Archives by: John Bergin

Apartment Construction Boom Slowing Rent Increases as Market Shifts Into Expansion Phase

With construction on new apartments back in full swing and vacancy rates beginning to trend upward, the robust rent increases enjoyed previously by landlords in most U.S. metro areas are expected to decelerate to below 2% in 2015 as the multifamily market shifts from full recovery into an expansion phase. CoStar Group economists are forecasting that apartment vacancy rates will rise in 46 of the 54 top U.S. metros over the next four quarters due to the massive wave of current... Read ... Read more

CMBS market hit by rating suspension, downgrade

Reports of the Securities and Exchange Commission's possible suspension of Standard & Poor's rating abilities for commercial mortgage-backed securities and Moody's Investors Service's downgrade of a planned issuance could slow the CMBS market in the coming year, according to industry analysts. While low interest rates and climbing property values hold promise for the market, which has regained strength in recent years, risks exist. Read full story Read more

Construction of 405,000 apartments is expected in 2015

Developers will likely begin building 405,000 apartment units next year, according to the 2015 Dodge Construction Outlook. Developers are betting on strong demand as the employment landscape improves and new households form. "Financing for construction projects is becoming more available, reflecting some easing of bank lending standards, a greater focus on real estate development by the investment community and more construction bond measures getting passed,” said Robert Murray, chief economist and vice president of Dodge Data & Analytics. Read full story Read more

Condo Comeback?

It’s not like it's 2005, but, suddenly, for-sale multifamily is making sense again. Read full story Read more

Chasing Yield: The 2015 Dealmaking Outlook

As cap rates continue to fall, investors are pushing for returns in five key areas heading into the new year. Read full story Read more

U.S. GDP posts stronger-than-expected 3.9% growth in Q3

Gross domestic product rose by a seasonally adjusted annual rate of 3.9% in the third quarter, the Commerce Department reports -- up from an earlier estimate of 3.5%. Consumer spending and inventory investment were stronger than previously thought, offsetting weaker export estimates. Some economists had expected a downward revision of third-quarter GDP. Read full story Read more

Class C Market Grows Tense as Prices Rise

The product's growing popularity may press buyers to seek yield in riskier markets and assets. Read full story Read more

Central bankers acknowledge downside of low rates

Six years of low interest rates have had worrisome consequences, including sparing governments from fixing their economies, hurting savers and increasing volatility, traders and central bankers say. Despite that, the world needs interest rates to remain flat, they say.  Bloomberg (11/7) Read full story Read more

Sales of Newly Built Apartments Hint at Speed of Cycle Maturity

As supply climbs to its peak, price per unit in primary markets is decelerating more quickly than in secondary markets. Read full story Read more

Cap Rates Hit Record Lows in 3Q

Overall cap rates are at 5.9 percent; for mid- and high-rises, they've shrunk to just 3.6 percent. Read full story Read more

U.S. homeownership continues to decline

The U.S homeownership rate continues its downward trend, even as the economy improves. The latest Census Bureau figures show the rate fell to 64.3% in the third quarter. As a result, the rental market is surging. The New York Times (tiered subscription model) (10/31) Read full story   Read more

Report: REITs are driving CRE transactions

Commercial real estate transaction volume in the US increased 16.4% Y/Y for the first 7 months of 2014, up to $204.5B. REITs are driving much of this activity. Read Full Story Read more

Real Estate Institutional Assets Reach $1Trillion

Assets held by institutional real estate money managers rose 13.7% to $1.003T. It was the second time that assets reached $1T, and the first time since 2008 Read Full Story Read more

Denver Leads List of Top 10 Quarterly Rent-Growth Markets

All 79 markets that Reis tracks saw rent increases in the third quarter, but these 10 stood out from the pack. Read full story Read more

Fannie, Freddie, FHFA, lenders work on mortgage deal

Fannie Mae, Freddie Mac, the Federal Housing Finance Agency and lenders are working on an agreement that would expand access to mortgages. The deal "would allow credit to flow more freely to lower- and middle-income households," said Mark Zandi, Moody's Analytics' chief economist. "That's vital to getting the housing recovery moving forward." Reuters (10/17), The Wall Street Journal (tiered subscription model) (10/17), Bloomberg (10/17) Read full story   Read more

U.S. posts strong output, jobs numbers

Production at U.S. factories, mines and utilities jumped 1% last month for the biggest gain in nearly two years while initial claims for jobless benefits plunged to a 14-year low last week. The data reinforced other figures pointing to an improving economy but contributed to a mixed picture overall, including weak retail sales data reported a day earlier. Reuters (10/16) Read full story Read more

CMBS projected to reach $100B this year

The U.S. commercial mortgage-backed securities market is expected to post $100 billion in originations for 2014, an important post-financial crisis milestone. Despite market fluctuations, demand for these securities remains strong, CREFC CEO Steve Renna says. (10/16) Read full story Read more

Consumer spending gives strength to U.S. economy

Consumer spending is on the upswing in the U.S. and will likely keep the economy solid even as global growth slows, economists say. Low gas prices and low borrowing costs will likely keep consumers spending in the near term. Bloomberg (10/14) Read full story Read more

Capital from Self-Directed IRAs Flows to Real Estate

Individuals with self-directed IRAs are adding to the abundant capital flowing into commercial real estate investments these days. Read full story Read more

CalPERS is increasing its real estate investments

Real estate has risen to 9.9% of investments for the California Public Employees’ Retirement System, up from 8.7% as of July 31, according to documents. The largest U.S. pension fund plans to increase that to 11% in fiscal year 2016. Its focus is on fully leased office towers and multifamily properties in large cities, which CalPERS says are safer investments than some of its precrisis real estate holdings. The Wall Street Journal (tiered subscription model) (10/7), Bloomberg (10/7) Read full story Read more

Expectations for Rise in Rates Pummel REITs

REIT stock prices lagged behind the broader stock market as investors bet rates would rise over the next year Read full story   Read more

Draghi’s Case for Quantitative Easing in Europe [Forbes]

ECB announcing QE plans via purchase of private sector credit, covered bonds, and cutting interest rates. Read full story   Read more

Sept. 2014 US Economic & Housing Market Outlook – “Multifamily On The Move” [Freddie Mac]

Strong demand for apartments among younger households has created ripe conditions for rental apartment development.  Read full story Read more

Cap Rates Fall to Historic Lows as Investors Chase Yield Far Afield [Multifamily Executive]

Cap rates fell to 4.4% in Big Six markets for Q2. Volume increasing in secondary/tertiary markets. Read full story   Read more

5 Reasons Occupancy is Growing Stronger [Multifamily Executive]

Even with 180k units coming online in the last year, occupancy & rent growth highest this century. Read full story Read more

Millennials Maintain Multifamily Momentum—Spur Sustained Investment [CoStar News]

Multifamily continues to be a hot sector based on rental demand from Millennials. Read full story Read more

Demand for Apartments Proves Stronger Than Thought, Driven by Millennials

Good news for multifamily housing—demand for space is likely to be even stronger than experts estimated, helping the sector keep ahead of new construction for the immediate future, according to the Mid-Year Outlook 2104 from Freddie Mac Multifamily Research. “For a majority of the markets… new supply will continue to be absorbed as it enters the market and rents will continue to rise,” the agency’s researchers note. Apartment pros have been increasingly worried ... >>Click here for full story (NREI subscription required) Read more

Banks, Conduits Lead Lending Activity for CRE

It’s shaping up to be another big year for commercial and multifamily lending—especially for banks and conduit lenders, according to the latest figures from the Mortgage Bankers Association (MBA), an industry trade group. “Commercial and multifamily borrowing is running at about the same pace as 2013, even though the volume of loans maturing and needing to be refinanced is 23 percent lower than last year’s level,” says Jamie Woodwell, MBA’s vice president ... >>Click here for full story. (NREI subscription required) Read more

5 Reasons Occupancy is Growing

Most people think that when a flood of new supply hits the apartment market, occupancy and effective rents will go down. That’s true in most cases, but not in the first half of 2014, according to Axiometrics research. Even though 180,000 units have come on line in the past year, with thousands more on the way in the third and fourth quarters, occupancy and effective-rent growth have been at their highest levels since almost the turn of the 21st century. >>Click here ... Read more

Raleigh-Cary has nation’s second fastest growing economy

As the US economy is expected to taper out at a long-run growth rate under 3%, the Raleigh-Cary market will likely rise and remain above 4% growth through 2020. >>Click here for full story   Read more

Raleigh #4 Fastest-Growing City For Renters in US

If you are renting an apartment in Raleigh, you are among the fourth fastest-growing population in the country. Raleigh's population grew 4.8% from 2010 to 2012. >>Click here for full story   Read more

Secondary & Tertiary markets to shine in 2014

St. Romain, managing director for capital markets at Chicago-based Jones Lang-Lasalle, sees a shift occurring as opportunities cool off in primary markets, and secondary markets become the shining stars of 2014...St. Romain is particularly interested in the Southeast and feels many markets in that area have a lot of depth and room for success. >>Click here for full story Read more

Apartment construction at an all-time high in Charlotte

Apartment construction in the Charlotte region has hit an all-time high, according to the latest report from research firm Real Data, with the average vacancy rate expected to rise during the next year...There are 10,067 apartments units under construction in the region — including 8,122 in Mecklenburg County — and an additional 11,003 units proposed, according to the firm’s latest report... >>Click here for full story Read more

Multi-Family’s Maximal Momentum

Multifamily in Charlotte and the Carolinas still has its mojo--lenders are still willing to lend for it, and investors are still looking to buy it because they both believe in the sector's upside for years to come...Demand for multifamily loans in the Carolinas continues to be strong in all sectors, as job growth strengthens and population growth expands... >>Click here for full story Read more

Investors Gaga Over Multi-Family

Which do investors want more in greater Charlotte, Class-A or Class-Bapartments? Neither, ARA principal Blake Okland tells us. They've been going after As for a while, but as those opportunities dwindle, Bs will do quite nicely. (The sale of Alpha-Bits cereal is also through the roof.) Blake says that 2012 and 2013 were dominated by new urban infill properties... >>Click here for full story Read more

North Carolina & Texas headline nation’s most affordable cities

Every few days there seems to be a new ranking of the "best" cities that features North Carolina locales, and here's a new one that takes into account affordability. Charlotte ranks fourth and Raleigh ranks sixth among the nation's six most affordable cities evaluated by consumer website Texas claims the top three and fifth spots. >> Click here for full story Read more

Politics & CRE Sales (Déjà Vu)

The failure of Congress and the administration to reach a budget agreement before the Oct. 1 deadline, the possibility that the debt ceiling will not be raised before the nation is unable to pay its obligations, and the huge swings in the stock and bond markets are all too familiar. After the last time we went through this and our nation’s credit rating was downgraded and the sequester became law, we thought our politicians would have learned to put politics aside ... Read more

What do students really want in housing?

When it comes to student housing, one thing is pretty much clear: The dorm days are over. To satisfy both cost and quality-of-life concerns, most students have moved off campus into modernized student housing communities. Competition for their rent dollars hinges on several key components of the rental property: proximity to school; apartment size and plenitude of storage space; availability of one bathroom for every resident (even if they share a bedroom); and a fitness center as the crown jewel in your ... Read more

Confidence in Multifamily at All-Time High

The apartment and condominium market continued to gain momentum in the second quarter with builders’ and developers’ confidence in the sector soaring to an all-time high, according to the National Association of Home Builders’ multifamily index.  The index rose to its highest reading since 2003, which is the year the index began. The index measures builder and developer sentiment in the apartment and condo market. The latest reading for the second quarter was 61. Any number above 50 indicates that more respondents ... Read more

Second Quarter Apartment Markets Mixed in Latest NMHC Survey

While demand for apartment homes remained strong, rising interest rates exerted negative pressure on the industry’s ability to secure debt financing according to the National Multi Housing Council’s (NMHC) July Quarterly Survey of Apartment Market Conditions. Only the Market Tightness Index (55) remained above the breakeven line of 50 this quarter. Sales Volume (46) and Equity Financing (49) dipped, with Debt Financing dropping sharply to 20.   » Click here for full story Read more
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