It turns out “Don’t Mess With Texas,” is more than just a slogan. At least judging by the state’s ability to rebound from the Great Recession, and its dominance over the rankings in a new report highlighting the best-performing U.S. cities.
San Antonio heads up the Milken Institute’s 2011 Best-Performing Cities index, but is just one of four Texas cities in the top five and nine of the 25 best in the country. The Lone Star State grades out well in job creation, according to the report, which found that Texas employers were responsible for one of every five U.S. jobs created from June 2010 to June 2011.
Ross DeVol, the Milken Institute’s chief research officer, leads the team that compiles the index and said that a number of factors lie behind Texas’ success, some unique to the region and others that cities elsewhere in the U.S. can try to emulate.
Read more...Cities with the best economies in America - MSNBC.com
Friday, December 30, 2011
Austin Sees Surge in Out-of-State Investor Interest via MHNonline
The Live Music Capital of the World is expecting a population growth exceeding 50,000 people. This will undoubtedly increase the demand for apartments, pushing rents and occupancies.
As of the third quarter of 2011, employers added 15,500 jobs, increasing the workforce by 2 percent. Austin’s unemployment rate was 7.1 percent as of October, down 40 bps from the month prior.
Class A rents are slightly higher than the monthly mortgage payment on a median-priced home in the suburbs, notes Marcus & Millichap. Asking and effective rents increased 2.7 percent and 3 percent, respectively, year-over-year to the third quarter. Class B and C asking rents increased slightly more than those of Class A—2.7 percent versus 2.4 percent. Marcus & Millichap expects that asking and effective rents will end the year 3.1 percent and 3.6 percent, respectively, higher than the year prior.
Read more...Austin Sees Surge in Out-of-State Investor Interest MHNonline
As of the third quarter of 2011, employers added 15,500 jobs, increasing the workforce by 2 percent. Austin’s unemployment rate was 7.1 percent as of October, down 40 bps from the month prior.
Class A rents are slightly higher than the monthly mortgage payment on a median-priced home in the suburbs, notes Marcus & Millichap. Asking and effective rents increased 2.7 percent and 3 percent, respectively, year-over-year to the third quarter. Class B and C asking rents increased slightly more than those of Class A—2.7 percent versus 2.4 percent. Marcus & Millichap expects that asking and effective rents will end the year 3.1 percent and 3.6 percent, respectively, higher than the year prior.
Read more...Austin Sees Surge in Out-of-State Investor Interest MHNonline
Thursday, December 29, 2011
MFE TV: Forecast 2012 - Multifamily - Multifamily Executive Magazine
Tune into the future as senior multifamily executives and their capital partners offer up their predictions for how 2012 will shape up. These leaders will take a deep dive into everything from the state of the eceonomic markets to the election and GSE reform to their personal business objectives for the coming year.
Watch the video...MFE TV: Forecast 2012 - Multifamily - Multifamily Executive Magazine
Watch the video...MFE TV: Forecast 2012 - Multifamily - Multifamily Executive Magazine
MFE TV: Operations Outlook - Operations - Multifamily Executive Magazine
In an environment of growing rents, it’s more important than ever to stay on top of your operations to ensure you’re delivering the right products, services, and amenities to maximize your occupancies and rent rolls. Listen in as property managers from across the country share their observations on the rental environment.
Watch the video...MFE TV: Operations Outlook - Operations - Multifamily Executive Magazine
Watch the video...MFE TV: Operations Outlook - Operations - Multifamily Executive Magazine
Faulty Appraisals Kill Banks - Bank Think Article - American Banker
If you read through enough material loss reviews prepared by the FDIC's Inspector General — essentially autopsies on failed banks — certain common themes emerge. One of the recurring themes is that many closed banks overconcentrated in commercial real estate and development loans. The rapid decline in property values, reflected by appraisals, then rendered the bank undercapitalized.
Banks often tell the story of a downward spiral in the carrying value of their property loan portfolios as examiners require updated appraisals followed by a series of re-appraisals. In most cases, these dwindling values involve GAAP accounting and valuation definitions (market value versus fair or liquidation value) and appraisal assumptions.
Regulators fostered this confusion by not regularly updating interagency appraisal guidance. Between 1994 and December 2010, the respective regulators failed to update interagency appraisal guidance once.
Why is this point so pivotal to banks? Each downward revision and additional loan loss provision tightens the noose as loan value markdowns whittle away the bank's capital position.
Read more...Faulty Appraisals Kill Banks - Bank Think Article - American Banker
Banks often tell the story of a downward spiral in the carrying value of their property loan portfolios as examiners require updated appraisals followed by a series of re-appraisals. In most cases, these dwindling values involve GAAP accounting and valuation definitions (market value versus fair or liquidation value) and appraisal assumptions.
Regulators fostered this confusion by not regularly updating interagency appraisal guidance. Between 1994 and December 2010, the respective regulators failed to update interagency appraisal guidance once.
Why is this point so pivotal to banks? Each downward revision and additional loan loss provision tightens the noose as loan value markdowns whittle away the bank's capital position.
Read more...Faulty Appraisals Kill Banks - Bank Think Article - American Banker
Actions At Law Are Recognized And Permitted For Deficiencies On Foreclosure By Advertisement, Regardless Of Whether The Mortgage Was Extinguished. via JDSupra
This case arises out of a commercial mortgage-backed securities (CMBS) loan. A CMBS loan has a unique structure: a non-recourse basis in exchange for the isolation of the assets to be financed. Two components of asset isolation are separateness covenants and limited recourse provisions limiting the lender’s general agreement not to pursue recourse liability. Accordingly, in a CMBS financing, in the event on “recourse triggers” on the part of the borrower, the lender’s agreement not to pursue recourse liability against the borrower or owner has limited application, allowing the lender to pursue recourse as part of its remedies.
Read more...Actions At Law Are Recognized And Permitted For Deficiencies On Foreclosure By Advertisement, Regardless Of Whether The Mortgage Was Extinguished. | Warner Norcross & Judd - Appellate Practice Group - JDSupra
Read more...Actions At Law Are Recognized And Permitted For Deficiencies On Foreclosure By Advertisement, Regardless Of Whether The Mortgage Was Extinguished. | Warner Norcross & Judd - Appellate Practice Group - JDSupra
Texas' 2012 job forecast: A lot like 2011 via Star-Telegram.com
The Federal Reserve Bank of Dallas is forecasting slower job growth next year, of 1.5 to 2 percent, citing reduced government hiring and a projected slowdown in exports because of financial problems in Europe.
"If we grow at this year's pace, that would be a good outcome," said Pia Orrenius, a Dallas Fed senior economist.
Read more...Texas' 2012 job forecast: A lot like 2011 via Star-Telegram.com
"If we grow at this year's pace, that would be a good outcome," said Pia Orrenius, a Dallas Fed senior economist.
Read more...Texas' 2012 job forecast: A lot like 2011 via Star-Telegram.com
Unimpeded by Legacy Distress, Healthier Banks Making CRE Loans via GlobeSt.com
As reported in our most recent Bank Default and Lending Report, the combined default rate on banks' commercial and multifamily mortgage loans fell to 3.75 percent in the third quarter of 2011. The new accounting reflects a 19-basis point drop from the second quarter's 3.94 percent default rate and a 67 basis point decline from the cyclical peak of 4.42 percent a year earlier.
Most Banks Still Drawing Down Exposure to CRE
In spite of the improvement in legacy loan performance, many banks are still drawing down their exposures to the property sector. The outstanding balance of banks' multifamily and commercial real estate loans fell by $3.1 billion during the third quarter, reflecting a small net increase in multifamily loans and a larger offsetting decline in commercial loans.
Read more...GlobeSt.com - Unimpeded by Legacy Distress, Healthier Banks Making CRE Loans - Chief Economist Article
Most Banks Still Drawing Down Exposure to CRE
In spite of the improvement in legacy loan performance, many banks are still drawing down their exposures to the property sector. The outstanding balance of banks' multifamily and commercial real estate loans fell by $3.1 billion during the third quarter, reflecting a small net increase in multifamily loans and a larger offsetting decline in commercial loans.
Read more...GlobeSt.com - Unimpeded by Legacy Distress, Healthier Banks Making CRE Loans - Chief Economist Article
Cap Market Forecast: Sunny, Clouds Brewing via GlobeSt.com
Plentiful capital will be available in 2012 for core assets, even as those assets are becoming increasingly scarce, according to a recent report from CBRE Capital Markets. The report also foresees a continuation of the “deal velocity” of recent months, and increasing competition among lenders.
The demand for capital will be so great, however, that some life insurance companies may be forced to increase their loan allocations from 10% to 25% in the coming year, according to the same report. “We continue to see real estate and mortgage finance fundamental gradually improve, and with the availability of substantial capital, commercial real estate continues to become more of a core investment alternative and one that can provide very attractive risk-adjusted returns,” according to the report, authored by CBRE Capital Markets president Brian Stoffers.
Not all lenders are thriving in the current environment, however.CMBS conduit lenders, however, may turn out to be big wallflower at the lenders’ ball, according to the CBRE report.
Read more...GlobeSt.com - Cap Market Forecast: Sunny, Clouds Brewing - Daily News Article
The demand for capital will be so great, however, that some life insurance companies may be forced to increase their loan allocations from 10% to 25% in the coming year, according to the same report. “We continue to see real estate and mortgage finance fundamental gradually improve, and with the availability of substantial capital, commercial real estate continues to become more of a core investment alternative and one that can provide very attractive risk-adjusted returns,” according to the report, authored by CBRE Capital Markets president Brian Stoffers.
Not all lenders are thriving in the current environment, however.CMBS conduit lenders, however, may turn out to be big wallflower at the lenders’ ball, according to the CBRE report.
Read more...GlobeSt.com - Cap Market Forecast: Sunny, Clouds Brewing - Daily News Article
Texas Manufacturing Outlook Survey, December 2011 - FRB Dallas
Texas factory activity weakened slightly in December, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, posted a second negative reading but moved up from –5.1 to –1.3. This suggests a slowing of the pace of decline.
Other measures of current manufacturing conditions indicated flat activity in December. The new orders index suggested stagnant demand, registering a near-zero reading after dipping into negative territory last month. The shipments index was little changed from its November reading and continued to suggest flat shipment volumes. The capacity utilization index was also near zero although it rebounded from last month, rising from –10.2 to 0.7.
Perceptions of broader economic conditions were mixed in December. The general business activity index dipped into negative territory after two consecutive positive readings. The index came in at –3, with 12 percent of manufacturers noting improvement in the level of business activity while 15 percent noted a worsening. The company outlook index remained positive and edged up from 4.7 to 6.6. Nearly 90 percent of manufacturers said their outlooks were unchanged or improved from last month.
Read more...Texas Manufacturing Outlook Survey, December 2011 - Economic Data - FRB Dallas
Other measures of current manufacturing conditions indicated flat activity in December. The new orders index suggested stagnant demand, registering a near-zero reading after dipping into negative territory last month. The shipments index was little changed from its November reading and continued to suggest flat shipment volumes. The capacity utilization index was also near zero although it rebounded from last month, rising from –10.2 to 0.7.
Perceptions of broader economic conditions were mixed in December. The general business activity index dipped into negative territory after two consecutive positive readings. The index came in at –3, with 12 percent of manufacturers noting improvement in the level of business activity while 15 percent noted a worsening. The company outlook index remained positive and edged up from 4.7 to 6.6. Nearly 90 percent of manufacturers said their outlooks were unchanged or improved from last month.
Read more...Texas Manufacturing Outlook Survey, December 2011 - Economic Data - FRB Dallas
Wednesday, December 28, 2011
Something for Everyone via multihousingnews.com
While the recession may have been severe for the apartment market, the recovery has been just as extreme, states Hessam Nadji, managing director, Research and Advisory Services, Marcus & Millichap. “There really wasn’t a group of markets that escaped the recession; conversely, there isn’t a group of markets that is being left out of the recovery,” he notes. “Today’s apartment market really offers something for everyone.”
The third quarter of 2011 marked the transition from the recovery phase of multifamily into the expansion phase, adds Gleb Nechayev, senior managing economist at CBRE Econometric Advisors. “It returned to—and actually surpassed—the previous peak in terms of revenues, and by that metric it is well ahead of other property types,” he notes.
According to the most recent analysis from CBRE Econometric Advisors, the U.S. multi-housing vacancy rate will hold steady at 5.5 percent in 2012—down 60 bps year-over-year and 190 bps from its peak in 2009—and actually decline an additional 30 bps in 2013.
Read more...Something for Everyone via multihousingnews.com
The third quarter of 2011 marked the transition from the recovery phase of multifamily into the expansion phase, adds Gleb Nechayev, senior managing economist at CBRE Econometric Advisors. “It returned to—and actually surpassed—the previous peak in terms of revenues, and by that metric it is well ahead of other property types,” he notes.
According to the most recent analysis from CBRE Econometric Advisors, the U.S. multi-housing vacancy rate will hold steady at 5.5 percent in 2012—down 60 bps year-over-year and 190 bps from its peak in 2009—and actually decline an additional 30 bps in 2013.
Read more...Something for Everyone via multihousingnews.com
What to Watch for in 2012 in the U.S. Apartment Market via Property Management Insider
Following two strong years for the U.S. apartment market, what should we expect to see in 2012? Greg Willett joins Jay Parsons to discuss in this video edition of Apartment Market Dynamics.
Watch video...What to Watch for in 2012 in the U.S. Apartment Market via Property Management Insider
Watch video...What to Watch for in 2012 in the U.S. Apartment Market via Property Management Insider
Multifamily in 2011: Moving Forward on All Cylinders via GlobeSt.com
Throughout much of 2011, multihousing has been an extraordinarily strong real estate sector nationwide. This has definitely been the case and then some in Houston as, during the past year, the multihousing sector has been active in all areas: Rent, occupancy and sales transaction.
Apartment Realty Advisors’ Fall, 2011 Multihousing Market Report introduced Q2 figures (the latest available) pertaining to the Houston market. Those figures pointed to a vacancy of just under 10%, with effective rents 1.9% higher than they were in the middle of 2010. Experts tell Globest.com that, in the closing days of 2011, those effective rents are continuing to climb, while vacancies continue to drop. Rents are anticipated to increase a total of 10% from a year ago.
In other words, says ARA principal David Mitchell: “To sum up 2011, we’re lucky to be in Houston.” Furthermore, the combination of jobs growth, continued disdain for single family purchases from renters (especially younger renters) and the strong energy sector that continues to churn out many jobs means that “this is all a perfect storm for multifamily in Houston,” notes Ed Cummins, senior vice president with Transwestern.
Read more...GlobeSt.com - Multifamily in 2011: Moving Forward on All Cylinders - Daily News Article
Apartment Realty Advisors’ Fall, 2011 Multihousing Market Report introduced Q2 figures (the latest available) pertaining to the Houston market. Those figures pointed to a vacancy of just under 10%, with effective rents 1.9% higher than they were in the middle of 2010. Experts tell Globest.com that, in the closing days of 2011, those effective rents are continuing to climb, while vacancies continue to drop. Rents are anticipated to increase a total of 10% from a year ago.
In other words, says ARA principal David Mitchell: “To sum up 2011, we’re lucky to be in Houston.” Furthermore, the combination of jobs growth, continued disdain for single family purchases from renters (especially younger renters) and the strong energy sector that continues to churn out many jobs means that “this is all a perfect storm for multifamily in Houston,” notes Ed Cummins, senior vice president with Transwestern.
Read more...GlobeSt.com - Multifamily in 2011: Moving Forward on All Cylinders - Daily News Article
Tuesday, December 27, 2011
Commercial Property Owners Facing Higher Rates via- WSJ.com
Interest rates are at the lowest levels in decades, but commercial property owners looking to refinance shouldn't expect to lock in those rates any longer.
At the height of the boom years, many owners of office buildings, hotels, shopping malls and other commercial real estate financed their properties using five-year mortgages, most of which are set to mature next year.
But lenders are warning property owners that refinancing won't be automatic, and the low mortgage rates in the headlines probably won't apply to them anymore. If properties are underwater, lenders are requiring owners to put in additional cash. In other cases, lenders will offer to refinance, but at substantially higher interest rates.
Analysts say the hard line that lenders are taking could be especially harsh on adjustable-rate, or floating-rate, loans, where the difference between the old rate and the new rate will be greatest. Some ARMs, which followed interest-rate benchmarks in recent years, are currently under 1%. The rates are tied to the international interest-rate benchmark—the London interbank offered rate, or Libor, and are often reset monthly or quarterly.
Read more...Commercial Property Owners Facing Higher Rates - WSJ.com
At the height of the boom years, many owners of office buildings, hotels, shopping malls and other commercial real estate financed their properties using five-year mortgages, most of which are set to mature next year.
But lenders are warning property owners that refinancing won't be automatic, and the low mortgage rates in the headlines probably won't apply to them anymore. If properties are underwater, lenders are requiring owners to put in additional cash. In other cases, lenders will offer to refinance, but at substantially higher interest rates.
Analysts say the hard line that lenders are taking could be especially harsh on adjustable-rate, or floating-rate, loans, where the difference between the old rate and the new rate will be greatest. Some ARMs, which followed interest-rate benchmarks in recent years, are currently under 1%. The rates are tied to the international interest-rate benchmark—the London interbank offered rate, or Libor, and are often reset monthly or quarterly.
Read more...Commercial Property Owners Facing Higher Rates - WSJ.com
Top 10 Strategies for Maximizing Lease Renewals, Retention, Leasing And Concessions, Marketing via Multifamily Executive Magazine
Despite indications that the number of apartment renters electing to move out at the conclusion of their lease is easing up, multifamily firms are nevertheless working harder than ever to lock in renewals, due in large part to downward pressure on rents for new leases and weaker occupancies. That doesn’t mean it’s time to throw in the towel. Instead, seasoned property management vets from progressive multifamily firms say there are still plenty of tools left in the strategy box to keep loyal residents happy and coming back for more at the conclusion of their lease.
Here are the top 10 tactics suggested by a panel of industry experts who are revving up their renewals.
Read more...Top 10 Strategies for Maximizing Lease Renewals - Retention, Leasing And Concessions, Marketing - Multifamily Executive Magazine
Here are the top 10 tactics suggested by a panel of industry experts who are revving up their renewals.
Read more...Top 10 Strategies for Maximizing Lease Renewals - Retention, Leasing And Concessions, Marketing - Multifamily Executive Magazine
MHN Interview: Why the U.S. Multifamily Market Appeals to International Companies
Now is a good time for international real estate companies to jump into the U.S. multifamily market. Because of the housing crisis, multifamily is booming, making it attractive for foreign investors. However, the Jaymor Group, and Ontario-based real estate company has been involved in the U.S. real estate market in Florida, Texas and North Carolina for over 20 years, long before international companies started jumping on the bandwagon. MHN talks to Fabrizio Lucchese, CEO and president, Jaymor Group, about the benefits of the U.S. multifamily market and why these new international companies don’t scare him.
Read more...MHN Interview: Why the U.S. Multifamily Market Appeals to International Companies
Read more...MHN Interview: Why the U.S. Multifamily Market Appeals to International Companies
How Long Can Low LIBOR, 10-Year Treasury Last? - Interest Rates via Multifamily Executive Magazine
The yield on the 10-year Treasury has been so low for so long that you can excuse borrowers for being lulled into complacency.
For the past 18 months, multifamily borrowers have seen some of the lowest fixed rates in history, giddily locking in long-term rates that begin with a 4. And floating rate borrowers are all smiles as well—the one-month LIBOR has been less than 36 basis points (bps) since May 2009.
But how long can this dynamic last?
“What goes down must come up,” quips David Brickman, who leads the multifamily division for McLean, Va.-based Freddie Mac. “Nobody could’ve guessed how steeply rates would fall, and you have to run that in reverse. Just when everybody believes we’re in for a long run, that’s when things get shaken up.”
The government-sponsored enterprises (GSEs) have been the multifamily industry’s stimulus plan, and the resulting competitive landscape, combined with the Federal Reserve’s Quantitative Easing program, means that these low rates will continue in the near term.
Read more...How Long Can Low LIBOR, 10-Year Treasury Last? - Interest Rates - Multifamily Executive Magazine
For the past 18 months, multifamily borrowers have seen some of the lowest fixed rates in history, giddily locking in long-term rates that begin with a 4. And floating rate borrowers are all smiles as well—the one-month LIBOR has been less than 36 basis points (bps) since May 2009.
But how long can this dynamic last?
“What goes down must come up,” quips David Brickman, who leads the multifamily division for McLean, Va.-based Freddie Mac. “Nobody could’ve guessed how steeply rates would fall, and you have to run that in reverse. Just when everybody believes we’re in for a long run, that’s when things get shaken up.”
The government-sponsored enterprises (GSEs) have been the multifamily industry’s stimulus plan, and the resulting competitive landscape, combined with the Federal Reserve’s Quantitative Easing program, means that these low rates will continue in the near term.
Read more...How Long Can Low LIBOR, 10-Year Treasury Last? - Interest Rates - Multifamily Executive Magazine
Top 4 Multifamily Business Strategies for 2012 via Multifamily Executive Magazine
Thanks to strong fundamentals and an unbeatable demographic outlook, the apartment industry is poised to enter a period of historic growth through 2014. As a result, progressive operators are looking ahead, setting their dials, and trying to determine which of four strategic channels—IPOs, development, acquisition funds, or value-add—they will immediately tune in to.
1. Make a Public Offering
2. Prime the Pipeline
3. Issue a Call for Cash
4. Renovate and Operate
Read more...Top 4 Multifamily Business Strategies for 2012 - Business, Development, Equity - Multifamily Executive Magazine
1. Make a Public Offering
2. Prime the Pipeline
3. Issue a Call for Cash
4. Renovate and Operate
Read more...Top 4 Multifamily Business Strategies for 2012 - Business, Development, Equity - Multifamily Executive Magazine
Trepp expects banks to face stronger headwinds in 2012 via HousingWire
U.S. banks weathered huge storms in the past few years, but bigger risks lie ahead as benefits from releases on loan loss reserves give way to a market environment where banks are forced to fight for new revenue and maintain profitability, Trepp said in its 2012 banking outlook report.
"Banks will earn less, putting 2012 a bit behind 2003 in terms of overall industry profitability," said the commercial real estate data analytics firm, which "does not expect 2012 to be a repeat of 2008, but there will be more disappointments than pleasant surprises in the new year."
Trepp said interest margins compressed in 2011, but the damage is mostly modest. Any benefit banks receive from loan loss reserve releases, which are the difference between loss provisions and charge-offs, will be gone by the middle of the year and account for 5% to 10% of net income next year.
Banks will rush to try and pick up new revenue by rolling out new fees, requiring higher minimum balances on deposit accounts and providing more incentives for customers to use their credit cards, Trepp said.
Read more...Trepp expects banks to face stronger headwinds in 2012 via HousingWire
"Banks will earn less, putting 2012 a bit behind 2003 in terms of overall industry profitability," said the commercial real estate data analytics firm, which "does not expect 2012 to be a repeat of 2008, but there will be more disappointments than pleasant surprises in the new year."
Trepp said interest margins compressed in 2011, but the damage is mostly modest. Any benefit banks receive from loan loss reserve releases, which are the difference between loss provisions and charge-offs, will be gone by the middle of the year and account for 5% to 10% of net income next year.
Banks will rush to try and pick up new revenue by rolling out new fees, requiring higher minimum balances on deposit accounts and providing more incentives for customers to use their credit cards, Trepp said.
Read more...Trepp expects banks to face stronger headwinds in 2012 via HousingWire
America becoming a nation of renters via MSNBC.com
Brian Keith is busier than ever as the architecture firm he works for rushes to wrap up work on a 300-unit apartment complex in Dallas.
The project is one of dozens the firm, JHP Architecture, has on its hands -- a surge of business driven by a rise in demand in the United States for rental properties.
The increased demand has forced JHP to expand, and it expects to keep hiring at least through the first quarter.
"We're seeing overall work come back and there's a backlog of contracts to go through," said Keith, director of urban design and planning at JHP. "There's strong interest in multi-family units and plenty of pent-up demand."
With U.S. unemployment at a lofty 8.6 percent, home foreclosures rising and property prices under pressure, more and more Americans have given up the dream of owning, opting instead to rent, a shift that is remaking the face of the U.S. housing industry.
The percentage of Americans who own their home dropped from a peak of 69.2 percent in late 2004 to a 13-year low of 65.9 percent in the second quarter. It edged up to 66.3 percent in the third quarter of this year.
On the flip side, the percentage of rental properties that are empty fell to 9.8 percent in the third quarter from 10.3 percent a year earlier.
Read more...America becoming a nation of renters via MSNBC.com
The project is one of dozens the firm, JHP Architecture, has on its hands -- a surge of business driven by a rise in demand in the United States for rental properties.
The increased demand has forced JHP to expand, and it expects to keep hiring at least through the first quarter.
"We're seeing overall work come back and there's a backlog of contracts to go through," said Keith, director of urban design and planning at JHP. "There's strong interest in multi-family units and plenty of pent-up demand."
With U.S. unemployment at a lofty 8.6 percent, home foreclosures rising and property prices under pressure, more and more Americans have given up the dream of owning, opting instead to rent, a shift that is remaking the face of the U.S. housing industry.
The percentage of Americans who own their home dropped from a peak of 69.2 percent in late 2004 to a 13-year low of 65.9 percent in the second quarter. It edged up to 66.3 percent in the third quarter of this year.
On the flip side, the percentage of rental properties that are empty fell to 9.8 percent in the third quarter from 10.3 percent a year earlier.
Read more...America becoming a nation of renters via MSNBC.com
Multifamily’s Future in 2012 via MHNonline
Thanks to a favorable combination of limited supply and demand edging up, market conditions for the multifamily sector are likely to be favorable in 2012. As well, the tepid market for home buying is likely to continue into 2012, further boosting rentals.
Although multifamily market observers expect that the economy will merely plod along in 2012, not improving much from 2011 levels, they still expect somewhat higher vacancies and effective rents.
This sanguine outlook is based on the expectation that the U.S. economy does not dip back into a recession and that there is no significant spillover from the European debt crisis.
Read more...Multifamily’s Future in 2012 Via MHNonline
Although multifamily market observers expect that the economy will merely plod along in 2012, not improving much from 2011 levels, they still expect somewhat higher vacancies and effective rents.
This sanguine outlook is based on the expectation that the U.S. economy does not dip back into a recession and that there is no significant spillover from the European debt crisis.
Read more...Multifamily’s Future in 2012 Via MHNonline
Freddie Readies ARM For Value-Add Deals - Debt - Multifamily Executive Magazine
Value-add deals are expected to gather momentum next year as financiers get more comfortable with—though stopping short of trending rents—the prospect of rent growth.
The value-add trend started in the best markets and with the largest developers over the past year. But it’s only a matter of time before secondary markets and middle-market developers can freely access the capital to renovate.
For lenders, it’s still a cautious enterprise—the per-unit dollar amounts being offered are relatively modest. In many ways, curing deferred maintenance has become the new value-add. But as fundamentals continue to improve, the prospect of healing an underperforming property is an increasingly viable play.
Read more...Freddie Readies ARM For Value-Add Deals - Debt - Multifamily Executive Magazine
The value-add trend started in the best markets and with the largest developers over the past year. But it’s only a matter of time before secondary markets and middle-market developers can freely access the capital to renovate.
For lenders, it’s still a cautious enterprise—the per-unit dollar amounts being offered are relatively modest. In many ways, curing deferred maintenance has become the new value-add. But as fundamentals continue to improve, the prospect of healing an underperforming property is an increasingly viable play.
Read more...Freddie Readies ARM For Value-Add Deals - Debt - Multifamily Executive Magazine
Why All Is Not (Uniformly) Rosy in the Apartment Sector - NREIonline.com
Multifamily properties have outperformed other commercial property types in the past two years, benefiting directly from the continuing travails of the for-sale housing market.
Occupancies and rents have improved consistently, in seeming defiance of slow economic growth and the lethargic pace of job creation. Signs of weakness have begun to appear, however, for certain segments of the apartment market, suggesting that even the best performing property type in real estate nowadays is still subject to fundamental economic rules.
Unlike the office and retail sectors, which sport vacancies unseen in two decades, the apartment sector has bounced back impressively. After hitting a 30-year high of 8.0 percent at the end of 2009, national vacancies have plummeted to 5.6 percent by the third quarter of 2011, and are expected to dip below 5 percent by early 2012. Asking and effective rents have both posted gains on a consistent quarterly basis since the start of 2010.
Read more...Why All Is Not (Uniformly) Rosy in the Apartment Sector
Occupancies and rents have improved consistently, in seeming defiance of slow economic growth and the lethargic pace of job creation. Signs of weakness have begun to appear, however, for certain segments of the apartment market, suggesting that even the best performing property type in real estate nowadays is still subject to fundamental economic rules.
Unlike the office and retail sectors, which sport vacancies unseen in two decades, the apartment sector has bounced back impressively. After hitting a 30-year high of 8.0 percent at the end of 2009, national vacancies have plummeted to 5.6 percent by the third quarter of 2011, and are expected to dip below 5 percent by early 2012. Asking and effective rents have both posted gains on a consistent quarterly basis since the start of 2010.
Read more...Why All Is Not (Uniformly) Rosy in the Apartment Sector
Calculated Risk: Existing Home Sales Revisions
The NAR released the benchmark revisions today. From the NAR:
Also released today are benchmark revisions to historic existing-home sales. The 2010 benchmark shows there were 4,190,000 existing-home sales last year, a 14.6 percent revision from the previously projected 4,908,000 sales. For the total period of 2007 through 2010, sales and inventory were downwardly revised by 14.3 percent. The revisions are expected to have a minor impact on future revisions to Gross Domestic Product.
The impact on GDP is from a reduction in the estimate for Brokers' commissions on sale of structures. That reduction will be minor.
Here are a couple of graphs to illustrate the revisions:
Read more...Calculated Risk: Existing Home Sales Revisions
Also released today are benchmark revisions to historic existing-home sales. The 2010 benchmark shows there were 4,190,000 existing-home sales last year, a 14.6 percent revision from the previously projected 4,908,000 sales. For the total period of 2007 through 2010, sales and inventory were downwardly revised by 14.3 percent. The revisions are expected to have a minor impact on future revisions to Gross Domestic Product.
The impact on GDP is from a reduction in the estimate for Brokers' commissions on sale of structures. That reduction will be minor.
Here are a couple of graphs to illustrate the revisions:
Read more...Calculated Risk: Existing Home Sales Revisions
Distressed commercial real estate in retreat? - The Washington Post
Distressed commercial real estate in the United States — including properties in default, foreclosure or taken back by lenders — totaled $171.6 billion in October 2011. That is a dip from the recent past.
The level of distress began to plateau when it reached $191.5 billion in March 2010, and it has stayed in the $175 billion to $190 billion range until now, according to data from Real Capital Analytics.
We think those levels should continue to come down in a meaningful way in 2012 and beyond, assuming interest rates cooperate and economic expansion accelerates. The real test of the distress plateau is likely to be seen in 2012 and 2013, when about $300 billion in loans comes due each year.
Read more...Distressed commercial real estate in retreat? - The Washington Post
The level of distress began to plateau when it reached $191.5 billion in March 2010, and it has stayed in the $175 billion to $190 billion range until now, according to data from Real Capital Analytics.
We think those levels should continue to come down in a meaningful way in 2012 and beyond, assuming interest rates cooperate and economic expansion accelerates. The real test of the distress plateau is likely to be seen in 2012 and 2013, when about $300 billion in loans comes due each year.
Read more...Distressed commercial real estate in retreat? - The Washington Post
CIRE Magazine’s Top Articles of 2011 | CCIM Institute
During the past year, Commercial Investment Real Estate magazine highlighted property market recovery trends, shared strategies for marketing your business and increasing your bottom line, and provided insight on how to use today’s technology to your advantage. Check out the articles readers found most valuable in 2011:
Read more...CIRE Magazine’s Top Articles of 2011 | CCIM Institute
Read more...CIRE Magazine’s Top Articles of 2011 | CCIM Institute
GlobeSt.com - Property Condition Reports: Spend a Little to Save a Lot - The Science of Real Estate Article
What would you pay to uncover hidden problems at a potential investment property? Would you pay $10,000 to discover a $500,000+ problem? Real estate investors can find out crucial information about an asset by having a Property Condition Report done. A Property Condition Report, akin to a commercial building inspection, is an evaluation of all improvements at a property including the building and building systems.
Property Condition Report Scope of Work
The Property Condition Report scope of work can vary significantly depending on who’s ordering it – a lender may not need the level of detail that a buyer would require. “Debt-style” PCRs normally follow the ASTM E2018 standard scope of work, which includes a walk-through inspection of the asset by an experienced commercial building inspector, architect or engineer, interviews of relevant personnel, and review of available records. The data is compiled and used to create two important schedules: 1) a schedule of Immediate Repairs necessary due to failed systems, systems being past their useful life, and/or building code violations; and 2) a Replacement Reserve schedule that will estimate the remaining useful life of major systems and provide an estimate of the replacement cost at that time in the future.
Read more...GlobeSt.com - Property Condition Reports: Spend a Little to Save a Lot - The Science of Real Estate Article
Property Condition Report Scope of Work
The Property Condition Report scope of work can vary significantly depending on who’s ordering it – a lender may not need the level of detail that a buyer would require. “Debt-style” PCRs normally follow the ASTM E2018 standard scope of work, which includes a walk-through inspection of the asset by an experienced commercial building inspector, architect or engineer, interviews of relevant personnel, and review of available records. The data is compiled and used to create two important schedules: 1) a schedule of Immediate Repairs necessary due to failed systems, systems being past their useful life, and/or building code violations; and 2) a Replacement Reserve schedule that will estimate the remaining useful life of major systems and provide an estimate of the replacement cost at that time in the future.
Read more...GlobeSt.com - Property Condition Reports: Spend a Little to Save a Lot - The Science of Real Estate Article
Calculated Risk: Private Investment and the Business Cycle
Discussions of the business cycle frequently focus on consumer spending (PCE: Personal consumption expenditures), but one key is to watch private domestic investment. Even though private investment usually only accounts for about 15% of GDP, private investment experiences significantly larger swings than PCE during the business cycle and has an outsized impact on GDP. Note: currently private investment is just over 12% of GDP - much lower than normal.
The first graph shows the real annualized change in GDP and private investment since 1960 (this is a 3 quarter centered average to smooth the graph).
GDP has fairly small annualized changes compared to the huge swings in investment, especially during and just following a recession. This is why investment is one of the keys to the business cycle.
Read more...Calculated Risk: Private Investment and the Business Cycle
The first graph shows the real annualized change in GDP and private investment since 1960 (this is a 3 quarter centered average to smooth the graph).
GDP has fairly small annualized changes compared to the huge swings in investment, especially during and just following a recession. This is why investment is one of the keys to the business cycle.
Read more...Calculated Risk: Private Investment and the Business Cycle
Monday, December 26, 2011
The Best of Property Management Insider from 2011
The end of a year is often a time for reflection, and 2011 is no exception. I would be remiss not to thank you, the multifamily professionals, owners, and operators, for the support you have given Property Management Insider this past year.
From everybody involved with Property Management Insider, happy holidays and happy New Year.
Here’s a look back at some of the most-read articles from 2011. Do you have a favorite from the past year? Share them in the comments below.
Read more...The Best of Property Management Insider from 2011
From everybody involved with Property Management Insider, happy holidays and happy New Year.
Here’s a look back at some of the most-read articles from 2011. Do you have a favorite from the past year? Share them in the comments below.
Read more...The Best of Property Management Insider from 2011
Friday, December 23, 2011
Top 10 Commercial Real Estate Trends for 2012
Despite some downward-trending market indicators, the forecast for the commercial real estate sector is decidedly more mixed for the coming year, depending on the market sector, according to Deloitte.
Read more...Top 10 Commercial Real Estate Trends for 2012
Read more...Top 10 Commercial Real Estate Trends for 2012
DFW commercial foreclosure postings fall for first time in six years | Star-Telegram
Foreclosure postings on commercial properties in North Texas fell for the first time since 2005 and may have peaked, according to a year-end analysis by Addison-based Foreclosure Listing Service.
Commercial real estate includes office buildings, retail space, industrial facilities and apartments, along with land and miscellaneous buildings.
North Texas' four largest counties had 2,860 filings, down 14 percent from 3,313 in 2010. That number includes filings for foreclosure auctions through December, which has already been held.It's the first time in six years that commercial filings are down, said George Roddy, president of Foreclosure Listing Service. "Notices during the previous year ... appear to have been the peak, at least so far," Roddy said.
Read more...DFW commercial foreclosure postings fall for first time in six years | Star-Telegram
Commercial real estate includes office buildings, retail space, industrial facilities and apartments, along with land and miscellaneous buildings.
North Texas' four largest counties had 2,860 filings, down 14 percent from 3,313 in 2010. That number includes filings for foreclosure auctions through December, which has already been held.It's the first time in six years that commercial filings are down, said George Roddy, president of Foreclosure Listing Service. "Notices during the previous year ... appear to have been the peak, at least so far," Roddy said.
Read more...DFW commercial foreclosure postings fall for first time in six years | Star-Telegram
10 Trends in U.S. Housing in 2011 and What to Look for in 2012 - International Business Times
As the end of 2011 approaches, the housing market is another year removed from the subprime mortgage meltdown. But the legacy of the crash remains, as homeowners, lenders, regulators and brokers alike continue to deal with falling home prices, a glut of unprocessed foreclosures and an uncertain economy. There have been recent signs that the industry is rebounding, but many concerns remain.
Here's a look back at housing trends in 2011 and what it could mean for the outlook in 2012.
Read more...10 Trends in U.S. Housing in 2011 and What to Look for in 2012 - International Business Times
Here's a look back at housing trends in 2011 and what it could mean for the outlook in 2012.
Read more...10 Trends in U.S. Housing in 2011 and What to Look for in 2012 - International Business Times
GlobeSt.com - Finance Quarterly--2012: The Year of Maybe - Daily News Article
Last year at this time, Prudential Mortgage Capital Co., had what it thought was a reasonable allocation to real estate of $5.5 billion. Halfway through the year, the company realized it had been too conservative and promptly readjusted. “Though there was and still is some degree of volatility, we found commercial mortgages attractively priced, compared to other investments and asset classes,” says Dave Twardock, president of PMCC.
The upshot? Twardock expects to close 2011 having made between $6 billion and $6.5 billion in commercial real estate loans.
As the life insurer puts the finishing touches on its allocations for 2012, PMCC is not making the same miscalculation it did last year, he says. “Spreads are still very attractive relative to other fixed-income investments,” he notes, “so we’ll be investing about the same amount as 2011, which for us has been a very active year.”
Yet as much as Prudential may be entering 2012 on a positive note, it doesn’t have blinders on. Twardock is fully aware that the market next year may not be ripe for the level of investment he’s planning, and that Prudential could be making a completely different miscalculation—by betting too heavily in favor of commercial real estate. If so, it will redial allocations yet again.
Read more...GlobeSt.com - Finance Quarterly--2012: The Year of Maybe - Daily News Article
The upshot? Twardock expects to close 2011 having made between $6 billion and $6.5 billion in commercial real estate loans.
As the life insurer puts the finishing touches on its allocations for 2012, PMCC is not making the same miscalculation it did last year, he says. “Spreads are still very attractive relative to other fixed-income investments,” he notes, “so we’ll be investing about the same amount as 2011, which for us has been a very active year.”
Yet as much as Prudential may be entering 2012 on a positive note, it doesn’t have blinders on. Twardock is fully aware that the market next year may not be ripe for the level of investment he’s planning, and that Prudential could be making a completely different miscalculation—by betting too heavily in favor of commercial real estate. If so, it will redial allocations yet again.
Read more...GlobeSt.com - Finance Quarterly--2012: The Year of Maybe - Daily News Article
GlobeSt.com - Multifamily Quarterly: Virtually Unstoppable - Daily News Article
Less than a decade ago, the American Dream was home ownership. Then came the subprime collapse, followed by the Great Recession and, subsequently, plunging home values and tightened credit standards. Three years after the great credit freeze of 2008, single-family home ownership has sunk to between 64% and 66%, and the American Dream has turned into a nightmare for many.
Enter multifamily. During 2011, the abundance of interested buyers of multifamily product was outmatched only by the abundance of renters. Peter Muoio, principal with Apartment Realty Advisors’ ARA Research in New York City, tells it by the numbers. Vacancies in 2011 dropped 200 basis points year-over-year, while effective rents ended up well above pre-recession levels. Along those lines, homeownership has declined approximately 200 basis points, and according to Muoio, every 100-basis-point change in the ownership rate accounts for “about 1.2 million households that are shifting where they’re living.”
Bank of America Merrill Lynch’s October 2011 report demonstrated similar positive numbers, noting that revenues per available unit were up 6.3% year-over-year in the top 20 metropolitan US markets. The report also pointed out that October occupancy had increased 60 bps over the year, as had effective rental rates, which were up 5.6%.
Read more...GlobeSt.com - Multifamily Quarterly: Virtually Unstoppable - Daily News Article
Enter multifamily. During 2011, the abundance of interested buyers of multifamily product was outmatched only by the abundance of renters. Peter Muoio, principal with Apartment Realty Advisors’ ARA Research in New York City, tells it by the numbers. Vacancies in 2011 dropped 200 basis points year-over-year, while effective rents ended up well above pre-recession levels. Along those lines, homeownership has declined approximately 200 basis points, and according to Muoio, every 100-basis-point change in the ownership rate accounts for “about 1.2 million households that are shifting where they’re living.”
Bank of America Merrill Lynch’s October 2011 report demonstrated similar positive numbers, noting that revenues per available unit were up 6.3% year-over-year in the top 20 metropolitan US markets. The report also pointed out that October occupancy had increased 60 bps over the year, as had effective rental rates, which were up 5.6%.
Read more...GlobeSt.com - Multifamily Quarterly: Virtually Unstoppable - Daily News Article
Thursday, December 22, 2011
Commercial real estate loans improve in 2011, but face headwinds « HousingWire
Delinquency rates on commercial real estate mortgages improved across the board in 2011, but this segment is likely to remain challenged by loan write-offs and a contraction in liquidity, Trepp analytics said Thursday.
Trepp said banks saw significant improvements in CRE loan delinquencies this past year, but predicts delinquency rates will stay at distressed levels and charge-offs will strike again in 2012, draining loss reserves at banks and limiting liquidity.
The multifamily mortgage segment is performing the best with the sector's delinquency rate falling to 3.6%. Trepp said this sector, more than any other, is benefiting from favorable rent and occupancy rates as well as strong investor demand.
Read more...Commercial real estate loans improve in 2011, but face headwinds « HousingWire
Trepp said banks saw significant improvements in CRE loan delinquencies this past year, but predicts delinquency rates will stay at distressed levels and charge-offs will strike again in 2012, draining loss reserves at banks and limiting liquidity.
The multifamily mortgage segment is performing the best with the sector's delinquency rate falling to 3.6%. Trepp said this sector, more than any other, is benefiting from favorable rent and occupancy rates as well as strong investor demand.
Read more...Commercial real estate loans improve in 2011, but face headwinds « HousingWire
Read the Fine Print: Not All Apartment Renter’s Insurance Policies are Created Equal | Property Management Insider
"I was reminded recently of the story (probably an urban legend) about a Charlotte-based lawyer who bought an expensive box of 24 cigars and insured them against some standard perils – water, explosion, and fire. After about a month, the lawyer filed a claim to the insurance company because the cigars were lost in “a series of small fires.” The claims adjuster denied the claim after correctly determining that the man smoked all the cigars himself. After a court battle, the judge awarded $15,000 to the man because the insurance provider never clearly defined the fire peril. The insurance company got even in the end. The lawyer was arrested and sentenced to 24 months in jail and a $24,000 fine for 24 counts of arson and insurance fraud.
While not quite as entertaining, the multifamily industry is replete with odd but true apartment renters’ insurance claims."
Read more...Read the Fine Print: Not All Apartment Renter’s Insurance Policies are Created Equal | Property Management Insider
While not quite as entertaining, the multifamily industry is replete with odd but true apartment renters’ insurance claims."
Read more...Read the Fine Print: Not All Apartment Renter’s Insurance Policies are Created Equal | Property Management Insider
CPExecutive - Guest Column: Commercial Real Estate, 2012
Making sense of the extraordinary commercial real estate challenges that we face in today’s troubled economic times requires an understanding of where this market has been and where it is going. But when was the last time the Federal Reserve Bank announced in advance that it would keep interest rates at an historic low for at least two years? In a word, never.
In 2005, as the “perfect storm” was brewing that eventually decimated the residential real estate market, we looked back just 10 short years to the closure of the Resolution Trust Corp., saying, “It can’t happen again.” Today, commercial real estate seems positioned to follow the fate of the residential asset class as the economy teeters and loan maturities loom against a backdrop of aggressive property purchases.
Read more...CPExecutive - Guest Column: Commercial Real Estate, 2012
In 2005, as the “perfect storm” was brewing that eventually decimated the residential real estate market, we looked back just 10 short years to the closure of the Resolution Trust Corp., saying, “It can’t happen again.” Today, commercial real estate seems positioned to follow the fate of the residential asset class as the economy teeters and loan maturities loom against a backdrop of aggressive property purchases.
Read more...CPExecutive - Guest Column: Commercial Real Estate, 2012
MortgageOrb: - CoreLogic: Shadow Inventory At January 2009 Levels
For every two homes available for sale, there is one home in the shadow inventory, new data shows.
According to CoreLogic, the residential shadow inventory totaled 1.6 million units in October, representing a supply of five months. Though down from 1.9 million units a year before, October's shadow inventory was approximately the same level as reported in January 2009.
The shadow inventory represents about half of the 3 million properties that are seriously delinquent, in foreclosure or in real estate owned (REO) status, CoreLogic explains. Of the 1.6 million properties in the shadow inventory, 770,000 units (2.5 months’ supply) are seriously delinquent, 430,000 (1.4 months’ supply) are in some stage of foreclosure and 370,000 (1.2 months’ supply) are already in REO.
“The shadow inventory overhang is a large impediment to the improvement in the housing market because it puts downward pressure on home prices, which hurts home sales and building activity while encouraging strategic defaults,” says Mark Fleming, chief economist at CoreLogic.
Read more...MortgageOrb: Content / Mortgage Servicing / CoreLogic: Shadow Inventory At January 2009 Levels
According to CoreLogic, the residential shadow inventory totaled 1.6 million units in October, representing a supply of five months. Though down from 1.9 million units a year before, October's shadow inventory was approximately the same level as reported in January 2009.
The shadow inventory represents about half of the 3 million properties that are seriously delinquent, in foreclosure or in real estate owned (REO) status, CoreLogic explains. Of the 1.6 million properties in the shadow inventory, 770,000 units (2.5 months’ supply) are seriously delinquent, 430,000 (1.4 months’ supply) are in some stage of foreclosure and 370,000 (1.2 months’ supply) are already in REO.
“The shadow inventory overhang is a large impediment to the improvement in the housing market because it puts downward pressure on home prices, which hurts home sales and building activity while encouraging strategic defaults,” says Mark Fleming, chief economist at CoreLogic.
Read more...MortgageOrb: Content / Mortgage Servicing / CoreLogic: Shadow Inventory At January 2009 Levels
Do You Know Who Your Property Management Vendors Really Are? - Property Management Insider
In today’s high-risk business environment, small mistakes can have big consequences. For apartment property owners and managers, hiring a company to provide apartment supplies and services without doing a little background work can result in lost time and money, and even reputational damage.
According to industry reports, a significant number of vendors or contractors haven’t been doing a good job of housekeeping. More than 45 percent have experienced a lapse in general liability coverage in the past two years; 31 percent have had a lapse in auto liability coverage in the past two years; and 11 percent have relevant derogatory information in their file.
A vendor without insurance can be a walking time bomb. For example, if a painter without worker’s compensation insurance falls off of a ladder and is injured while working on property, they can easily seek damages against the property. The management company’s worker’s compensation carrier is likely to settle, which could increase the property’s insurance premium. That scenario grows exponentially worse if a resident is hurt by the fall and seeks damages.
Read more...Do You Know Who Your Property Management Vendors Really Are? - Property Management Insider
According to industry reports, a significant number of vendors or contractors haven’t been doing a good job of housekeeping. More than 45 percent have experienced a lapse in general liability coverage in the past two years; 31 percent have had a lapse in auto liability coverage in the past two years; and 11 percent have relevant derogatory information in their file.
A vendor without insurance can be a walking time bomb. For example, if a painter without worker’s compensation insurance falls off of a ladder and is injured while working on property, they can easily seek damages against the property. The management company’s worker’s compensation carrier is likely to settle, which could increase the property’s insurance premium. That scenario grows exponentially worse if a resident is hurt by the fall and seeks damages.
Read more...Do You Know Who Your Property Management Vendors Really Are? - Property Management Insider
Real Estate Weekly - $11 billion down the drain
Nearly $11 billion dollars went down the drain during the hey day of the mid-2000s real estate boom as prospecting developers delved into an easy flow of cash to finance projects that were based more on bright ideas than basic fundamentals.
A total of 3,196 commercial mortgage-backed securities (CMBS) conduit loans totaling nearly $24.6 billion have resolved with losses since January 2010, according to the latest data from Trepp’s November Loss Analysis report.
The liquidations – from loans made in 1996 through 2008 – resulted in nearly $10.7 billion in losses, with an average loss severity of 43.48 percent.
Read more...Real Estate Weekly » Blog Archive » $11 billion down the drain
A total of 3,196 commercial mortgage-backed securities (CMBS) conduit loans totaling nearly $24.6 billion have resolved with losses since January 2010, according to the latest data from Trepp’s November Loss Analysis report.
The liquidations – from loans made in 1996 through 2008 – resulted in nearly $10.7 billion in losses, with an average loss severity of 43.48 percent.
Read more...Real Estate Weekly » Blog Archive » $11 billion down the drain
Apt. Construction Lifts Housing Market, But Don't Call It a Building Boom (Yet) - CoStar Group
A surge in new multifamily construction in November resulted in the strongest month for U.S. residential builders since April 2010, with a number of large apartment projects breaking ground over the last two months.
While the increasing number of new apartment units breaking ground is picking up momentum, especially in the top coastal markets, the construction activity hardly qualifies as a boom as measured by either peak levels or historical averages for new construction starts.
That said, apartments remain the only major CRE product type showing demand growth justifying new supply at the moment, and first-movers are hoping to capitalize on the demand opportunity before the project pipeline fills up again in selected markets.
Read more...Apt. Construction Lifts Housing Market, But Don't Call It a Building Boom (Yet) - CoStar Group:
'via Blog this'
While the increasing number of new apartment units breaking ground is picking up momentum, especially in the top coastal markets, the construction activity hardly qualifies as a boom as measured by either peak levels or historical averages for new construction starts.
That said, apartments remain the only major CRE product type showing demand growth justifying new supply at the moment, and first-movers are hoping to capitalize on the demand opportunity before the project pipeline fills up again in selected markets.
Read more...Apt. Construction Lifts Housing Market, But Don't Call It a Building Boom (Yet) - CoStar Group:
'via Blog this'
Prospects Dim for Take-Out Financing on 2012 Loan Maturities - CoStar Group
Next year could be pivotal for CMBS credit performance as a huge wave of loans is scheduled to mature in 2012. The timing is such that, given the current constrained capital markets, it could mean a huge wave of opportunities for distressed asset investors.
Over the next 12 months, CoStar is expecting $100 billion in loans pooled in commercial mortgage backed securities to mature. Of that amount, $70 billion is coming due for the first time, and another $30 billion in loans is delinquent but rolling on a monthly basis past their maturity date.
"With scheduled maturities of $100 billion in 2012 at a total average loan-to-value of 94.1%, we can expect more modification/liquidation decisions made by servicers," said Pooja Sharma, senior debt analyst for CoStar Group. "As the cycle progresses, we expect more of these loans to be resolved via liquidations or recapitalization modifications. So distress investors should continue to keep their eye on the ball; opportunities will increase."
Read more...Prospects Dim for Take-Out Financing on 2012 Loan Maturities - CoStar Group
Over the next 12 months, CoStar is expecting $100 billion in loans pooled in commercial mortgage backed securities to mature. Of that amount, $70 billion is coming due for the first time, and another $30 billion in loans is delinquent but rolling on a monthly basis past their maturity date.
"With scheduled maturities of $100 billion in 2012 at a total average loan-to-value of 94.1%, we can expect more modification/liquidation decisions made by servicers," said Pooja Sharma, senior debt analyst for CoStar Group. "As the cycle progresses, we expect more of these loans to be resolved via liquidations or recapitalization modifications. So distress investors should continue to keep their eye on the ball; opportunities will increase."
Read more...Prospects Dim for Take-Out Financing on 2012 Loan Maturities - CoStar Group
Wednesday, December 21, 2011
Houston Economic Update: Economic Activity Grew at a 9.6 Annualized Rate - FRB Dallas
The Houston metropolitan area business-cycle index produced by the Federal Reserve Bank of Dallas indicates economic activity in the city grew at an annualized rate of 9.6 percent in October, the highest reading since April. The ability of Houston and Texas to plug into the global economy has played a large part in the region’s
exceptional performance this year. The slow recovery in the U.S. continues, but risks in the euro area and some emerging economies continue to mount, clouding forecasts. However, Houston’s economic fundamentals seem strong, and the outlook remains positive.
Read more...Houston Economic Update: Economic Activity Grew at a 9.6 Annualized Rate - December 2011 - Economic Research - FRB Dallas
exceptional performance this year. The slow recovery in the U.S. continues, but risks in the euro area and some emerging economies continue to mount, clouding forecasts. However, Houston’s economic fundamentals seem strong, and the outlook remains positive.
Read more...Houston Economic Update: Economic Activity Grew at a 9.6 Annualized Rate - December 2011 - Economic Research - FRB Dallas
Texas Economic Growth Slows - December 2011 - Economic Research - FRB Dallas
Growth in the Texas economy slowed slightly in October due to continued declines in state and local government employment and the further weakening of exports. According to Federal Reserve Bank of Dallas surveys, the manufacturing sector continued to retrench in November, while private services picked up. The Dallas Fed’s Texas Leading Index increased in October but not enough to offset declines in previous months. Given the deceleration in job growth and recent overall weakness in the leading index, the job forecast for 2012 is for similar or slightly slower growth than the 2 percent in 2011.
Read more...Texas Economic Growth Slows - December 2011 - Economic Research - FRB Dallas
Read more...Texas Economic Growth Slows - December 2011 - Economic Research - FRB Dallas
Apartment Searchers on the Lookout for Greener Digs - Green Building, Amenities, Rent Trends - Multifamily Executive Magazine
When it comes to how sustainability and environmental friendliness play into renting apartments, maybe consumers are just a little bit bipolar. While cognizant of how green building features reduce energy usage and save the planet, renters have traditionally been wary of any price premiums associated with greener apartments and have shown little inclination to pay higher rents for sustainability features.
Just give them time, says Evan Matzen, sustainability manager for The Home Depot’s San Diego–based HD Supply Facilities Maintenance division. While showing a similar dichotomy in the perceived cost versus value of green apartments, new research conducted by San Diego–based Stratus Research for HD Supply suggests that budget-bruised consumers aren’t just looking for ways to cut costs—they’re beginning to recognize the savings in renting more energy-efficient apartments, too, even as they still seek to “do the right thing” by going green.
Read more...Apartment Searchers on the Lookout for Greener Digs - Green Building, Amenities, Rent Trends - Multifamily Executive Magazine
Just give them time, says Evan Matzen, sustainability manager for The Home Depot’s San Diego–based HD Supply Facilities Maintenance division. While showing a similar dichotomy in the perceived cost versus value of green apartments, new research conducted by San Diego–based Stratus Research for HD Supply suggests that budget-bruised consumers aren’t just looking for ways to cut costs—they’re beginning to recognize the savings in renting more energy-efficient apartments, too, even as they still seek to “do the right thing” by going green.
Read more...Apartment Searchers on the Lookout for Greener Digs - Green Building, Amenities, Rent Trends - Multifamily Executive Magazine
4Q Rent Numbers Soften, Outlook for 2012 Bullish - MultifamilyBiz.com
Axiometrics Inc., a provider of data and analysis on the apartment market, reports that national effective rent growth was lower than expected during November, with effective rents declining 0.47% between October and November. This marked the lowest sequential growth rate of any month for the past two years. Year-to-date effective rent growth now stands at 4.37%.
The national occupancy rate declined 17 basis points (bp), from 93.82% in October to 93.65% in November. As with effective rents, the decline appears to be typical for the season and compares favorably to the 14 bp decline in November of 2010. Overall, occupancy is up 54 basis points year-to-date.
“The national growth numbers, particularly on the rent side, were more negative than expected, but the fourth quarter should finish stronger than what we’ve typically seen over the past decade,” said Ron Johnsey, president of Axiometrics Inc. “Strong renter household formation and the declining homeownership rate will continue to benefit the apartment market, and will help contribute to our forecasted effective rent growth of 5.5% nationally for 2012.”
Read more...4Q Rent Numbers Soften, Outlook for 2012 Bullish - MultifamilyBiz.com
The national occupancy rate declined 17 basis points (bp), from 93.82% in October to 93.65% in November. As with effective rents, the decline appears to be typical for the season and compares favorably to the 14 bp decline in November of 2010. Overall, occupancy is up 54 basis points year-to-date.
“The national growth numbers, particularly on the rent side, were more negative than expected, but the fourth quarter should finish stronger than what we’ve typically seen over the past decade,” said Ron Johnsey, president of Axiometrics Inc. “Strong renter household formation and the declining homeownership rate will continue to benefit the apartment market, and will help contribute to our forecasted effective rent growth of 5.5% nationally for 2012.”
Read more...4Q Rent Numbers Soften, Outlook for 2012 Bullish - MultifamilyBiz.com
Tuesday, December 20, 2011
Cap Rate Disparity Between Primary, Secondary Markets Shrinks - Cap Rates - Multifamily Executive Magazine
For the past two years, the apartment transaction market has been very black and white—it seemed like either everybody wanted an asset, or nobody did.
The best properties saw furious bidding wars, as a flight to quality among institutions intensified. And anything in a lower asset class, or far off from the major metros, was met with a somewhat lukewarm reaction.
But the cap rate disparity between primary and secondary markets is beginning to flatten, a trend that’s likely to grow in 2012.
Investors are increasingly balking at the pricetags on Class A assets in the nation’s largest markets, taking a step back and re-assessing their options. The cap rate compression found in the cream of the crop is finally halting, and even beginning to turn the other way.
Read more...Cap Rate Disparity Between Primary, Secondary Markets Shrinks - Cap Rates - Multifamily Executive Magazine
The best properties saw furious bidding wars, as a flight to quality among institutions intensified. And anything in a lower asset class, or far off from the major metros, was met with a somewhat lukewarm reaction.
But the cap rate disparity between primary and secondary markets is beginning to flatten, a trend that’s likely to grow in 2012.
Investors are increasingly balking at the pricetags on Class A assets in the nation’s largest markets, taking a step back and re-assessing their options. The cap rate compression found in the cream of the crop is finally halting, and even beginning to turn the other way.
Read more...Cap Rate Disparity Between Primary, Secondary Markets Shrinks - Cap Rates - Multifamily Executive Magazine
Dr. Mark Dotzour - 12/07/2011 - YouTube
Dr. Mark G. Dotzour is the Chief Economist and Director of Research for the Real Estate Center at Texas A&M University in College Station, Texas. As Chief Economist, he is currently doing market research to monitor how global and national trends are likely to impact residential and commercial real estate markets.
Presentation at the 12/7/2011 Society of Commercial Realtors- Breakfast.
He doesn't hold back in his discussion of where we are and what is coming next year.
Watch Video...Dr. Mark Dotzour - 12/07/2011 - YouTube
Presentation at the 12/7/2011 Society of Commercial Realtors- Breakfast.
He doesn't hold back in his discussion of where we are and what is coming next year.
Watch Video...Dr. Mark Dotzour - 12/07/2011 - YouTube
Real-Estate Trends: Renting Gets Glamorous - The Daily Beast
There was a time, not so long ago, when recent college graduates dreamed of a mortgage on a starter home replete with granite-topped kitchen counters and a few bedrooms to grow into. Remember when “cocooning” was all the rage?
How quaint. With an uncertain economy, the rise of social networks that redefine “community,” and more people moving to take jobs where they can find them, renting rules the Millenial generation. The new dream? A no-frills apartment in one of the new “destination living” communities, lush with multiple swimming pools, chain restaurants, and volleyball courts.
For the first time since Herbert Hoover pushed homeownership as a way of staving off communism’s Red Menace, owning has lost its luster for the young. Since 2008, when the economy faltered, the percentage of young people who think that owning a home “is without a doubt always better than renting” has fallen by several percentage points, according to study (PDF) released in October by the Center for Behavioral Economics at the Federal Reserve of Boston.
Renting, it seems, once the province solely of the disenfranchised, has acquired a sort of cool respectability. Empty nesters got the same religion a couple of decades ago, when droves of them began cashing out of their high-maintenance houses, but the embrace of young professionals is a postrecession phenomenon. For developers, says the futurist Richard Florida, whose most recent book is The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity, “multifamily is the only game in town.”
Read more...Real-Estate Trends: Renting Gets Glamorous - The Daily Beast
How quaint. With an uncertain economy, the rise of social networks that redefine “community,” and more people moving to take jobs where they can find them, renting rules the Millenial generation. The new dream? A no-frills apartment in one of the new “destination living” communities, lush with multiple swimming pools, chain restaurants, and volleyball courts.
For the first time since Herbert Hoover pushed homeownership as a way of staving off communism’s Red Menace, owning has lost its luster for the young. Since 2008, when the economy faltered, the percentage of young people who think that owning a home “is without a doubt always better than renting” has fallen by several percentage points, according to study (PDF) released in October by the Center for Behavioral Economics at the Federal Reserve of Boston.
Renting, it seems, once the province solely of the disenfranchised, has acquired a sort of cool respectability. Empty nesters got the same religion a couple of decades ago, when droves of them began cashing out of their high-maintenance houses, but the embrace of young professionals is a postrecession phenomenon. For developers, says the futurist Richard Florida, whose most recent book is The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity, “multifamily is the only game in town.”
Read more...Real-Estate Trends: Renting Gets Glamorous - The Daily Beast
Calculated Risk: Multi-family Starts and Completions, Record Low Total Completions in 2011
Since it usually takes over a year on average to complete multi-family projects - and multi-family starts were at a record low last year - builders are on track to complete a record low, or near record low, number of multi-family units this year.
The following graph shows the lag between multi-family starts and completions using a 12 month rolling total.
The blue line is for multifamily starts and the red line is for multifamily completions. Since multifamily starts collapsed in 2009, completions collapsed in 2010.
The rolling 12 month total for starts (blue line) has been increasing all year. It now appears multi-family starts will be around 170 thousand units in 2011, up from 104 thousand units in 2010. That is a 60%+ increase in multi-family starts - but from a very low level.
Read more...Calculated Risk: Multi-family Starts and Completions, Record Low Total Completions in 2011
The following graph shows the lag between multi-family starts and completions using a 12 month rolling total.
The blue line is for multifamily starts and the red line is for multifamily completions. Since multifamily starts collapsed in 2009, completions collapsed in 2010.
The rolling 12 month total for starts (blue line) has been increasing all year. It now appears multi-family starts will be around 170 thousand units in 2011, up from 104 thousand units in 2010. That is a 60%+ increase in multi-family starts - but from a very low level.
Read more...Calculated Risk: Multi-family Starts and Completions, Record Low Total Completions in 2011
Dallas Fed President: Indecision Stymies Economy — Economy | The Texas Tribune
The engine is primed to rev up the national economy, but businesses aren’t putting the pedal to the metal, Richard W. Fisher, the president and CEO of the Dallas Federal Reserve, said today.
At an event hosted by the Austin Chamber of Commerce, Fisher issued his predictions about the direction of the national economy, saying businesses have the cash on their balance sheets to start creating jobs, but that a lack of capital investment and slow job creation are “the frightful consequences of indecision” on Capitol Hill.
“I don’t care if you’re a Republican or Democrat, they’ve screwed us,” he said, emphasizing both political parties are at fault for the rising costs of government, such as the unfunded liabilities of Medicare and Social Security.
Read more...Dallas Fed President: Indecision Stymies Economy — Economy | The Texas Tribune
At an event hosted by the Austin Chamber of Commerce, Fisher issued his predictions about the direction of the national economy, saying businesses have the cash on their balance sheets to start creating jobs, but that a lack of capital investment and slow job creation are “the frightful consequences of indecision” on Capitol Hill.
“I don’t care if you’re a Republican or Democrat, they’ve screwed us,” he said, emphasizing both political parties are at fault for the rising costs of government, such as the unfunded liabilities of Medicare and Social Security.
Read more...Dallas Fed President: Indecision Stymies Economy — Economy | The Texas Tribune
CMBS Refinancing Prospect Dims as 2007 Deals Mature, S&P Says - Businessweek
More than half of commercial mortgages packaged into bonds in 2007 and coming due next year may fail to refinance as maturities reach the most ever and lenders pull back, according to Standard & Poor’s.
About $55 billion of property loans sold as securities come due in 2012, with $19 billion of those originated in 2007, S&P analyst Larry Kay said in a report today. The five-year mortgages have a 50 percent to 60 percent likelihood of failure to refinance, the New York-based analyst said.
Next year will “usher in the first major wave of maturities from the 2007 vintage, which were issued during a frothy period at the peak of the market,” Kay said. “Retrenchment in the capital markets and among other lenders in the third quarter of 2011, which has continued into the current quarter, dims the refinancing prospects.”
Read more...CMBS Refinancing Prospect Dims as 2007 Deals Mature, S&P Says - Businessweek
About $55 billion of property loans sold as securities come due in 2012, with $19 billion of those originated in 2007, S&P analyst Larry Kay said in a report today. The five-year mortgages have a 50 percent to 60 percent likelihood of failure to refinance, the New York-based analyst said.
Next year will “usher in the first major wave of maturities from the 2007 vintage, which were issued during a frothy period at the peak of the market,” Kay said. “Retrenchment in the capital markets and among other lenders in the third quarter of 2011, which has continued into the current quarter, dims the refinancing prospects.”
Read more...CMBS Refinancing Prospect Dims as 2007 Deals Mature, S&P Says - Businessweek
New Codes Aim to Cut Energy Use - NYTimes.com
The international symbol for Texas’ energy-guzzling habit is a monster pickup truck — pulling another pickup truck. But homes and other buildings are also big offenders, accounting for roughly 40 percent of the state’s overall energy use.
The opportunity for savings — and to draw down some energy-related federal stimulus dollars — has spurred action. In January, Texas will adopt a building code that should cut the energy consumption of new single-family homes by more than 15 percent, according to the Energy Systems Laboratory at the Texas A&M University System. The state tightened codes for commercial and industrial buildings and other residential buildings in April.
Big Texas cities tend to jump out ahead of the statewide building codes, which have often lagged nationally. This month, the Houston City Council passed a measure requiring new homes to be about 5 percent more efficient than the forthcoming statewide code, an effort to cut down on homes’ energy use and burnish Houston’s green credentials. Over the next few years, Houston will consider more requirements that could put the city some 15 percent above the state code in terms of energy savings.
Read more...New Codes Aim to Cut Energy Use - NYTimes.com
The opportunity for savings — and to draw down some energy-related federal stimulus dollars — has spurred action. In January, Texas will adopt a building code that should cut the energy consumption of new single-family homes by more than 15 percent, according to the Energy Systems Laboratory at the Texas A&M University System. The state tightened codes for commercial and industrial buildings and other residential buildings in April.
Big Texas cities tend to jump out ahead of the statewide building codes, which have often lagged nationally. This month, the Houston City Council passed a measure requiring new homes to be about 5 percent more efficient than the forthcoming statewide code, an effort to cut down on homes’ energy use and burnish Houston’s green credentials. Over the next few years, Houston will consider more requirements that could put the city some 15 percent above the state code in terms of energy savings.
Read more...New Codes Aim to Cut Energy Use - NYTimes.com
GlobeSt.com - Does Anyone Care About Asbestos Anymore? - The Science of Real Estate Article
If you are a building owner, restaurant chain or retailer performing tenant improvements, renovations or demolition projects, you should care. Although the asbestos buzz may have fizzled out in the late 1980s, many building owners and retailers are under the impression that asbestos has been banned for years. Not true.
Asbestos is not just a notorious building material whose use peaked in the 1940s. In spite of its well-documented carcinogenic properties, asbestos is still alive and well today. The following commercial product categories can be manufactured, imported and sold in the U.S.: asbestos-cement corrugated sheet, asbestos-cement flat sheet, asbestos clothing, pipeline wrap, roofing felt, vinyl-asbestos floor tile, asbestos-cement shingle, millboard, asbestos-cement pipe, automatic transmission components, clutch facings, friction materials, disc brake pads, drum brake linings, brake blocks, gaskets, non-roofing coatings, and roof coatings. Much of the asbestos used in the U.S. is imported from Canada and Mexico. Many imported asbestos products may not be labeled “asbestos” but rather as “asbestos-cement”, “cellulose fiber-cement”, or “contains chrysotile fibers.”
Read more...GlobeSt.com - Does Anyone Care About Asbestos Anymore? - The Science of Real Estate Article
Asbestos is not just a notorious building material whose use peaked in the 1940s. In spite of its well-documented carcinogenic properties, asbestos is still alive and well today. The following commercial product categories can be manufactured, imported and sold in the U.S.: asbestos-cement corrugated sheet, asbestos-cement flat sheet, asbestos clothing, pipeline wrap, roofing felt, vinyl-asbestos floor tile, asbestos-cement shingle, millboard, asbestos-cement pipe, automatic transmission components, clutch facings, friction materials, disc brake pads, drum brake linings, brake blocks, gaskets, non-roofing coatings, and roof coatings. Much of the asbestos used in the U.S. is imported from Canada and Mexico. Many imported asbestos products may not be labeled “asbestos” but rather as “asbestos-cement”, “cellulose fiber-cement”, or “contains chrysotile fibers.”
Read more...GlobeSt.com - Does Anyone Care About Asbestos Anymore? - The Science of Real Estate Article
Friday, December 16, 2011
Morningstar.com - We Don't Feel at Home With Apartment REITs' Bullish Outlook
We recently had the opportunity to hear a panel of multifamily REIT CEOs--Camden Property's Richard Campo, Equity Residential's (EQR) David Neithercut, UDR Inc.'s (UDR) Tom Toomey, and Essex Property's Michael Schall--speak candidly about sector fundamentals. While we agree with these CEOs that near-term fundamentals are robust, our opinions differed on other matters. For instance, we disagree with the assertion that the millennial cohort is meaningfully different than others before it. The panel discussion did not lead us to change our moat assessments or fair value estimates for the apartment market, and we continue to think that recent acquisition pricing offers no margin of safety. While there is upside to our current fair value estimates for apartment REITs if present supply and demand tailwinds persist beyond the near term, or if boomers turn toward apartment renting en masse, we continue to think the benefits will ultimately prove ephemeral.
Read more...Morningstar.com - We Don't Feel at Home With Apartment REITs' Bullish Outlook
Read more...Morningstar.com - We Don't Feel at Home With Apartment REITs' Bullish Outlook
Moody's Analytics sees 2012 GDP growth of 2.6% « HousingWire
Mark Zandi, chief economist for Moody's Analytics, expects U.S. gross domestic product growth of 2.6% in 2012, although this estimate is contingent on European debt concerns and domestic policy.
Zandi sees American unemployment remaining high in 2012, while interest rates and inflation remain low.
At the same time, he sounded an alarm for policymakers, declaring that without action on their part, federal fiscal policy could pull real GDP down 1.7 percentage points, as tax and spending policies expire. What remains on the table is the reduced payroll tax rate and unemployment insurance benefits, Zandi said.
The European debt crisis is another looming threat.
Read more...Moody's Analytics sees 2012 GDP growth of 2.6% « HousingWire
Zandi sees American unemployment remaining high in 2012, while interest rates and inflation remain low.
At the same time, he sounded an alarm for policymakers, declaring that without action on their part, federal fiscal policy could pull real GDP down 1.7 percentage points, as tax and spending policies expire. What remains on the table is the reduced payroll tax rate and unemployment insurance benefits, Zandi said.
The European debt crisis is another looming threat.
Read more...Moody's Analytics sees 2012 GDP growth of 2.6% « HousingWire
Top five most rewarding cities for being a landlord - report - AGBeat
We’ve said it for a long time now – renting is the new black. Rents are up, vacancies are down, and investors are making up more of the home buyer market than in recent years. The tides are turning and the natural real estate cycle is kicking back up – it will be a great time to be a landlord for a few years, then we’ll see people go back to buying homes, it’s all natural.
According to Local Market Monitor, the top five most rewarding cities for being a landlord are led by Houston, based on home prices, area economy and rents, and ranked by job growth.
Read more...Top five most rewarding cities for being a landlord - report - AGBeat
According to Local Market Monitor, the top five most rewarding cities for being a landlord are led by Houston, based on home prices, area economy and rents, and ranked by job growth.
Read more...Top five most rewarding cities for being a landlord - report - AGBeat
NewsTalk Texas - Austin ALN apartment news Nov. 2011
ALN Apartment Data has released the November occupancy and effective rent data for apartments in the Austin market.
Read more...NewsTalk Texas - Austin ALN apartment news Nov. 2011
Read more...NewsTalk Texas - Austin ALN apartment news Nov. 2011
Houston Touted as City of Opportunity for Real Estate - MultifamilyBiz.com
"You woke up in the city of opportunity this morning. Houston is not a destination city, it's a city of opportunity," said Brandi McDonald, managing principal with Newmark Knight Frank in her opening remarks at the 5th Annual BoyarMiller Real Estate Breakfast Forum. This perspective was echoed by the panel, which also included Joel Marshall, senior vice president, Trendmaker Development Company; Welcome W. Wilson, Jr., president and CEO, GSL Welcome Group; and Ewing King, principal, Read King Commercial Real Estate.
McDonald was optimistic in her predictions for the 2012 Houston office market stating, "Houston is one of the strongest cities in the nation and it will continue to be that way in 2012." Though Houston is below the national average for office vacancies at 16.3%, McDonald expects to see a continued decline in the coming year. And, while construction has been down in the office market with 1.4 million square feet under construction in 2011, she predicts a spike in construction in 2012.
Read more...Houston Touted as City of Opportunity for Real Estate - Multifamily News Headlines – Breaking News, Stories, Top Headlines :: MultifamilyBiz.com
McDonald was optimistic in her predictions for the 2012 Houston office market stating, "Houston is one of the strongest cities in the nation and it will continue to be that way in 2012." Though Houston is below the national average for office vacancies at 16.3%, McDonald expects to see a continued decline in the coming year. And, while construction has been down in the office market with 1.4 million square feet under construction in 2011, she predicts a spike in construction in 2012.
Read more...Houston Touted as City of Opportunity for Real Estate - Multifamily News Headlines – Breaking News, Stories, Top Headlines :: MultifamilyBiz.com
GlobeSt.com - View from the Field - Who Was Lending in 2011? - The Science of Real Estate Article
My firm, Partner Engineering and Science, provides due diligence for commercial real estate lending and I believe that our firm works on approximately 4% to 5% of commercial real estate transactions in the country.* The result is that we have a pretty unique window into who is lending on commercial real estate. I track our firm's data rather carefully and combine our data with transaction data provided by our largest vender EDRáµ» to provide the market a somewhat quantitative analysis of activity.
The overall volume of Phase 1 Environmental Site Assessments--and by extension commercial real estate transactions--has been steadily increasing month after month since its low point in October of 2009. Our firm's Phase 1 ESA volume in the 3rd Quarter of 2011 has increased 28% over the 3rd quarter of 2010 and volume has increased industry wide by 7% quarter over quarter. The connection between Phase 1 ESAs and CRE transactions is not absolute as much of the volume of Phase 1 ESAs has come from pre-foreclosure work. Nevertheless, lenders spending money to work out their non-performing loans is still a good barometer of positive activity for commercial real estate.
Read more...GlobeSt.com - View from the Field - Who Was Lending in 2011? - The Science of Real Estate Article
The overall volume of Phase 1 Environmental Site Assessments--and by extension commercial real estate transactions--has been steadily increasing month after month since its low point in October of 2009. Our firm's Phase 1 ESA volume in the 3rd Quarter of 2011 has increased 28% over the 3rd quarter of 2010 and volume has increased industry wide by 7% quarter over quarter. The connection between Phase 1 ESAs and CRE transactions is not absolute as much of the volume of Phase 1 ESAs has come from pre-foreclosure work. Nevertheless, lenders spending money to work out their non-performing loans is still a good barometer of positive activity for commercial real estate.
Read more...GlobeSt.com - View from the Field - Who Was Lending in 2011? - The Science of Real Estate Article
Thursday, December 15, 2011
Declining Multifamily Vacancy Rates Point to Future Growth « Eye on Housing
"Data from the Survey of Market Absorption (SOMA), produced by the Census Bureau and the Department of Housing and Urban Development, reveal limited weakness in the multifamily sector for the first half of 2011. However, declining multifamily vacancy rates are a hopeful sign for future multifamily market expansion, which is consistent with improving responses reported in NAHB multifamily surveys.
The SOMA tracks completions and market absorption (either units rented or units sold after construction of the property is complete) for multifamily rental and for-sale housing in 5+unit properties. Data released in December report absorptions for the third quarter of 2011 for properties completing construction in the second quarter of 2011.
Read more...Declining Multifamily Vacancy Rates Point to Future Growth « Eye on Housing
The SOMA tracks completions and market absorption (either units rented or units sold after construction of the property is complete) for multifamily rental and for-sale housing in 5+unit properties. Data released in December report absorptions for the third quarter of 2011 for properties completing construction in the second quarter of 2011.
Read more...Declining Multifamily Vacancy Rates Point to Future Growth « Eye on Housing
SPECIAL REPORT: Conference Discusses Multi-Housing World Without Fannie and Freddie
What would a multifamily world without Fannie and Freddie look like? Speakers at a panel preceding the New York Housing Conference and National Housing Conference’s (NHC) 38th Annual Awards Programs recently contemplated the possibilities and made the case for continued government involvement in multifamily financing. Panelists concluded that affordable housing may not obtain well priced financing, or any financing at all, if the government support for rental housing in the secondary markets disappeared altogether.
If they have not already done so, multi-housing players will definitely have to expect a future with a substantially changed financing system. Congress is not endorsing the survival of Fannie and Freddie, affirmed Ethan Handelman, NHC vice president. “That is off the table,” he said. All observers agree that the financing system undergird by Fannie Mae and Freddie Mac currently will “change significantly,” said Handelman. There is consensus, on the other hand, that FHA program works well and should be kept.
Handelman said that while Congress may continue to criticize the two agencies in the next two years, however, no action will likely be taken until after the 2012 elections.
Read more...SPECIAL REPORT: Conference Discusses Multi-Housing World Without Fannie and Freddie
If they have not already done so, multi-housing players will definitely have to expect a future with a substantially changed financing system. Congress is not endorsing the survival of Fannie and Freddie, affirmed Ethan Handelman, NHC vice president. “That is off the table,” he said. All observers agree that the financing system undergird by Fannie Mae and Freddie Mac currently will “change significantly,” said Handelman. There is consensus, on the other hand, that FHA program works well and should be kept.
Handelman said that while Congress may continue to criticize the two agencies in the next two years, however, no action will likely be taken until after the 2012 elections.
Read more...SPECIAL REPORT: Conference Discusses Multi-Housing World Without Fannie and Freddie
2012 Outlook: Gap Widening Between Commercial Real Estate Have, Have-Nots - Citybizlist Baltimore
A senior corps of analysts from Robert W. Baird & Co. has issued its 2012 outlook, citing the growing gap between haves and have-nots amid prevailing uncertainties in the U.S. and abroad.
Prepare for more of the same as clarity on issues and fundamentals continue to be elusive well into 2012 and possibly all year, said senior analysts David AuBuchon, David Loeb, Christopher R. Lucas and Paula J. Poskon. Long-term resolutions of present-day risks could change the dynamics, but that doesn't appear too likely for the near term.
"We continue to expect a slow growth environment next year, and no U.S. recession, but the market will need clarity on a number of question marks that continue to hang over the global economic picture," the quartet wrote.
Read more...2012 Outlook: Gap Widening Between Commercial Real Estate Have, Have-Nots - Citybizlist Baltimore
Prepare for more of the same as clarity on issues and fundamentals continue to be elusive well into 2012 and possibly all year, said senior analysts David AuBuchon, David Loeb, Christopher R. Lucas and Paula J. Poskon. Long-term resolutions of present-day risks could change the dynamics, but that doesn't appear too likely for the near term.
"We continue to expect a slow growth environment next year, and no U.S. recession, but the market will need clarity on a number of question marks that continue to hang over the global economic picture," the quartet wrote.
Read more...2012 Outlook: Gap Widening Between Commercial Real Estate Have, Have-Nots - Citybizlist Baltimore
Atlanta FRB - Overleveraged? Investigating the Availability of Commercial Real Estate Credit
Welcome to the Federal Reserve Bank of Atlanta's Perspectives on Real Estate podcast series. I'm Brian Bailey, senior financial policy analyst with the Federal Reserve Bank of Atlanta. Today, we're talking with Ann Hambly, CEO and president of 1st Service Solutions. Ann served as a panelist at a conference hosted by the Atlanta Fed on December 1 called Exploring Impediments to a Real Estate Recovery: A Policy Discussion. This podcast will highlight some of her remarks on the availability of credit as it relates to commercial real estate.
Ann, thank you for joining me today.
Ann Hambly: Thank you for the opportunity.
Bailey: First, why is the availability of credit so important for the commercial real estate market?
Hambly: Well, let me set the stage, actually first, and tell you that the primary problem, I think, with commercial real estate right now can be simply worded as "overleveraged." And so, regardless of the property type, or the location of the property, the ones that are in trouble today are the ones that were overleveraged in the last few years before our crash, or some people even call it "the storm." So, before the storm—and those were years of 2005, 2006, and 2007—and so, the vast majority of the defaults we have today are on loans where the debt was put in place in those years, 2005–2007, and there really was just too much debt put in place. There was a little bit of it that played into this was the fallacy that commercial real estate values could only go up, so people banked on that and put a lot of debt in place. Now, you add that to the fact there are $1.7 trillion of maturities that are going to happen in the next five years in commercial real estate, and what you've got is a recipe for a disaster, or a "perfect storm." So, it's going to take a massive amount of credit to solve the default problems and to allow there to be some available credit for the refinances that are going to have to take place at the maturity.
Read more...Atlanta FRB - Overleveraged? Investigating the Availability of Commercial Real Estate Credit
Ann, thank you for joining me today.
Ann Hambly: Thank you for the opportunity.
Bailey: First, why is the availability of credit so important for the commercial real estate market?
Hambly: Well, let me set the stage, actually first, and tell you that the primary problem, I think, with commercial real estate right now can be simply worded as "overleveraged." And so, regardless of the property type, or the location of the property, the ones that are in trouble today are the ones that were overleveraged in the last few years before our crash, or some people even call it "the storm." So, before the storm—and those were years of 2005, 2006, and 2007—and so, the vast majority of the defaults we have today are on loans where the debt was put in place in those years, 2005–2007, and there really was just too much debt put in place. There was a little bit of it that played into this was the fallacy that commercial real estate values could only go up, so people banked on that and put a lot of debt in place. Now, you add that to the fact there are $1.7 trillion of maturities that are going to happen in the next five years in commercial real estate, and what you've got is a recipe for a disaster, or a "perfect storm." So, it's going to take a massive amount of credit to solve the default problems and to allow there to be some available credit for the refinances that are going to have to take place at the maturity.
Read more...Atlanta FRB - Overleveraged? Investigating the Availability of Commercial Real Estate Credit
Wednesday, December 14, 2011
ALN Monthly Newsletter December 2011
ALNData just released their November 2011 stats on occupancy and rents for 23 markets. In Texas, it includes DFW, Austin, Houston, San Antonio, Lubbock, Amarillo, Abilene and Corpus Christi. It is a great read from a great provider of apartment data.
ALN Monthly Newsletter December 2011
ALN Monthly Newsletter December 2011
GlobeSt.com - A Pivot Point for Community Building - Daily News Article
In this post-recession environment, much is being made about great forces of change – population and demographic shifts, economic drivers, environmental concerns – that will dramatically reshape community building for the rest of the century. However, as dramatic as this change is, the land use industry faced circumstances just as daunting in early part of the 20th century.
Seventy-five years ago, on December 14, 1936, the Urban Land Institute was chartered in Chicago, during a time of great uncertainty in financial markets, shifting economic growth engines, changing demographics and household composition, and an ongoing influx of immigrants. Cities around the country were trying to recover from the Great Depression and position themselves as leaders in an economy then dominated by manufacturing. They were grappling with inner-city neighborhoods in decay as well as new suburbs that would soon face rapid growth.
At this milestone in the organization’s history, it is difficult to predict what our cities will look like when ULI reaches its next 75-year mark. However, a new ULI publication, What’s Next: Real Estate in the New Economy, offers some clues on how the built environment will be affected in decades to come by how we’ll live, work, use energy, and get around; and how what we build will be financed. This much is clear: Where we’ve been is not where we are headed.
As documented in What’s Next, these are just some of the reasons why:
Read more...GlobeSt.com - A Pivot Point for Community Building - Daily News Article
Seventy-five years ago, on December 14, 1936, the Urban Land Institute was chartered in Chicago, during a time of great uncertainty in financial markets, shifting economic growth engines, changing demographics and household composition, and an ongoing influx of immigrants. Cities around the country were trying to recover from the Great Depression and position themselves as leaders in an economy then dominated by manufacturing. They were grappling with inner-city neighborhoods in decay as well as new suburbs that would soon face rapid growth.
At this milestone in the organization’s history, it is difficult to predict what our cities will look like when ULI reaches its next 75-year mark. However, a new ULI publication, What’s Next: Real Estate in the New Economy, offers some clues on how the built environment will be affected in decades to come by how we’ll live, work, use energy, and get around; and how what we build will be financed. This much is clear: Where we’ve been is not where we are headed.
As documented in What’s Next, these are just some of the reasons why:
Read more...GlobeSt.com - A Pivot Point for Community Building - Daily News Article
Dallas FRB - Texas Economic Indicators December 2011
Growth in the Texas economy slowed moderately, with employment expanding at a 0.8 percent annual rate in
October. Texas home prices fell, but single-family housing permits, housing starts and existing-home sales all
rose. Texas exports increased slightly in the third quarter. Manufacturing activity contracted in November,
according to the Texas Manufacturing Outlook Survey’s production index.
Texas Economic Indicators December 2011
Texas Economic Indicators December 2011
Dallas FRB - Houston Economic Update December 2011
The Houston metropolitan area business-cycle index produced by
the Federal Reserve Bank of Dallas indicates economic activity in
the city grew at an annualized rate of 9.6 percent in October, the
highest reading since April. The ability of Houston and Texas to
plug into the global economy has played a large part in the region’s
exceptional performance this year. The slow recovery in the U.S.
continues, but risks in the euro area and some emerging economies
continue to mount, clouding forecasts. However, Houston’s economic
fundamentals seem strong, and the outlook remains positive.
Dallas FRB - Houston Economic Update December 2011
Dallas FRB - Houston Economic Update December 2011
Pretend and Extend coming to an end | Real Capital Analytics
Apartment Finance Today reports: Time is money, as the saying goes, but in some cases, biding your time is the richest strategy of all.
Throughout the downturn, the common practice of “extend and pretend,” where lenders hoped to delay the inevitable demise of troubled assets, was widely derided by distress hunters. After all, critics said, lenders were just kicking the can down the road, building a weak dam of false hope to hold back a flood of distress.
But even the staunchest critics would have to agree that extend and pretend actually worked. The swift rebound in values and continually improving capital markets gave lenders and troubled owners a way out this year, probably sooner than they could have hoped.
As a result, the 2011 Deals of the Year, a who’s who of large, distressed portfolios, signaled the endgame of extend and pretend.
At the starting line are overleveraged owners that bought at the height of the upturn and have since bought nothing but time. And waiting at the finish line is a bevy of hungry private investors, lured by the prospect of above-average returns on complicated capital restructuring deals.
“Extend and pretend allowed this to drag out, and now we’re starting to see a steady flow of distressed portfolios come to market,” says Dan Fasulo, managing director of global property research firm Real Capital Analytics. “There’s a window of opportunity now. And I think that will increase moving forward."
Read more...Pretend and Extend coming to an end | Real Capital Analytics
Throughout the downturn, the common practice of “extend and pretend,” where lenders hoped to delay the inevitable demise of troubled assets, was widely derided by distress hunters. After all, critics said, lenders were just kicking the can down the road, building a weak dam of false hope to hold back a flood of distress.
But even the staunchest critics would have to agree that extend and pretend actually worked. The swift rebound in values and continually improving capital markets gave lenders and troubled owners a way out this year, probably sooner than they could have hoped.
As a result, the 2011 Deals of the Year, a who’s who of large, distressed portfolios, signaled the endgame of extend and pretend.
At the starting line are overleveraged owners that bought at the height of the upturn and have since bought nothing but time. And waiting at the finish line is a bevy of hungry private investors, lured by the prospect of above-average returns on complicated capital restructuring deals.
“Extend and pretend allowed this to drag out, and now we’re starting to see a steady flow of distressed portfolios come to market,” says Dan Fasulo, managing director of global property research firm Real Capital Analytics. “There’s a window of opportunity now. And I think that will increase moving forward."
Read more...Pretend and Extend coming to an end | Real Capital Analytics
Tuesday, December 13, 2011
Res/MF Home Building Permits and Housing Start Trends for Dallas, Texas - Builder Magazine
The Dallas, TX market saw an increase in sales of new homes in September year-over-year, and the percentage rise was greater than August 2011, giving hints of improving market conditions. Sales increased 9.4% from a year earlier to 1,243, compared with an 8.0% rise in August from the year earlier.
In the 12 months ending September 2011, there were 12,732 new home sales, up from an annualized 12,625 in August.
As a percentage of overall housing sales, new home sales accounted for 13.0%. This is a rise from 11.9% of sales a year earlier. Sales of new and existing homes rose year-over-year in September after also rising in August year-over-year.
Read more...Residential Home Building Permits and Housing Start Trends for Dallas, Texas - Builder Magazine
In the 12 months ending September 2011, there were 12,732 new home sales, up from an annualized 12,625 in August.
As a percentage of overall housing sales, new home sales accounted for 13.0%. This is a rise from 11.9% of sales a year earlier. Sales of new and existing homes rose year-over-year in September after also rising in August year-over-year.
Read more...Residential Home Building Permits and Housing Start Trends for Dallas, Texas - Builder Magazine
Fort Worth OKs rules to fight crime in apartment complexes | Star-Telegram
With apartment owners opposed to amending the city's multifamily-housing ordinance and neighborhood groups fed up with crime, the Fort Worth City Council on Tuesday unanimously approved new rules intended to help give authorities another way to clean up the worst apartment complexes.
The crime-free multifamily housing ordinance requires leases to include a prohibition against tenant criminal conduct, making it far easier to evict tenants who commit crimes or permit them. City officials said they have found it difficult to remove tenants who bring drugs or other crime-related activity into run-down complexes.
Read more...Fort Worth OKs rules to fight crime in apartment complexes | Crime and Safety | Star-Telegram
The crime-free multifamily housing ordinance requires leases to include a prohibition against tenant criminal conduct, making it far easier to evict tenants who commit crimes or permit them. City officials said they have found it difficult to remove tenants who bring drugs or other crime-related activity into run-down complexes.
Read more...Fort Worth OKs rules to fight crime in apartment complexes | Crime and Safety | Star-Telegram
Five Years After Market's Peak, Defensive Refis Grow - Finance - Multifamily Executive Magazine
Nearly five years ago, the commercial mortgage-backed securities (CMBS) industry was booming and on the cusp of a peak year.
In 2007, nearly $230 billion in CMBS was issued as the commercial real estate markets soared. But the day of reckoning is expected to come next year, when a slew of five-year balloon loans made at the height of the market will soon start coming due.
And after next year, longer-term 2007-vintage CMBS loans are set to mature, leaving many owners to restructure, recapitalize, and plug some gaps in the capital stack. A huge increase in demand for structured-finance products like bridge, mezzanine, and preferred equity is expected over the next few years.
“We’ve all seen the charts regarding maturities scheduled between now and 2017—it’s like a hockey stick,” says Kevin Smith, who leads the Alternative Capital Division of New York–based Centerline. “There’s going to be a huge need for bridge capital and preferred equity or mezz where the deals can support it.”
Read more...Five Years After Market's Peak, Defensive Refis Grow - Finance - Multifamily Executive Magazine
In 2007, nearly $230 billion in CMBS was issued as the commercial real estate markets soared. But the day of reckoning is expected to come next year, when a slew of five-year balloon loans made at the height of the market will soon start coming due.
And after next year, longer-term 2007-vintage CMBS loans are set to mature, leaving many owners to restructure, recapitalize, and plug some gaps in the capital stack. A huge increase in demand for structured-finance products like bridge, mezzanine, and preferred equity is expected over the next few years.
“We’ve all seen the charts regarding maturities scheduled between now and 2017—it’s like a hockey stick,” says Kevin Smith, who leads the Alternative Capital Division of New York–based Centerline. “There’s going to be a huge need for bridge capital and preferred equity or mezz where the deals can support it.”
Read more...Five Years After Market's Peak, Defensive Refis Grow - Finance - Multifamily Executive Magazine
MortgageOrb: Content / Person Of The Week / Could The 2008 Crash Have Been Prevented?
"It has been more than three years since the September 2008 financial crisis, and many people are still trying to piece together what went so horribly wrong. Veteran financial journalist Robert Stowe England has offered his insight on what happened with his new book, "Black Box Casino: How Wall Street's Risky Shadow Banking Crashed Global Finance" (published by Praeger). MortgageOrb spoke with England about the circumstances that triggered the economic catastrophe."
Read More...MortgageOrb: Content / Person Of The Week / Could The 2008 Crash Have Been Prevented?
Read More...MortgageOrb: Content / Person Of The Week / Could The 2008 Crash Have Been Prevented?
Monday, December 12, 2011
Slow Growth in 2012 for Commercial Real Estate, According to Jones Lang LaSalle
Economic indicators suggest improvement – albeit minor – in the real estate market for the forthcoming year, with no foreseeable double dip, according to Jones Lang LaSalle's 2012 National Commercial Real Estate Outlook. Key findings from Jones Lang LaSalle's outlook were presented by top experts from the firm's Research group in its annual media webcast event.
"Given concerns in Europe and in some emerging markets, we anticipate the United States recovery to be comparably stable in 2012, though the overall growth trajectory will remain modest," said Ben Breslau, Jones Lang LaSalle's Americas Research Managing Director. Despite the slow improvement in underlying demand for most segments of the commercial real estate market, total investment volume will continue trending upward. "Debt financing will remain available for core real estate, and we expect the current slowdown in commercial mortgage-backed securities will be relatively short-lived, though the recovery in CMBS volumes will be choppy and will take time."
Read more...Slow Growth in 2012 for Commercial Real Estate, According to Jones Lang LaSalle
"Given concerns in Europe and in some emerging markets, we anticipate the United States recovery to be comparably stable in 2012, though the overall growth trajectory will remain modest," said Ben Breslau, Jones Lang LaSalle's Americas Research Managing Director. Despite the slow improvement in underlying demand for most segments of the commercial real estate market, total investment volume will continue trending upward. "Debt financing will remain available for core real estate, and we expect the current slowdown in commercial mortgage-backed securities will be relatively short-lived, though the recovery in CMBS volumes will be choppy and will take time."
Read more...Slow Growth in 2012 for Commercial Real Estate, According to Jones Lang LaSalle
For Your Residents, What Is Best Service? - Multifamily Blogs – Experts – Technology, Products :: MultifamilyBiz.com
Best service, especially in the property management industry, can be deceiving because the needs and expectations of your residents are changing and evolving rapidly. In addition, your residents are comparing your apartment communities to both your competition and to best service with every company, product or service they experience. By reading this article, you will learn the steps for developing a system so your residents can tell you exactly what best service means to them!
Read more...For Your Residents, What Is Best Service? - Multifamily Blogs – Experts – Technology, Products :: MultifamilyBiz.com
Read more...For Your Residents, What Is Best Service? - Multifamily Blogs – Experts – Technology, Products :: MultifamilyBiz.com
MortgageOrb: Content / Commercial Mortgage / Trepp: Dramatic Increase In Balance Of CMBS Conduit Loans Liquidated
The balance of commercial mortgage-backed securities (CMBS) conduit loans liquidated in November reached a new high, according to data released by Trepp LLC. Last month saw liquidations from 218 loans, which was 17% higher than the previous record set in June 2011.
At $2.1 billion, November’s CMBS conduit loan liquidations were 60% higher than the 12-month moving average of $1.3 billion per month. The average loan size for liquidated loans was $9.6 million in November - in comparison, the average size for liquidated loans has been $8.2 million over the last 12 months.
Read more...MortgageOrb: Content / Commercial Mortgage / Trepp: Dramatic Increase In Balance Of CMBS Conduit Loans Liquidated
At $2.1 billion, November’s CMBS conduit loan liquidations were 60% higher than the 12-month moving average of $1.3 billion per month. The average loan size for liquidated loans was $9.6 million in November - in comparison, the average size for liquidated loans has been $8.2 million over the last 12 months.
Read more...MortgageOrb: Content / Commercial Mortgage / Trepp: Dramatic Increase In Balance Of CMBS Conduit Loans Liquidated
GlobeSt.com - Commercial Real Estate Investing Strategies for the 'New Normal' - Commercial Property Advisor Article
When Scrooge is visited by Jacob Marley’s ghost in Charles Dickens’ A Christmas Carol, Scrooge initially doubts that he is seeing a ghost, blaming the apparition on bad digestion. Scrooge says, “There’s more gravy about you than grave, whatever you are.” After three hauntings, the old humbug vows to change his ways less he be “captive, bound and doubled iron” for all eternity, perhaps even longer.
With the holiday parties before us, and the rotten financial news about the state of Europe keeping investors cautious, perhaps it is time to reflect on change in the commercial real estate industry.
The economic world is drastically altered. As brainy economist Robert Meulmeester of Cadence Capital Group writes about commercial real estate: “Challenging times are here to stay and we continue our adjustment to the ‘new normal’ as we have yet to really understand what that means, and how you can do business in such an environment… Only once the fiscal and debt impasse have been resolved, a more clearer and optimistic tone will be justified. Capital remains on the sideline as rebalancing has not been completed and sometimes not even started."
I submit for your consideration the following “adjustments” to accommodate the “new normal”:
Read more...GlobeSt.com - Commercial Real Estate Investing Strategies for the 'New Normal' - Commercial Property Advisor Article
With the holiday parties before us, and the rotten financial news about the state of Europe keeping investors cautious, perhaps it is time to reflect on change in the commercial real estate industry.
The economic world is drastically altered. As brainy economist Robert Meulmeester of Cadence Capital Group writes about commercial real estate: “Challenging times are here to stay and we continue our adjustment to the ‘new normal’ as we have yet to really understand what that means, and how you can do business in such an environment… Only once the fiscal and debt impasse have been resolved, a more clearer and optimistic tone will be justified. Capital remains on the sideline as rebalancing has not been completed and sometimes not even started."
I submit for your consideration the following “adjustments” to accommodate the “new normal”:
Read more...GlobeSt.com - Commercial Real Estate Investing Strategies for the 'New Normal' - Commercial Property Advisor Article
Index Shows Apartment & Condo Market Improving - Multifamily News Headlines – Breaking News, Stories, Top Headlines :: MultifamilyBiz.com
The Multifamily Production Index (MPI), a leading indicator for the multifamily market, released by the National Association of Home Builders (NAHB) on Friday, Dec. 9 showed continued improvement for the fifth consecutive quarter for the apartment and condominium housing market.
The MPI, which tracks the sentiment of builders and developers about the conditions of the multifamily market on a scale of 0 to 100, increased from 44.4 in the second quarter to 47.3 in the third quarter—the highest reading since the fourth quarter of 2005.
The index provides a composite measure of three key elements of the multifamily housing market: construction of low-rent units, market-rate rental units and “for-sale" units, or condominiums. The index and all of its components are scaled so that any number over 50 indicates that more respondents report conditions are improving than report conditions are getting worse. In the third quarter of 2011, the MPI component tracking builder and developer perceptions of market-rate rental properties recorded an all-time high of 63.8, while low-rent units remained steady at 50.1. For-sale units rose to 31.9, the highest recording since the second quarter of 2006.
Read more...Index Shows Apartment & Condo Market Improving - Multifamily News Headlines – MultifamilyBiz.com
The MPI, which tracks the sentiment of builders and developers about the conditions of the multifamily market on a scale of 0 to 100, increased from 44.4 in the second quarter to 47.3 in the third quarter—the highest reading since the fourth quarter of 2005.
The index provides a composite measure of three key elements of the multifamily housing market: construction of low-rent units, market-rate rental units and “for-sale" units, or condominiums. The index and all of its components are scaled so that any number over 50 indicates that more respondents report conditions are improving than report conditions are getting worse. In the third quarter of 2011, the MPI component tracking builder and developer perceptions of market-rate rental properties recorded an all-time high of 63.8, while low-rent units remained steady at 50.1. For-sale units rose to 31.9, the highest recording since the second quarter of 2006.
Read more...Index Shows Apartment & Condo Market Improving - Multifamily News Headlines – MultifamilyBiz.com
Thursday, December 8, 2011
Fourth Quarter 2011 Real Estate Investment Outlook
Commercial real estate investors have not been dissuaded by the economic and political turmoil that has dominated headlines in recent months.
The latest NREI/Marcus & Millichap Investor Sentiment Survey shows only a slight decline in investor sentiment from the high of 164 that was recorded in the second quarter. It is important to note that the current investor sentiment matches the 152 recorded in fourth quarter 2010, which at that time represented the highest level the index had achieved since the survey began in 2004.
Read more...Fourth Quarter 2011 Real Estate Investment Outlook
The latest NREI/Marcus & Millichap Investor Sentiment Survey shows only a slight decline in investor sentiment from the high of 164 that was recorded in the second quarter. It is important to note that the current investor sentiment matches the 152 recorded in fourth quarter 2010, which at that time represented the highest level the index had achieved since the survey began in 2004.
Read more...Fourth Quarter 2011 Real Estate Investment Outlook
Texas Ahead: Economic Outlook
Job growth, sales tax collections – both from business and consumer purchases – as well as automobile sales, signal that the Texas economy has emerged from the recent recession.
Another indicator that the state’s economy has been comparatively healthy was the U.S. Bureau of the Census report that Texas added more people (nearly 4.3 million) than any other state between the census counts of 2000 and 2010.
Through October 2011, 94 percent of the total jobs shed by employers during Texas’ shorter recession have already been recovered as our economy has rebounded more quickly than the U.S. as a whole. Nationally, only 28 percent of recession-hit jobs have been recovered through November 2011.
Read more...Texas Ahead: Economic Outlook
Another indicator that the state’s economy has been comparatively healthy was the U.S. Bureau of the Census report that Texas added more people (nearly 4.3 million) than any other state between the census counts of 2000 and 2010.
Through October 2011, 94 percent of the total jobs shed by employers during Texas’ shorter recession have already been recovered as our economy has rebounded more quickly than the U.S. as a whole. Nationally, only 28 percent of recession-hit jobs have been recovered through November 2011.
Read more...Texas Ahead: Economic Outlook
Real Points » Blog Archive » Multifamily Investors Peg Dallas as Top Five Market for 2012
Housing trends are driving continuing interest in multifamily properties among investors, according to a 2012 outlook study by Jones Lang LaSalle and RealShare. More than 150 private investors, real estate brokers, developers, REITs, and institutional investors participated in the survey. Core assets in primary coastal markets are getting the most attention, but buyers are also looking for value-add deals and facing increased competition from foreign investors, the study found.
Investors are most likely to invest in Dallas, Los Angeles, San Francisco, San Diego, and Phoenix in 2012. Bumped from the list were 2010 heavyweights New York City and Washington, D.C. Divestitures in 2012 are most likely to occur in Las Vegas, Los Angeles, Washington, D.C., Atlanta, Houstin, and Phoenix, investors say.
Read more...Real Points » Blog Archive » Multifamily Investors Peg Dallas as Top Five Market for 2012
Investors are most likely to invest in Dallas, Los Angeles, San Francisco, San Diego, and Phoenix in 2012. Bumped from the list were 2010 heavyweights New York City and Washington, D.C. Divestitures in 2012 are most likely to occur in Las Vegas, Los Angeles, Washington, D.C., Atlanta, Houstin, and Phoenix, investors say.
Read more...Real Points » Blog Archive » Multifamily Investors Peg Dallas as Top Five Market for 2012
Council to consider Crime-Free Multi-Housing Ordinance Tuesday | City of Fort Worth, Texas
The updates — dubbed the Crime-Free Multi-Housing Ordinance — are aimed at giving residents and property managers in multi-family communities new ways to reduce code violations.
Provisions of the draft ordinance were the subject of a series of nine public meetings. Based on feedback from those meetings, an updated draft ordinance will be presented to council. The following is a look at changes from the original draft ordinance and the ordinance set for council consideration."
Read more...Council to consider Crime-Free Multi-Housing Ordinance Tuesday | City of Fort Worth, Texas
Provisions of the draft ordinance were the subject of a series of nine public meetings. Based on feedback from those meetings, an updated draft ordinance will be presented to council. The following is a look at changes from the original draft ordinance and the ordinance set for council consideration."
Read more...Council to consider Crime-Free Multi-Housing Ordinance Tuesday | City of Fort Worth, Texas
Results: 2011 Cost of Risk Insurance Benchmarking Survey - NMHC
Apartment industry insurance costs rose for the first time in four years, according to NMHC’s 2011 Apartment Cost of Risk Survey (ACORS), although the increase was nominal and limited to a couple of lines of insurance.
According to the results, the average (nonweighted) Total Cost of Risk (TCR), went up 1% between 2010 and 2011. (Total Cost of Risk reflects the costs of risk for the key exposures of property, including business income, general liability and workers’ compensation.)
Nevertheless, the mean average property cost of risk, which accounts for close to 70% of the average apartment firm’s insurance budget, actually decreased by 1% in 2011.
Read more...Results: 2011 Cost of Risk Insurance Benchmarking Survey - NMHC
According to the results, the average (nonweighted) Total Cost of Risk (TCR), went up 1% between 2010 and 2011. (Total Cost of Risk reflects the costs of risk for the key exposures of property, including business income, general liability and workers’ compensation.)
Nevertheless, the mean average property cost of risk, which accounts for close to 70% of the average apartment firm’s insurance budget, actually decreased by 1% in 2011.
Read more...Results: 2011 Cost of Risk Insurance Benchmarking Survey - NMHC
Property Management: Carpet, Tile, Vinyl and Wood | Multifamily Insight Blog
As property managers, we spend more real cash on flooring that just about any other item. Excluding roofs, windows and boilers, flooring is often the one line item expenditure that pops on the annual profit/loss. Some property managers are flooring experts. Most of us muddle forward executing a well-rounded flooring strategy that needs work.
With flooring, there is always the necessary balance between initial costs and longevity. Frankly, as you know, its sometimes a crap shoot based on how hard people live in a unit. But irrespective of the covering we are generally choosing from four options: Carpet, wood, tile or vinyl.
Excluding seasonal and tropical adjustments most people have a preference for carpet. Preference or not, let’s look at some alternative flooring types.
Read more...Property Management: Carpet, Tile, Vinyl and Wood | Multifamily Insight Blog
With flooring, there is always the necessary balance between initial costs and longevity. Frankly, as you know, its sometimes a crap shoot based on how hard people live in a unit. But irrespective of the covering we are generally choosing from four options: Carpet, wood, tile or vinyl.
Excluding seasonal and tropical adjustments most people have a preference for carpet. Preference or not, let’s look at some alternative flooring types.
Read more...Property Management: Carpet, Tile, Vinyl and Wood | Multifamily Insight Blog
Percentage of CMBS loans paid off at maturity increases, still below 50% « HousingWire
The percentage of commercial loans that paid off at their maturity date rebounded in November, an improvement that probably won't continue next year, according to a Trepp report released Wednesday.
In November, 47.1% of loans that reached their balloon date paid off, up from 41.8% in October. The percentage is in terms of dollar volume.
So far in 2011, the average monthly rate is 41%, a reflection of an improvement in the lending environment in the first half of the year that allowed 2006 five-year balloon loans to refinance, the analytics firm reported. The average monthly rate in 2010 was 34%.
Read more...Percentage of CMBS loans paid off at maturity increases, still below 50% « HousingWire
In November, 47.1% of loans that reached their balloon date paid off, up from 41.8% in October. The percentage is in terms of dollar volume.
So far in 2011, the average monthly rate is 41%, a reflection of an improvement in the lending environment in the first half of the year that allowed 2006 five-year balloon loans to refinance, the analytics firm reported. The average monthly rate in 2010 was 34%.
Read more...Percentage of CMBS loans paid off at maturity increases, still below 50% « HousingWire
Wednesday, December 7, 2011
Austin Market Review End of November 2011 « ALN Apartment Data
The Occupancy Rate in Austin at the end of November stood at 94.5%, up 1.1% from a year ago but down slightly from last month. Effective Rental Rates were at $894 ($1.04 per square foot), up 7.0% for the year. The percent of properties offering concessions was slightly elevated over the past month, but still down 43% from a year ago. Nothing is on the horizon to greatly change Austin’s upward cycle – new construction is in gear, but not enough to cause any real damage to the market as a whole; job numbers are pretty stable; market conditions look good. All-in-all, Austin should look forward to another very good year ahead, even if it is slightly mellowed from 2011.
Read more...Austin Market Review End of November 2011 « ALN Apartment Data
Read more...Austin Market Review End of November 2011 « ALN Apartment Data
ULI Real Estate Business Barometer -- December 2011
The top ten trends in this month’s Barometer point to sparks as well as concerns in the economy, some weak signals in the capital markets, and some glimmer in the weak housing market. Compared with a year ago, 57 percent of the key indicators in the Barometer are better and 43 percent are worse.
Read more...ULI Real Estate Business Barometer -- December 2011
Read more...ULI Real Estate Business Barometer -- December 2011
MHNonline.com - Re-Keying Ordinances Spur Lock Hardware Innovation
The state of Texas has a code calling for locks to be re-keyed after apartment residents move out, and Illinois has enacted a new amendment to its Landlord and Tenant Act that will go into enforcement in several weeks on January 1.
Read more...MHNonline.com - Re-Keying Ordinances Spur Lock Hardware Innovation
Read more...MHNonline.com - Re-Keying Ordinances Spur Lock Hardware Innovation
MM Research Services - Apartment Operations Moving in the Right Direction for Houston
Houston will lead the nation in job growth this year, supporting stronger apartment operations and enabling owners to begin making healthy rent increases. The market last led the country in employment gains in 2007, when a comparable number of positions were created. Although job growth is similar, the economic climate in 2011 is significantly different from four years ago. For one, the local housing market has yet to gain footing, and traditional loans, including a 10 percent or more downpayment, still prevail for all but FHA-qualified, first-time homebuyers. As a result, renter migration into homeownership will be measured for the next several quarters. Additionally, current operators will not contend with an influx of new competition this year. Only 1,100 units are coming online in large properties, significantly less than the 8,200 apartments delivered in 2007. While vacancy at the end of both years measured the high-8-percent range; unlike 2007, momentum is moving in a favorable direction for operators heading into 2012.
Read more...MM Research Services - Apartment Operations Moving in the Right Direction for Houston
Read more...MM Research Services - Apartment Operations Moving in the Right Direction for Houston
CoreLogic predicts flat home prices through 2013 « HousingWire
House prices dipped 1.3% on a month-over-month basis, according to the CoreLogic (CLGX: 13.70 -0.22%) October home price index, the third consecutive monthly decline.
Prices declined 3.9% compared to year-ago figures that include distressed sales. Excluding distressed sales, year-over-year prices declined 0.5% in October. Distressed sales include short sales and real estate owned transactions.
"Home prices continue to decline in response to the weak demand for housing," said Mark Fleming, chief economist for CoreLogic. "Looking forward, our forecasts indicate flat growth through 2013"
Read more...CoreLogic predicts flat home prices through 2013 « HousingWire
Prices declined 3.9% compared to year-ago figures that include distressed sales. Excluding distressed sales, year-over-year prices declined 0.5% in October. Distressed sales include short sales and real estate owned transactions.
"Home prices continue to decline in response to the weak demand for housing," said Mark Fleming, chief economist for CoreLogic. "Looking forward, our forecasts indicate flat growth through 2013"
Read more...CoreLogic predicts flat home prices through 2013 « HousingWire
GlobeSt.com - What’s Really Driving Foreclosure Increases - Daily News Article
Locally based RealtyTrac recently released its US Foreclosure Market Report for October 2011, which shows foreclosure filings—default notices, scheduled auctions and bank repossessions—were reported on 230,678 US properties for the month, a 7% increase from September. The report also shows one in every 563 US housing units with a foreclosure filing during the month. Local experts say the uptick will continue.
According to James Saccacio, CEO of RealtyTrac, “recent state court rulings and new state laws keep changing the rules of the foreclosure game on the fly, creating more uncertainty in the housing market and threatening to prolong the road to a robust real estate recovery.”
Saccacio explains that the October numbers “continue to show strong signs that foreclosure activity is coming out of the rain delay we’ve been in for the past year as lenders corrected foreclosure paperwork and processing problems.”
Read more...GlobeSt.com - What’s Really Driving Foreclosure Increases - Daily News Article
According to James Saccacio, CEO of RealtyTrac, “recent state court rulings and new state laws keep changing the rules of the foreclosure game on the fly, creating more uncertainty in the housing market and threatening to prolong the road to a robust real estate recovery.”
Saccacio explains that the October numbers “continue to show strong signs that foreclosure activity is coming out of the rain delay we’ve been in for the past year as lenders corrected foreclosure paperwork and processing problems.”
Read more...GlobeSt.com - What’s Really Driving Foreclosure Increases - Daily News Article
On the Record: Dodd–Frank: Toward Greater Financial System Stability - Southwest Economy, Fourth Quarter 2011 - FRB Dallas
Robert D. (Bob) Hankins is an executive vice president at the Federal Reserve Bank of Dallas, responsible for the Eleventh District’s banking supervisory activities. In July 2010, Congress approved the Dodd–Frank Wall Street Reform and Consumer Protection Act in response to the global financial crisis. At almost 2,000 pages, the act spells out new laws and regulations whose ramifications for financial institutions are broad and complex. In this interview, Hankins fields questions about the act and its implications.
Read more...On the Record: Dodd–Frank: Toward Greater Financial System Stability - Southwest Economy, Fourth Quarter 2011 - FRB Dallas
Read more...On the Record: Dodd–Frank: Toward Greater Financial System Stability - Southwest Economy, Fourth Quarter 2011 - FRB Dallas
States Still Feel Recession's Effects Two Years After Downturn's End - Southwest Economy, Fourth Quarter 2011 - FRB Dallas
The U.S. economy entered a financial-market-driven recession in December 2007 from which it has yet to fully recover. The boom of the mid-2000s has been replaced with a stubborn national reality of high unemployment and sluggish output growth, with no clear indication when economic activity will return to more normal levels.
Yet the states have, in many ways, borne the brunt of the recession. Demand for public services increased at the very moment tax revenue—especially from property taxes—declined. As late as this October, a full two years after the recession ended, states from Florida to California to New York warned of new shortfalls that must be addressed through spending cuts and tax increases. In Texas, lawmakers completed work on cuts totaling at least $15 billion for the upcoming two-year budget cycle.
As the nation’s economic woes continued, the federal budget deficit climbed, posing potential limits on aid Washington could provide. The deficit soared to $1.4 trillion in 2009 and is expected to remain above $1 trillion annually until 2013. At least one major ratings agency downgraded the country’s top-tier credit rating, warning as part of its unprecedented action that officials must do more over the short term to stabilize and improve the deficit picture. Other ratings firms have similarly cautioned that their assessments of U.S. creditworthiness could be cut if fiscal imbalances aren’t addressed.
Read more...States Still Feel Recession's Effects Two Years After Downturn's End - Southwest Economy, Fourth Quarter 2011 - FRB Dallas
Yet the states have, in many ways, borne the brunt of the recession. Demand for public services increased at the very moment tax revenue—especially from property taxes—declined. As late as this October, a full two years after the recession ended, states from Florida to California to New York warned of new shortfalls that must be addressed through spending cuts and tax increases. In Texas, lawmakers completed work on cuts totaling at least $15 billion for the upcoming two-year budget cycle.
As the nation’s economic woes continued, the federal budget deficit climbed, posing potential limits on aid Washington could provide. The deficit soared to $1.4 trillion in 2009 and is expected to remain above $1 trillion annually until 2013. At least one major ratings agency downgraded the country’s top-tier credit rating, warning as part of its unprecedented action that officials must do more over the short term to stabilize and improve the deficit picture. Other ratings firms have similarly cautioned that their assessments of U.S. creditworthiness could be cut if fiscal imbalances aren’t addressed.
Read more...States Still Feel Recession's Effects Two Years After Downturn's End - Southwest Economy, Fourth Quarter 2011 - FRB Dallas
Budgeting and the Beginner's Mind | Multifamily Insight Blog
Steve Jobs had an affinity for Zen. One of the concepts he deployed in business from this perspective was “the beginners mind”. In its most basic form “the beginners mind” allows us to believe that in any circumstance there are many possibilities. Interesting. Can we apply this to the annual budgeting process for our assets?
The over-simplified budgeting process: take last years budget, compare it with actuals, split the differences and add 3% to revenue categories and 2% to expense categories. Done. Next! So much for thoughtfulness, professionalism or being connected to reality. Budgeting can be a “value add” proposition, assisted by the beginners mind perspective.
Read more...Budgeting and the Beginner's Mind | Multifamily Insight Blog
The over-simplified budgeting process: take last years budget, compare it with actuals, split the differences and add 3% to revenue categories and 2% to expense categories. Done. Next! So much for thoughtfulness, professionalism or being connected to reality. Budgeting can be a “value add” proposition, assisted by the beginners mind perspective.
Read more...Budgeting and the Beginner's Mind | Multifamily Insight Blog
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