego County's apartment market is looking up for investors for next year, analysts say.

They point to rising demand, falling vacancies, higher rents and more projects in the pipeline.

"The apartment market is going to be very strong," said Russ Valone, president of MarketPointe Realty Advisors. "There's a lot of demand out there because people are shy about the for-sale marketplace today."

He said younger renters want to be flexible in case job prospects draw them away. Young families are interested in renting foreclosed houses and townhomes rather than buy as they normally would in their late-20s and early-30s. And former owners are settling into apartments.

Valone said some of the increasing demand derives from people who moved to Riverside and Imperial counties for affordable housing and commuted to work in San Diego. Many are renting back in the county to be closer to work.

"So you've seen a repatriation of a lot of households who had left the county for housing but continued to be employed in the county," he said.

Vacancies have not reached the low 2-3 percent range seen in the mid-2000s, since so many singles doubled up or moved back home with relatives. But the present vacancy rate of 4.5 percent is considered a healthy one, as measured in a survey in September of more than 117,800 units in 803 projects.

Economists generally say a 5 percent vacancy rate represents a desirable balance point between supply and demand.

Looking to supply trends, Valone said the number of apartment projects is likely to increase next year after a three-year slump. Only three projects with 185 units are under construction now but seven with 1,051 units have received their final go-ahead and 26 with 5,091 units have received tentative approval.

"We'll see increased supply in the marketplace," he said.

The Construction Industry Research Board in Burbank reported that through September, the number of multifamily units authorized locally was 2,329, more than double the 1,022 approved for the same period last year. That indicates many more new apartments are likely to be available in coming months.

By contrast, single-family homes were virtually unchanged for the same period, 1,744 in 2010 and 1,742 this year.

For existing owners, refinancing of their rental projects has loosened up with money available from Fannie Mae and Freddie Mac, the two government-sponsored enterprises that stumbled in the secondary for-sale market three years ago.

According to real estate attorney, Gordon Gerson, who advises clients seeking financing, both companies are on tap to complete more than $40 billion in multifamily financing and refinancing. Owners previously relied much more on commercial mortgage-backed securities offered by commercial lenders.

"This is a good thing because it means the capital markets have opened the gates of funding in the area of multifamily housing," Gerson said. 

Refinancing means owners can free up capital with lower rates and look for more investment opportunities. They also will not face the need to raise rates on tenants as much, since their cost of borrowing will be lower -- "all of which is good for the economy," he said.

Alejandro Lombrozo, a broker at Cushman & Wakefield, said institutional-grade deals, involving 100 or more units, have drawn many potential buyers. He cited one recent example, Woodbend Shadowridge, a 240-unit project in Vista, that sold for $44.3 million last month -- $185,000 per unit. 

"That had a lot of interest," Lombrozo said, "over 30 tours at the property and close to 20 offers."

He said 10 such sales are expected to close this year, about the same as last year and about what 2012 will bring. But he said things could slow down if interest rates rise significantly or Freddie Mac and Fannie Mae pull back on lending. 

But he said other lenders, particularly life insurance companies, are showing greater interest in San Diego apartments. 

For tenants, the current market has meant rising rents.

Valone said his latest survey showed that the average monthly rent surpassed the previous record, set in September 2008, to reach $1,364 in this past September survey. That represents a 1.3 percent increase since the March survey and 2.2 percent year-over-year. 

The highest rent was $1,719 in downtown San Diego, ahead of the submarket leader in the North County Coastal market, where the average was $1,697.

Gerson said rents are rising partly in reaction to the relatively better economy San Diego than in other markets. 

"As employment increases, you have an increase in rents," he said. But he said they are not rising as fast as in the San Francisco Bay area.

"Not only the Silicon Valley but in other suburbs of San Francisco are doing very well," he said.

Source: SignOnSanDiego

Apartments Will Continue With Modest Growth

By Natalie Dolce

November 11, 2011

Nadji says companies won't expand until at least 2013

ENCINO, CA- On a recent apartment webcast, 57% of participants predict that renter demand will get stronger in 2012, while 2% says it will be weaker, with 40% saying it will stay the same. The 2012 Apartment Market Outlook Video Webcast was put on by Marcus & Millichap Real Estate Investment Services, and was generally optimistic in the sector’s “continuation of modest growth in 2012.”

According to William Hughes, managing director of Marcus & Millichap Capital Corp., from a lenders standpoint, the improving apartment fundamentals have supported their level of confidence in the marketplace. “It has been easy to finance core assets all the way down to C assets across the board,” he said. “It becomes a little choppy as you move into tertiary and smaller assets, but even those are being financed by local and regional banks.”

Capital supply, he said, will remain healthy, but not for every asset. Agency lenders will continue to be Fannie Mae and Freddie Mac, life companies, regional and local banks, debt funds, and CMBS, he says.

Hughes pointed out that debt and equity markets for the first half of the year will resemble the last half of 2011—pointing to the choppy domestic economy such as slowly improving employment numbers; inconsistent economic indices; and the election; as well as global influences like foreign sovereign debt and economic geopolitical uncertainty.

Hughes says that investor strategies will be: maturing overleveraged properties—extensions and recapitalizations; and refinancing. “It is a great time to take down fixed-rate financing,” he said.

When Hessam Nadji, managing director of research and advisory services at Marcus & Millichap, asked webcast participants if job growth does not improve over the next 12 months, will apartment demand contract, stay the same or get stronger, 64% said it would stay the same, 22% said it will continue to get stronger and 16% predicted that it would contract. According to Nadji, as also mentioned in another GlobeSt.com article, companies aren’t expanding or hiring aggressively, which is something he expects to see through 2012, “but companies aren’t panicking.”

Nadji pointed out that “The job creation trend is still below expectations, and the muted housing market will have a tremendous affect on consumer sentiment. Companies need to enter an expansion mode for us to see improvement, and that won’t happen until 2013.”

Another interesting participant question was whether or not interest rates in 2012 would be somewhat higher, be much higher or be about the same. Approximately 40% of participants said somewhat higher, with 58% saying “about the same,” while only 1% predicted “much higher.”

On the construction side of this cycle, Nadji said that developers are working to bring new product to the marketplace that will be delivered in 2013 and 2014. “At a macro level, we don’t see overbuilding,” he said.

Overall, the webcast echoed key points from a previously reported midyear webcast from the company. In that webcast, Nadji pointed out that lowest apartment vacancy markets include: New York; Minneapolis; San Jose, CA; Portland, OR; San Diego; San Francisco; Milwaukee; and Philadelphia. Higher vacancy markets mentioned include: Jacksonville, FL; Houston; Tucson; Atlanta; Phoenix, Las Vegas, and Columbus, OH.

Source: GlobeSt.com

Apartment on Iowa in North Park sold

November 9, 2011

The five residential units in North Park at 4342 Iowa St., San Diego 92104, have been sold for $561,000.

The buyer was Draper LLC, 7011 Draper Ave., La Jolla 92037. The members of Draper are Anthony John Henry Pauker and Kristee Anne Beres Pauker.

The acquisition was financed by a $350,000 loan secured by La Jolla Capital Group through Mission Federal Credit Union.

The sellers of the property (assessor's parcel) were David and Nicola Fiedler.

James V. Carter, senior managing director/principal of Apartment Realty Group (ARG) negotiated the transaction.

The rental units total 3,374 square feet and were constructed in 1956 on a 7,000-square-foot lot.

The rentals consist of three single-level detached units, and two units located in the rear building above four garages.

The unit mix consists of one two-bedroom/one-bathroom unit and four one-bedroom units, all with the original hardwood floors.

In November 2001, the property was sold for $450,000, with financing of $315,000.

Source: San Diego Source The Daily Transcript

The lone bright spot in the commercial market

A longtime real estate expert gives his take during an industry event

Written by Lily Leung

Oct. 26, 2011

The commercial real estate market is going through a period of stagnation, with the apartment sector standing as the lone bright spot, said a veteran real estate analyst Wednesday at an industry gathering in Los Angeles.

"I think we're stuck," summarized Marcus & Millichap Real Estate Investment Services executive Hessam Nadji, who kicked off a market update session at the Urban Land Institute fall meeting.

The annual event brings together the who's who of the real estate industry, from researchers to mortgage bankers and multifamily investors.

The market pause is a result of good and bad conditions, said Nadji, who's often cited by several publications including The Wall Street Journal and Bloomberg/Businessweek.

The bad first: Home prices continue to slide across the country, the European economy is in turmoil and distressed homes sales continue to account for about 20-30 percent of all transactions.

The good, which often gets overlooked: Retails sales have rebounded, as well as corporate profits, which is important because they are the underpinning of investment and hiring. Still, even profitable companies are reserved about any "aggressive expansion," given market conditions, Nadji said.

Slice by slice, apartments have recovered quickly, while the office and retails sectors have reached their bottom, Nadji said.

Nadji predicts "a very gradual recovery" but says we won't see meaningful progress until after the presidential election. He added that the chances of the country falling into another recession within the next 12 months is 20-25 percent.

What could help the recovery along?

Some panelists at Wednesday's market update talk mentioned easing regulation that affects those in the real estate industry. They said we were once too lax and now are too strict.

Source: SignOnSanDiego

The Debt Deal Viewed Through Real Estate’s Prism

By Erika Morphy

August 3, 2011

 

Capitol Hill

 

WASHINGTON, DC-So it happened. Within hours of an apparent default, Congress came together and delivered a bill that would raise the debt ceiling and work towards reducing spending.

The impact to commercial real estate is still a work in progress: more cuts to government spending will be identified under the deal, as will additional sources of revenue. So yes, carried interest is most likely back, yet again, on the table. Still, with the deal closed, the industry has been able to come to a few conclusions about the next two years will bring. Some thoughts as expressed to GlobeSt.com.

We always knew there would be a debt deal...

"I don’t think a default was ever viewed as credible," Kevin Finkel, executive vice president, director of acquisitions at Resource Real Estate, a New York-based real estate asset manager, tells GlobeSt.com. "That is why the markets never fluctuated that dramatically even when talks seemed to break down."

…But we didn’t know how brutal it would be.

That said, the way the political drama played out with the extreme brinkmanship, took a lot of people by surprise. "Especially with the new crop of Congress people from the Tea Party that didn’t want to compromise,” Finkel says. “To me as a businessperson, that was scary and I think it scares investors too."

Does this mean that every issue that comes up in Congress will result in a bloodletting sprawl, Finkel wonders. "I am afraid so and that is no way to run a country," he remarks.

The US will still be a safe haven for investors…

There are 17 countries in the world that sport the AAA rating, Eric Michael Anton, executive managing director and principal of Eastern Consolidated in New York, points out, a list that includes such tiny locales as Isle of Man. “Foreign capital is still coming here,” he tells GlobeSt.com. Even in the run up to the midnight hour agreement, so to speak, the bond returns showed that investors continued to seek out US debt, he says.

…But the bifurcation of trophy and second-tier markets will step up.

Lately there have been signs that investors are interested in Middle America again--particularly multifamily investors that are finding prices too rich on either coast. Foreign investors, albeit more slowly, have been following suit. However, if the US does suffer a credit downgrade the distinction between the gateway global cities and the rest of the country will surely sharpen, Anton also says. “Top cities such as New York, Washington, San Francisco, Boston and Los Angeles will continue to pull in tremendous debt and equity.” Foreign capital, however, stayed away from the Rust Belt, and other secondary cities, and if the US does get downgraded, this will be an additional reason for them to stay away, he said.

We got a commitment to slow spending…

This had to be done, Finkel says. "The country had to deleverage and perhaps just as importantly, it had to tell the world that our debt would not grow anymore."

…But at what cost?

The price of this deal was substantial cuts in government spending, Dennis Russo, co-chair of the commercial real estate department at Manhattan-based law firm Herrick, Feinstein LLP, tells GlobeSt.com. That will lead to slower growth, given the sluggishness of the private sector.

“Economic sluggishness plus austerity tends to equal a less-than-fertile environment for vitality and growth in commercial real estate," says Russo. “The health of most sectors of the commercial real estate economy--office leasing, for example, and sales-investment--depends on growth and the vitality of the gross domestic product, and for the time being, I just don’t see where that growth will be coming from.”

The impact of Washington’s austerity is already being felt outside of the debt ceiling negotiations. The Centers for Medicare and Medicaid Services just announced an 11.1% cut in Medicare rates set, according to the Wall Street Journal - an announcement that promptly sent health care REIT prices tumbling. 

Property valuations could be affected in the near term as well, Michael A. Torres, CEO of Adelante Capital Management LLC, a REIT investment manager in Oakland, CA, tells GlobeSt.com. The rest of the cuts and their subsequent effects will remain in doubt until the “Super” Congress decides on cuts, or they don’t.
 
Source: GlobeSt.com

New Luxury Apartment Development in San Marcos Started While San Diego City Redevelopment Projects Take a Hit

By Gabriel Circiog, Associate Editor
RenTV.com reported that Wood Partners has started construction on a new luxury gated apartment community in San Marcos. The four-acre property, located at 815 South Twin Oaks Valley Road, has 12,000 square feet reserved for a future retail development. The residential development is comprised of 42 two-bedroom and 66 one-bedroom units. These will be arranged in four garden style three-story walk-up buildings.
The project will feature granite countertops as well as luxury amenities such as an ultra-modern clubroom with Wifi, electronic gaming systems, a fully-equipped fitness center, a pool and a rooftop terrace. The developer is aiming to offer the highest standard of living in North San Diego County. Construction is scheduled to be completed in October 2012, but the first units will be available in May 2012.
At the same time, 3 Tier Investments LLC will start the construction of its Campus Pointe retail project. The plan comprises two retail building with 12,000 rentable square feet which will include three restaurants and up to seven retail businesses.
In other local news, Signon San Diego informs that the San Diego city redevelopment projects are set to lose $69.8 million in revenues this year and $16.5 million annually henceforth, according to the new state budget plan. Centre City Development Corp. oversees and implements Downtown redevelopment projects and programs.
Frank Alessi, executive vice president of CCDC, told this same source that the organization is facing a $47.6 million payment this year which represents around 38 percent of its tax revenue. The high-profile projects such as the $29.6 million first phase of the North Embarcadero Design and the $8 million expansion of Horton Plaza park will continue as planned if the CCDC board and City Council agree.
Regarding the mega-projects, such as the $550 million expansion of the San Diego Convention center and the $950 million Chargers stadium, Alessi said that the amount of support that the CCDC can offer is problematic.

Source: Multi-Housing New Online

Normal Heights apartment complex sold

By JAMES PALEN, The Daily Transcript

Thursday, July 14, 2011

The lender-owned apartment complex at 4963 35th St. in the Normal Heights neighborhood of San Diego has sold for more than $1 million cash.

Apartment Realty Group represented the seller, 4639 35th Street LLC, which, according to ARG Managing Director James V. Carter, was the San Diego-based private lender that took possession of the property around four years ago. ARG procured more than 10 written offers on the 5,500-square-foot, eight-unit property before closing escrow with the all-cash buyers, Gerald G. Gossman and Rose M. Gossman, for $1,087,500.

Built in 1962, the complex contains six two-bedroom, one-bathroom units and two one-bedroom, one-bathroom units.

Carter spearheaded the sale, while Don Warfield of Donald Warfield & Associates represented the buyer.

Source: San Diego Source The Daily Transcript 

Apartments boost amenities to attract, retain ownership-shy tenants

Sunday, July 3, 2011  03:16 AM 

By Jim Weiker

Fred Squillante | DISPATCH PHOTOS

A lousy housing market has driven hundreds of affluent central Ohioans to apartment complexes.
Now, can community gardens, sports bars, granite countertops and trips to Ikea keep them there?
New high-end complexes from Groveport to Hilliard are offering a bevy of amenities to attract and retain tenants, many of whom are paying more in rent than they might on a mortgage."The same people who rent today might have bought three years ago," said Sam Stark, the sales manager with Lifestyle Communities, whose newest apartment complex - the Paddock at Hayden Run - boasts a 7,000-square-foot sports bar called the Goat.
"There's still fear in the housing market. People want to be mobile, and they're willing to pay a premium for living in an apartment."
Adding to the appeal, the Paddock offers a beach volleyball court, a staffed workout facility, hardwood floors, stainless-steel appliances and 9-foot ceilings.
Down Hayden Run Road, the new Hilliard Grand complex provides a dog park, a community garden, a car wash, 9-foot ceilings, Wi-Fi, a fire-pit terrace and washer-dryer hookups.
Those perks and others are in addition to once-luxurious features now considered a must in high-end rentals: fitness centers, movie rooms, clubhouses, pools, business centers and open floor plans.
To those in the industry, such amenities are more than just brochure fodder: They are tools in what could be a watershed moment in modern housing.
The U.S. homeownership rate has dropped to 66.4 percent of households, its lowest level in 13 years and down from a peak of 69.2 percent in 2004. Although many of America's new renters might be eager to hop back into a home when their finances allow, others are choosing to pay rent instead of a mortgage.
"In the past five or six years, we could have bought a home," said Sri Thokala, 36, who moved into Hilliard Grand in June with his wife, Preeti Kawatra, 30. "But especially looking the last two years at the housing market, and the uncertainty of the job market, I don't want to take that plunge."
The couple was drawn to Hilliard Grand by its proximity to Thokala's software engineering job in Dublin, and by the gym, clubhouse and new appliances. They pay $1,005 a month for a two-bedroom flat.
John Scruggs, a 21-year-old model who recently moved into the Paddock at Hayden Run, doesn't plan to buy a home for "five or six years."
Scruggs' $975-a-month rent could cover a mortgage, but instead of buying, he is considering upgrading to the three-floor town house plan for $1,275 a month.
"It's like living in a condo here. You've got a gym, a bar, a full restaurant and the pool," he said. "It's very classy; there's a lot of young professionals here."
Anthony Verrilli and Noelle Carusillo were drawn to the Paddock by the pool, the workout facilities and their apartment's washer and dryer.
"Not having to have gym or pool memberships, that was huge for us," said Verrilli, whose rent is $800 a month for a one-bedroom unit.
Rent at seven new central Ohio complexes to open in the past 12 months starts in the $700 range and tops out from $1,200 to $1,400 (although some units in Flats on Vine in the Arena District cost more than $1,800) - enough at today's interest rates to buy a $200,000 home.
Stark notes that some Paddock tenants are paying $200 to $300 more to rent a unit than it would cost to buy an almost identical condo in the same complex. Other builders could say the same.
"Tenants now realize they can't sell quickly and move on," said Debbie Rurik-Goodwin, president of the management arm of Edwards Communities, which opened Arlington Park apartments in Hilliard this year. "They're renters by choice, and I think that will continue to be the case for a long time."
Renters also seem to be unpacking their bags for longer stretches.
"I talk to a lot of people in the industry and ask them all this question and, almost uniformly, they tell me retention rates are up 10 to 15percent from the housing collapse," said Greg Willett, vice president of research and analysis at MPF Research, an apartment consulting firm in Texas.
DRK & Co., which has opened three central Ohio complexes in the past year (Prescott Place in Worthington, Albany Landings in New Albany and Winchester Park in Groveport) is finding that tenants stay longer than they did before the housing crash, said company President Tre Geller.
To draw tenants and encourage them to stay, DRK focused on features in its new communities.
"We made a determination a few years ago that the amenities the customers are looking for will be a paramount concern," Geller said. "We upgraded our clubhouse and offer the standard amenities like a pool and exercise facility, but we also have pool tables, 10- to 15-seat movie theaters in the clubhouse, kitchenettes in the clubhouse, and we upgraded the pool and patio areas."
The Edwards Communities, which offered an upscale fitness center in its Quarry community in 1999 and built the Barn restaurant and bar in 2004, pioneered many high-end apartment amenities in central Ohio.
In its new Arlington Park community, the company provides granite countertops, undermount sinks, pendant lighting, side-by-side refrigerators, and, in town house units, screened porches.
The perks seem to have worked: The complex, which opened in January, has rented all but 30 of its 284 units, the fastest lease-up that Rurik-Goodwin has seen in her decade of managing Edwards' apartment communities.
"I think those amenity expectations are only going to grow," she said.
Rurik-Goodwin and others say they are seeing some empty nesters and middle-aged divorced men and women, but renters continue to be dominated by professionals in their 20s and early 30s.
To keep them, complexes are also using tactics beyond physical amenities.
The Paddock and other Lifestyle complexes offer ski clubs and trips to the Cincinnati-area Ikea store.
Hilliard Grand's "purposeful living" is designed to remedy one of renting's main shortcomings: the lack of a sense of community.
"We want to provide opportunities for people ... that will give them more of a purpose than just coming and going, and become attached to others here," said Brett Kaufman, president of the Schottenstein Real Estate Group, which developed the complex.
"Based on what we're seeing in other communities, people who in the past may have seen homeownership as a goal are seeing rental as a long-term option."


Source: The Columbus Dispatch

Rents Rise, Vacancies Go Down

By WESLEY LOWERY 

July 7, 2011

Apartment landlords are enjoying rising rents and falling vacancies.

The average effective rent, the amount paid after discounting, was $997 in the second quarter of the year, up from $974 a year earlier, according to a report scheduled for release Thursday by Reis Inc., which tracks leasing data for 82 markets. Second-quarter rents rose in all but two markets.

Rent levels rose fastest in San Jose, Calif., to $1,501 in the second quarter. The average effective rent in San Francisco was $1,806; Wichita, Kan., $495, and New York, $2,826.

Vacancies, meanwhile, fell in 72 of the 82 markets during the second-quarter vacancy rate to 6%, the lowest since 2008 and compared with 7.8% a year earlier, according to Reis. Vacancies declined fastest in Charleston, W.Va., Greensboro/Winston-Salem, N.C., and Richmond, Va.

"Rising rents and falling vacancies are the perfect situation for landlords," said Rich Anderson, an analyst for BMO Capital Markets. "It's like drinking without the hangover."

But there were some cautious signs in the data. Landlords filled a net 33,000 units in the second quarter, a slowdown from the 45,000 units they filled in the first quarter. That was somewhat surprising because typically, the net "absorption" rate falls faster during the summer as college graduates leave campus and descend on cities in search of jobs. Some analysts said the slower absorption rate could be linked to slower job growth, although it is too soon to know for sure. The peak apartment renting season runs from May to September.

"When you're going from big numbers and getting gradually smaller it's tough to determine if things are in fact cooling," says Haendel St. Juste, an analyst at Keefe, Bruyette & Woods.

Meanwhile, supply remains constrained. Roughly 8,700 new apartment units opened during the second quarter, the second-lowest quarterly tally for new completions since Reis began collecting data in 1999.

But there is new construction in the pipeline. The CoStar Group, a Washington, D.C.-based real-estate research firm, expects about 22,500 units to be added this year, followed by 94,600 in 2012 and more than 109,000 in 2013.

But as long as employers keep adding jobs to the economy, analysts say, they expect vacancy rates to keep falling and rents to keep rising. "Barring some unexpected shock from the global economy, we expect the recovery to continue through 2011," Reis wrote in the report. "Vacancies should continue to decline while rents rise at an even faster pace than we observed in the first half of the year."

Source: The Wall Street Journal

 

Apartment Market Pushing toward 6 Percent Annual Rent Growth

By Joshua Pringle, Online News Editor

Jun 30, 2011

Dallas–Axiometrics Inc., a multifamily data and analysis providor, released a research report today that shows the national apartment market continuing to heat up in May, with effective rents (rents net of concessions) increasing 0.7 percent from April levels. Axiometrics estimates that effective rents will rise 5.9 percent in 2011, which would be the largest annual increase since a rate of 5.8 percent in 2005.

Year-to-date, effective rents nationally have risen 3.17 percent, as compared to 2.55 percent in 2010. Top performing submarkets for annual effective rent growth in May included San Jose (13.0 percent), San Francisco (9.7 percent), Austin (8.7 percent), Seattle (8.5 percent), Boston (7.4 percent) and Dallas (6.5 percent).

Axiometrics President Ron Johnsey says, “With year-to-date increases in effective rents, and continued strong occupancy levels, renters who are able might be wise to sign longer term leases as property owners in most markets will maintain pricing power at least through the rest of 2011.”

Additionally, the national occupancy rate increased for the 12th time in the past 16 months, rising from 93.3 percent in April to 93.96 percent in May. From January through May 2011, the occupancy rate has increased 86 basis points (bps), which is below the rate of 136 bps for the same period of 2010. Axiometrics says that the slowdown in absorption can be attributed partially to the increase in effective rents year-to-date. But occupancy in May was still above the previous peak of 93.5 percent reached in August 2008.

From May 2010, eight major markets increased occupancy by more than 100 bps and have rates above 95 percent: New York, Minneapolis, Austin, San Jose, Cleveland, Orange County, Chicago and Denver. Some of the most overbuilt markets are recovering rapidly as well. Six major markets that had low occupancy rates in May of 2010 have increased their occupancy levels between 142.5 and 333.4 bps: Charleston, Charlotte, Dallas, Orlando, Phoenix and Houston.

Source: Multi-Housing New Online

Multifamily market limps forward; small uptick seen in rents

By ANDREW KEATTS, The Daily Transcript

Friday, June 24, 2011

 

 

The news isn’t all good in San Diego’s multifamily housing market, but it’s better than in many other markets, and it’s only going to improve, according to a panel of local experts.

The San Diego chapter of the California Apartment Association hosted a panel discussion on the state of the local multifamily market on Thursday, with panelists essentially saying, “Things could be a lot worse.”

Rents here are expected to increase between 2 and 4 percent this year on an annual basis, according to Darcy Miramontes, executive vice president of Jones Lang LaSalle.

That would lead to more pronounced growth in 2012 and 2013, she said, citing a Moody’s estimate of rent growth in those years approaching 5 percent. Even if that estimate is a bit aggressive, property owners can be sure rent growth wouldn’t fall below its 2011 level.

Renters who’ve moved in with family members during the lean years of the recession are expected to uncouple and look to live on their own again, according to Nathan Moeder, principal of London Group Realty Advisors. Since there’s been virtually no new projects delivered to the market recently, those renters will put upward pressure on rents.

“Even if only 20 percent of the people who’ve doubled and tripled up return to the market, that’s still a significant amount of demand,” he said.

Josh Harnett, senior manager of asset management for Irvine Company Apartment Communities, marked Escondido and Carlsbad as markets poised for an uptick in traffic and leasing, leading to rising rents.

He expects Torrey Hills to continue as one of the region’s strongest markets, but said Mission Valley will see the biggest year-over-year increase in rental rates.

North County beach markets are expected to remain the tightest in the region, Miramontes said, pointing to the area’s comparatively low 3.7 percent average vacancy rate.

She added that the vacancy rate downtown is artificially high. More than 600 units came into the market at the same time, due to the Vantage Point building, skewing the statistics.

The only large-scale project of note on the horizon is Sudberry’s Civita in Mission Valley, the three panelists agreed.

The master-planned community just north of Friars Road will bring nearly 5,000 housing units to market. After being discussed for more than a decade, it broke ground earlier this year. Two townhouse buildings by Shea Homes, and an apartment complex by Sudberry are scheduled to be delivered this year.

Other than Civita, the only other projects breaking ground are for affordable housing, according to Moeder.

“There’s just not a lot of inventory we’re going to see built immediately,” he said.

Small investors looking to purchase apartment buildings in the area are learning they need to get farther away from San Diego to find deals that make financial sense, according to Moeder. Some are now looking as far as El Centro.

But San Diego is largely seen as a safe market, and multifamily units in general are seen as a safe investment nationwide, he said.

Miramontes said investors like that San Diego development is constrained by its three physical borders, Camp Pendleton, Mexico and the Pacific.

“Investors like that, because it helps keep the area in check,” she said. “During the darkest part of the recession, San Diego wasn’t going too bad.”

Driven by the cost of debt the current state of capital markets, cap rates are low, according to Miramontes.

Roughly speaking, she said core, A-level product carries a 4.5 percent cap. That’s closer to 5 percent for class B, and it ranges widely after that. Class C could be anywhere from 5 to 7.5 percent.

“It depends on the individual story, and the position you want to take it to,” she said.

The apartment market fared far better than the for-sale housing market during the recession, according to Moeder. It’s currently down 4 percent from its peak, while the housing market remains 20 to 30 percent lower than its peak years, he said.

Diversity in San Diego’s employment market allowed it to fare better as well, he said.

Victims of foreclosure ended up in the rental market, according to Harnett, softening the effect of the downturn on the multifamily market.

Moeder said cities in the county are much more approachable when it comes to entitling projects.

“You can get the cities’ ears these days,” he said. “You can go back to the city and re-entitle for more economic uses. They’re interested in asking what they can do to revive a project.”

But he was highly skeptical that SANDAG’s estimations that 85 percent of new home construction will be multifamily. Historically, 60 percent of the county’s housing has been single-family homes.

“You can’t force people into that product,” he said.

Source: The Daily Transcript 

Survey: County has lowest apartment vacancy rate in nation

By THOR KAMBAN BIBERMAN, The Daily Transcript

Thursday, June 23, 2011

 

A new PricewaterhouseCoopers and Reis Inc. investor survey states San Diego has the lowest apartment vacancy rate of any major metropolitan area in the country and even has a strengthening office market.

The investor survey report subtitled "Optimism Prevails Despite Economic Unease" said the average apartment vacancy rate here was 3.9 percent during the first quarter of 2011 -- a full percentage point stronger than the 4.9 percent recorded during the like period a year earlier.

The 3.9 percent figure was stronger than all other major metropolitan areas surveyed. It was followed by Los Angeles at 4.5 percent and Baltimore at 4.7 percent, according to the survey that examined 18 of the largest metropolitan areas in the United States.

The survey said San Diego County's apartment investment market is in a strong recovery period for this year and next and will see a significant growth in demand in 2013 and 2014 -- likely fueling significant construction in those years.

San Diego's MarketPointe Realty Advisors has reached similar conclusions, but placed the average vacancy rate at 5.06 percent as of the end of March, with a 5 percent level considered to be ideal by the industry. Even at that, San Diego would still rank among the top five apartment markets in the country.

The PricewaterhouseCoopers report said the county absorbed 446 rentals in the first quarter of 2011, compared to 679 units in the fourth quarter of 2010 and 422 in the first quarter of 2010.

The report didn't stop at apartments. It said San Diego's office market, while decidedly less impressive, demonstrated some surprising strength during the first quarter of the year.

"Strengthening economic conditions, positive net absorption and a decline in sublease space are creating momentum in the San Diego office market," the report states.

The report adds that the technology services, hospitality, and education/health employment sectors are showing signs of growth in San Diego.

"In particular, the biotechnology and renewable energy sectors are attracting attention from venture capitalists, leaving these sectors poised for near-term expansion," the report continues.

It also helps that the unemployment rate has been on a slow but steady decline, currently at 9.6 percent, according to the state Employment Development Department.

The office vacancy rate tightened by a full 100 basis points to 16.8 percent year-over-year in March, according to Cushman & Wakefield. The amount of sublease space declined by 26.2 percent, while the total net absorption increased by 17.3 percent during the same one-year period.

Not everything is as office landlords would wish, however.

"The leasing market is remarkably slow for owners marketing 2,000- to 10,000-square-foot spaces," describes a survey participant.

That hasn't stopped landlords from seriously considering significant rent increases to augment their balance sheets.

"Further evidence of investors' optimistic outlook for this market is the growing use of rent spikes. The percentage of surveyed participants using rent spikes in their cash flows rose from 60 percent to 80 percent over the past three months," the report said.

San Diego's office market is presently in a recovery mode that will strengthen in 2013 and 2014, according to the report.

Retail is a mixed bag. Although many formerly empty large retail boxes continue to be refilled by such retailers as Kohl's, Best Buy, Dick's Sporting Goods and Discount Tire, the PricewaterhouseCoopers report said the retail market is still effectively in recession here and will continue to be so through next year. The report is projecting a retail recovery happening in San Diego County in 2013 and 2014.

Nationally, the report says stabilized real estate investment trust retail assets are faring the best in this economy, though malls have had their troubles. While there are many high-quality assets, few high-quality retail properties are being placed on the market -- at a time when "a flood of lower quality malls are being offered for sale ..."

In one case, Fashion Valley mall owner Simon Property Group (NYSE: SPG) has placed four malls for sale in Florida and Tennessee that have an average age of 27 years. What's more, it has been an average of 13 years since a major renovation occurred at the malls.

Power centers have been trading. In one of some 70 power centers that have traded thus far this year, Rancho Bernardo-based Excel Trust acquired the 325,431-square-foot Gilroy Crossing in Gilroy for about $210-per-square foot.

Source: The Daily Transcript

 

5 signs a Craigslist rental listing is fake

By Lily Leung

5:24 p.m., June 10, 2011

Screenshot of the Craigslist landing page for San Diego, taken June 10, 2011.

You're on Craigslist looking for a rental. As you're skimming listings in the $2,000 range for one particular area, you suddenly see one for $1,200 a month.

Too good to be true? In many cases, yes.

Real estate agents and property managers in San Diego County come across scammer listings on Craigslist and other websites from time to time. What usually happens is someone lifts the information from an existing sales or rental listing and makes a duplicate featuring a drastically lower price and different contact number.

Sometimes, the scammer asks respondents for cash up-front or an application with their Social Security number and other sensitive information -- then never follows up. The ads often are taken down after the consumer inquires about the status of the transaction, agents and property managers say.

Century 21 Award agent Nancy Beck, who specializes in University City properties, came across this just three months ago. Someone cloned one of her sales listings in that area, taking everything from the specs to property photos. What changed was the home's price and its status from a sale to a rental.

"People would call me after seeing my listing for a super-low price," Beck said. "It would create a frenzy, and people would drive by the listing, see that it was for sale" and follow up with a phone call to Beck.

"That's how I became aware," said Beck, who went through two other similar incidents within a year.

The Union-Tribune talked to Kayla Roeder, vice president of Cambridge Management Group in San Diego, who shared some signs that a rental listing is likely a scam.

The person renting out the property:

1. Does not have the keys to the home and cannot show it to you.
2. Doesn't do credit checks.
3. Deals only in cash, which makes fraud untraceable.
4. Tells you to fill out an application without letting you see the home first.
5. Lists the property at a price that's drastically lower than those of comparable homes in the area.

What others are saying:

This is a terrible scam. (Renters) go out to properties thinking they're going to get something for $1,000, and they're disappointed when they don't.

--Marilyn Lewis, office manager at Park Place Realty & Asset management in San Diego, who's recently come across cloned listings of her company's properties.

These scams drastically reduce the rent and make the rentals way below market value. People are not thinking with their heads and instead with their wallets. They have this need to snap (the deal) up. It's out of desperation.

--Jennifer Newton, president of Walters Home Management in San Diego.

Craigslist did not respond to a request for comment.

Some agents and managers said they normally flag the cloned listings, and they're usually taken down within a timely manner.

Source: SignOnSanDiego