News Alerts, Aug. 25, 2013, Evening Edition, 3 New Articles, Real Estate +, Don’t Miss Them

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  1. Renter Demand Holding Fast So Far As Apartment Supply Wave Begins to Break – CoStar Group News Alerts, Aug. 25, 2013, Evening Edition, 3 New Articles, Real Estate +, Don't Miss Them


    “Clients often ask us, ‘is the time to invest in multifamily over?’ The simple answer is ‘No, we don’t believe so,'” Yuen [“real estate economist Francis Yuen”] said. “However, it’s clear that after 2.5 years of fundamentals improvement and a more than 200-basis-point decrease in the U.S. vacancy rate to around 6%, the apartment market has grown far more competitive. The market has hit the pause button and is now going in the reverse direction.”

    Chalk up a good part of the reversal to the feverish pace of new apartment construction in many markets. The total number of units delivered is now outpacing net absorption by tenants.

    Developers are building projects in the best locations, and in most cases, that means close to rail or other mass transit.

    Nationally, 40% of the total units under construction are walkable to transit stops or stations. Subtracting markets without transit systems, 60% of units under construction are transit-oriented developments (TOD), compared with less than 20% of the units delivered from 2000-2010.

    “We should not be afraid of rising home prices. The factors that drive home price growth will eventually also be favorable to the apartment market,” Mejia [“Luis Mejia, CoStar Group director of U.S. research, multifamily at CoStar’s Midyear 2013 Multifamily Review and Outlook”] said.

    Interestingly, the common perception that investors have traded down to lesser-quality properties in superheated markets such as New York and San Francisco because the best properties have become too expensive is not supported by the data. Investor interest across all parts of the quality spectrum has remained unchanged since 2009 at least.

    With returns weaker in 2013 , REITs likely won’t be willing to further dilute their shares by raising as much equity as in the past. Buyers who specialize in other product types such as office and industrial moved into apartments because it was the only game in town for several years. But as yields shrink in the apartment space, some will probably return to their core specialties as warehouse and office fundamentals continue to improve in 2014-15.

    Read the source article …

  2. Illinois renters get protection | Smart Real Estate Investing

    Renters whose apartments are involved in foreclosures will get special new protections under a bill signed into law today by Gov. Pat Quinn. The measure, sponsored by Sen. Jacqueline Collins and Rep. Kelly Cassidy, both Chicago Democrats, covers residents who live in multifamily developments who have hit financial problems and are foreclosed on. Specifically, the measure requires anyone who is acquiring residential property through a foreclosure to honor their tenants’ existing leases or provide them a minimum of 90 days to move. The measure takes effect in 90 days and strengthens provisions of a measure that is set to expire in 2014.

    Read the source article …

  3. GDP figures: some good news to start your bank holiday weekend with | Commercial Briefing

    …the latest Markit PMI indices for the regions paint an encouraging picture. For the PMI indices a reading over 50 suggests growth, and every UK region is above that level.

    For property investors this is an interesting development. …

    …the UK economy is still a way off returning to its 2008 peak level of GDP. The concern here is that this means the economy has spare capacity – factory lines standing idle, and workers unemployed. …

    …the capacity issue is more complicated than it seems. Factory machinery that has been shut down since 2009 (particularly if it was old to start with) may now need replacing.

    …wage increases will be inflationary, and thus increase pressure on the Bank of England to act sooner than assumed on interest rates.

    Plus, the unemployed have rusty work skills and many will have retired from the particular form of work. It would take some time before everything could be up and running again.

    Read the source article …