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Mogul Minute 11/02/2016
November 2 | 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:

Apt. Rents: Biggest Monthly Drop Since ’13 (Globe St)

  • According to Yardi’s most recent report, multifamily annual effective rent growth dropped for the second straight month in October. Although the cumulative drop was minimal ($3 overall), it was the largest since October 2013.  Still, on a year-over-year basis, rents grew 4.4% nationwide in October, a 30-basis-point decline from September and a 230-bp fall from the recent high of 6.7%, in October 2015.
  • Yardi believes the “decline demonstrates a reversion to more ‘normal’ rent growth that we forecast at the beginning of the year. Given the seasonal nature of apartment rents, the consistency of growth in recent years represents more of a historical outlier than the current moderation.”
  • Moderation in high rent growth markets (Sacramento & the Inland Empire) and supply concerns at the high-end “Lifestyle” apartments in certain markets were cited as two reasons for the decline in rents. Rent growth for renter-by-necessity units continues to remain high.
  • Twenty-six of the top 30 metros in the Yardi Matrix survey are above the 2.3% long-term average for rent growth, and Yardi expects that rate to continue in most markets. The markets in which rent growth has dropped swiftly—among them San Francisco, Houston and Denver—have issues with supply, affordability and/or job growth.

The Non-Affordable Care Act’s Restaurant Recession (WSJ)

  • According to a recent survey of 25,000 restaurants located here by the research firm TDn2K, restaurant traffic is down 2.8% from the start of the year through September which would put the industry at its weakest performance since 2009. This report comes on the heels of eight major restaurant companies filing for bankruptcy over the past 10 months.
  • Despite decreased gas costs and food costs, the report attributes a large portion of the decline in performance to a worsening of personal finances, namely increased healthcare costs. The Civic Science survey also found that consumers whose health-insurance costs had increased over the past year were 30% more likely to say they were “significantly” cutting back on restaurant spending than those whose insurance costs had not increased. This could be a trend to monitor as the Obama administration confirmed the average cost of benchmark premiums on Obamacare will increase by another 25% in 2017.

CBRE Research Tech-Thirty 2016 (CBRE)

  • CBRE’s most recent report, the “Tech-Thirty 2016” includes a great write-up on the technology sector covering job growth for the sector, top-ranked tech cities for CRE, areas of concern, and an outlook for the sector moving forward.
  • San Francisco, Phoenix, Austin & Charlotte headline the markets with the strongest growth of new high-tech office jobs. Silicon Valley, Raleigh, & Orange County rank the highest for office market rent growth. 

  • The recent rise of subleased office space is a concern that CBRE is tracking moving forward. The markets with the highest concentration and highest availability rates (top right quadrant) include San Francisco, Silicon Valley, and Phoenix. 

  • While CBRE sees San Francisco, New York, and Silicon Valley as tech office markets that have matured, they see Austin, Philadelphia, Atlanta, and Charlotte as markets that are still in expansion mode. 

 

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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