A Sign Of Things To Come
The Star Tribune reports from Minnesota. “Finding an apartment is still difficult in many parts of the Twin Cities but, with new ones being built at breakneck speed, that’s beginning to change. During the past three years, about 11,000 new apartments have hit the market, but only about only about 10,000 have been absorbed. Developers are about to tap the brakes after delivering a near-record number of new rentals this year. ‘The slowdown is happening and it’s real, but the market will remain in balance,’ said Brent Wittenberg, vice president at Marquette Advisors, at a recent gathering of the Minnesota Multi-Housing Association in Minneapolis. ‘There will be winners and losers.’”
The San Francisco Chronicle in California. “Thanks to a glut of new high-end apartment buildings, some Bay Area landlords are offering incentives such as free rent for a month or more, six months of free parking, free electricity for a year or up to $1,500 in gift cards. Some are waiving application fees and cutting security deposits to $1,000 or less on units that rent for $3,000 a month and up. But with so many buildings opening around the same time, the incentives are getting bigger and spreading to somewhat older buildings that compete with new ones. South of Market, South Beach, Mission Bay and Potrero Hill are San Francisco’s ground zero for new construction — and rent concessions.”
“Afi Valizadeh is a San Francisco real estate broker who helps investors buy condominium units and then finds tenants for them. ‘All of a sudden the (apartment buildings) started offering one month free, six months’ free parking,’ Valizadeh said. Now prospective tenants ‘come to me and say, look at all this inventory out there. I want this (unit) for this much. They are offering me prices now.’ Rents in her buildings have dropped 15 percent on average since last year. ‘Rents in the Madrone were $5,500 last year, this year they are $4,500 for the same two-bedroom,’ she said.”
From Boston.com in Massachusetts. “Rent increases have slowed over the past year in 71 percent of the Boston area’s ‘luxury zip codes’ where $3,000 and up is the norm, Zillow reports. That’s compared to 61 percent for the rest of Greater Boston where rents are not so lofty. And renters on the high end are also more likely to be offered all sorts of incentives to sign a lease. Slowing luxury rents is not just a Boston phenomenon, but one taking place around the country as new luxury towers flood city centers from New York to San Diego. ‘There has been a slowdown in the apartment market but it is more common in luxury zip codes than in non-luxury ones,’ noted Aaron Terrazas, senior economist at Zillow.”
Bisnow on Georgia. “Atlanta Fine Homes Sothebys International Realty’s Christa Huffstickler tells us she’s working with more multifamily developers looking to rejigger potential projects by converting some units into condominiums. The half-and-half approach, she says, is a strategy to get financing that’s becoming more scarce. ‘We know that there will be some condo announcements and offerings coming to market. There are some very ambitious people,’ Christa told our audience. But for now, developers are focused on the luxury condo market, where units can start at $1M. She says there’s a pool of buyers seeing housing in pricing between $600k to $1M, ‘and there is nothing for them. The challenge with even the new projects we announced…everything is trending toward the very expensive, very high-end luxury base.’”
“During his keynote address, US Department of Housing and Urban Development regional center director Ruben Brooks told our audience that there is evidence of a multifamily slowdown in the Southeast. Last year, HUD saw $2B in transactions, down from $3.2B the year before. ‘We’re seeing a slight …slowdown, which is probably a sign of things to come,’ Ruben says.”
From Arlington Now in Virginia. “In Arlington County, projections by the Metropolitan Washington Council of Governments show that 69,000 new residents will move in by 2045. That’s a population increase of nearly a third. Of course, all those new people will need somewhere to live. And if recent trends are an indicator, many will choose to rent their homes. So, while a glut of recent apartment construction may have led regional rents to flatten a bit lately, it looks like there will be plenty of demand for new and existing units in the coming years.”
From Click 2 Houston in Texas. “Cranes and crews are all over town, putting up new luxury apartment buildings in some of the hottest neighborhoods. The building continues, even as Houston’s economy slows down. That has created an oversupply of apartment units that could take years to fill. Analysts said the area is now in a renter’s market. ‘Right now, we are overbuilding, and we are going to continue to overbuild,’ Patrick Jankowski, with the Greater Houston Partnership, said.”
“Jankowski said that means renters can find deals because with 45,000 new apartment units expected to be added this year and next, the area is maxed out, building more than could be filled in three of the region’s best years. ‘A lot of anecdotes out there of ‘their manager is willing to reduce their rent’ to make sure that they don’t leave. But if you’re out there looking for a new apartment, you can get two months free rent, sometimes you can get a gift card on top of that,’ Jankowski added.”
“In a top of the line apartment, Jankowski said the savings could add up to an extra $3,000 a year. ‘Rents are soft now. But they’re going to get even softer over the next six months,’ Jankowski said.”
