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Mogul Minute 08/18/2016
August 18 | 2016

Here at RealtyMogul.com, we keep our finger on the pulse of all things real estate, from finance to technology and everything in between. We make a point of sharing interesting articles and think pieces among RealtyMogul.com staff to help our team stay abreast of the market, and ahead of the curve.

So we thought, why not share some of these insights with you, our partners?

Got A Minute? Here’s some recommended reading with key points from the content:

Rent growth matches eight-year high as building boom doesn’t keep up (MarketWatch)

  • Although moderating in rate, rents continue to rise as they hit 3.8% in the 12 months ending in July – the highest level since January 2008.
  • Vacancy and rent growth are still continuing to outperform the historical averages, however, there are pockets of oversupply that are starting to pop up, particularly in Class A properties.

These 10 Cities Experienced Large Apartment Rent Boosts in August (Bisnow)

  • Per the apartment listing website Adobo, here are the top 10 multifamily gainers for the month in order of % growth:
    • Minneapolis (14%), Nashville (13%), Fort Worth (13%), Portland (12%), Baltimore (12%), Atlanta (11%), Virginia Beach (11%), LA (10%), San Antonio (8%), and Raleigh (7%).

US Apartment Market Growth To Stay Strong (GlobeSt)

  • AppFolio, a software provider for property managers, has put out a new study with one particularly interesting note on student housing. “Student housing is the one portion of the nation’s apartment market with a real mismatch between supply and demand. ‘There is a lot of demand that is not being met,’ says Nathanial Kunes, VP of product management for AppFolio. Perhaps the best explanation is that ‘it’s a fairly new asset class.’ Until the mid-1990s, there was almost no purpose-built student housing as we have come to know it. Students either lived in dorms or made do with the regular apartments available near their schools. The new resort-style apartment developments that have sprung up around university towns are ‘definitely a specialized sector,’ and many builders feel they don’t have enough knowledge or experience to jump in.”   

The Future of Malls: The Pop-Up Shop (Bisnow )

  • Interesting concept for potential non-traditional uses for malls in the future. Landlords can easily refresh the space and chase cash flow while owners of these pop-up shop owners gain flexibility and more visibility.

Rent Growth in East Bay Fastest in the World (Bisnow )

  • According to a recent ranking by JLL, Oakland and the East Bay have seen office rents increase 35% since last August as they have been the beneficiaries of sharply rising rents in San Francisco.
  • “Companies such as Uber and GAP are fleeing the expensive San Francisco market and looking for space across the Bay, according to the San Francisco Business Times.”

Port of Oakland

Mid-America to Buy Post Properties for About $3.9 Billion (National Real Estate Investor )

  • The merger would create the largest publicly traded landlord by number of units, with a combined 105,008 apartments. The majority of them are concentrated largely in the U.S. Southeast. The combined company, with a market value of $17 billion, will have its largest share of net operating income coming from Atlanta, Dallas and Charlotte, North Carolina, where the firms project three-year employment growth to be above the national average.

Apartment REITs Return to Buying Properties (National Real Estate Investor )

  • Some interesting quotes from the piece:
    • REITs bought far fewer apartment properties over the first half of this year compared to earlier in the cycle. That is changing with deals like the Mid-America acquisition (linked to in Monday’s bulletin) —partly because REITs’ stock prices have recovered and their cost of capital has improved. However, REITs are unlikely to fully return to the buying activity they showed earlier in the cycle, when occupancy rates for apartments were rising and prices for apartment properties were still relatively low.
    • Prices for apartment properties continue to rise relative to the income produced at the properties, driving down yields. Cap rates fell to an average of 5.6 percent in the second quarter, down from 6.0 percent the year before, according to RCA.
    • However, purchases by REITs accounted for only 3.45% of the volume of apartment purchases in the second quarter – the lowest rate since the third quarter of 2013. Since the Great Recession, REITs have typically accounted for well over 10 percent of apartment properties sold in any given year. REITs have been less active more recently—accounting for only 4.56 percent of apartment asset sales in 2015, according to RCA.

Economy Watch: Americans Didn’t Shop with Enthusiasm in July (Commercial Property Executive )

  • Overall retail sales held steady in July. Notables movement over the month include:
    • Car sales +1.3%
    • Sporting goods, hobby, book and music stores -2.2%
    • Internet sales continue to increase and are up 14.1% year-over-year at the end of July. Health and personal care store sales are up 7.8% over the year and food service is also up 5%
    • Department store sales are down 4% year-over-year and electronics are also down 3.8%
Tim Ednoff Headshot
Written by , Associate - Commercial Equity at RealtyMogul.com

Tim evaluates investment opportunities as well as performs due diligence and writes content for various equity and debt transactions. Outside of the office, Tim is an avid sneaker collector, a passionate health and fitness advocate, and a dedicated podcast enthusiast.

 
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