Property Management Resources

April 25, 2014

BOOM! – Spring 2014 Apartment Report

By: Craig McConachie, C&R Real Estate Services, Co.

Spring 2014 MultifamilyNW Apartment Report-Vol.20_Page_01-web

Amidst a significant building boom, low vacancies and increasing rents, there are some early signs that supply and demand will soon equalize, and the market will be more in balance by the end of next year. Overall vacancies have inched up in most areas, and the inclusion of new units in our survey has caused average rent rates to increase over 5% in the past six months.  Operating expenses for all unit types have increased a modest 2.2% on an annual basis, as landlords continue to realize solid returns on their investments.  Market demand is high for the multifamily sector, and supply is extremely low.  The number of closed transactions in the Metro area decreased from 87 in the fourth quarter of 2013, to 56 in the first quarter of 2014, reflecting a 36% decline in sales.

 

Portland/Vancouver

Vacancy

The Portland /Vancouver vacancy factor increased, and currently stands at 3.46%.  This is only slightly higher than the 3.11% rate reported in our Fall report.  The St. John’s area is showing surprising strength reporting a 2.3% vacancy factor. This is the lowest in all of the surveyed areas.  Tigard, NW Portland, Lake Oswego and Aloha all have vacancy factors over 4%.   All unit types are less than 4% vacant with the exception of a 4.06% rate for 3 bdrm/2bath units. Two-bedroom, one bath units have the best occupancy all unit types, with average vacancy of 2.7%.

Rent Rates

Overall rents in the Metro area have continued to increase at an annual rate of over 11%.  In the past six months Northwest Portland, and Tigard have experienced an 11% increase, with the St. John’s area showing a 25% increase.

Average rent per sq. ft. for all areas has increased to $1.16.  The downtown core continues to have the highest rents at $1.93 p.s.f.   Outer NE Portland and Troutdale/Fairview have the lowest rates, averaging $.88 p.s.f.  Oregon City was one of the few areas that had a slight decrease in rent.

Market Conditions

Only 7% of all properties are offering rental incentives. The average number of days that a unit will stay vacant for the entire area is 35, with Inner SE Portland and St. Johns experiencing the fastest turnover rate of only 10 days. Fifty two percent of all professionally managed properties in the Portland/Vancouver area are passing through water and sewer costs to their residents.

Other Areas

The Bend/Redmond area continues its strong performance, with a vacancy rate just over 1%, as Deschutes County, is once again, the fastest growing county in the Western U.S.  Eugene/Springfield is stable, with a 4% vacancy, and average rents of $1.02 p.s.f.  The Salem market has experienced a significant increase in vacancy from 4.03% to 6.45%, and landlords are offering incentives at 23% of the properties.  Salem landlords have been increasing tenant paid water and sewer bill-backs, with over 45% of tenants being billed.  The Bend and Eugene areas are reporting 33% tenant paid water and sewer.

Operating Expenses

This issue includes our annual survey of apartment operating expenses. The numbers are derived from 2013 year end operating statements at 108 stabilized properties, representing 13,011 units throughout the Portland Metro area.  We have expanded and modified our property types this year for Multnomah County, and now have three age groups for both garden style and urban style projects.  This will better reflect the recent building activity and allow for more relevant comparisons.

Median per unit expenses have increased for all property types by a modest 2.2 % over the past year, from $4,251 per unit, to $4,346  per unit.  Newer garden style apartments in Clackamas County have the highest per unit expenses at $5,009, while older urban style units in Multnomah County have the lowest per unit expenses of $4,037.  Property taxes average $870 per unit ($1.07 psf), insurance cost averages $165 per unit ($.22 psf) and water and sewer expense averages $550 per unit ($.76 psf).

Our Contributors

Patrick and Mark Barry have once again contributed an excellent article on the apartment construction market. The current building boom and the market’s supply and demand are skillfully analyzed in their detailed article.

Barry reports;

  • “There is a current shortage of 4,000 units”
  • “6,500 units currently under construction across 56 projects”
  • “75 projects with 6,850 new units completed in the last 18 months”
  • “14,000 proposed units across 125 projects”
  • “Longer lease up periods”

Over 50% of the units under construction are either close-in east Portland, or suburban west side.  Over 50% of the proposed units are close-in west Portland or suburban west.  There is a concern that the income levels needed by tenants to afford these higher priced units, may not be supported by the Portland economy.  As absorption slows and concessions increase, Barry expects vacancies to increase to 5.25% by the end of 2015.

We are in the midst of a “broad-based and healthy recovery”, explains Amy Vandervliet from the Oregon Employment Department. Unemployment has dropped to 6.4%, which is the lowest it’s been since the summer of 2008.  This has been helped by job strength in manufacturing, business services and the housing market. Amy believes that the jobs recovery is complete and notes that “in good times and in bad, people want to live here”.

This survey represents a total of 63,161 units from 890 properties.  All of the articles have been reprinted without editing the content, in order to present unbiased opinions.  We’d like to thank all of the management companies and property owners who have submitted information. Their participation is critical in insuring the accuracy of our data and the continued success of this report.

February 11, 2014

Discover How to Use Social Media in Marketing and Why it’s Important to your Company

Filed under: Uncategorized — Tags: , , , , , — Mary Daggett @ 4:50 pm

Pam McKenna, 2014 President Multifamily NWWhy is social media important to your business and how does it play a role in marketing? Social media is a low cost way to communicate with your customers, both current and future. The number one goal of social media is to build relationships and connections. Brian Solis, social media expert states, “Welcome to a new era of marketing and service in which your brand is defined by those who experience it.” Your connections and relationships help to build exposure to your community.

The last time I was out of town, we were looking for a good place for dinner. I turned to Monocle on Yelp to help with my search and found ratings from other customers as well as comments on their dining experience. I was able to pull up the menus, find pricing and even read comments on what attire would be appropriate for the restaurant. We were pleased with the results and truly enjoyed our dinner, posting our experience on Yelp’s site.

Statistics on social media reveal how much this has integrated with our lives which includes the apartment industry: Facebook has over 1.19 billion active users monthly; 72% of online adults use social networking sites; 9 billion photos are uploaded to Facebook monthly; You Tube reaches more US adults ages 18-34 than any cable network; 60% of American adults own a smart phone; Linked In experienced 105% growth between 2011 and 2013.

Social media takes time and careful strategic thought, it does not happen by accident. You will need to purposefully integrate social media into all marketing and branding efforts creating a consistent and relevant experience for your customers.

A few tips from experts:

  • Make sure your content is viewable on mobile devices including images and videos.
  • Plan ahead and map out how often you will connect with your customers by posting fresh content.
  • Create content that resonates with customers keeping it relevant.
  • Monitor and listen to comments – social media is just people talking to people and sharing their perspective. This can have a big impact on loyalty and purchasing decisions. If you treat your customers well they will talk about it. Don’t view negative comments as a crisis but an opportunity to respond and improve.
  • Engage with your customers and let them know you value their input.
  • Have fun! Create games online or a community challenge that will engage your residents. An example one community implemented included a property scavenger hunt to find a special yellow rubber ducky. The first resident to find the hidden duck won a $50 gift card and had their photo posted on the community Facebook page.
  • Cross-promote with local businesses suggesting ideas of places to shop, dine and play. By partnering with your local businesses you can offer a deal of the week adding value for the residents to live at your community.

The real value of social media is in its ability to help you cultivate relationships and build trust with your customers. Using social media to connect and engage with people is the most effective tool when you focus on adding value as opposed to self-promoting. Through this process you create a picture of the lifestyle and experience you can expect to have living at your community. David Butler from Social Media Made Easy sums it up, “Ultimately, a positive social media presence will draw in more prospective residents to visit and tour the community.”

How important is social media in our business today? What we do know is that people are connected and talking on social media in growing numbers. They are sharing their experiences. The question is… are they talking about your community? If so, what are they saying? Some choose to avoid social media personally, but in business you need to be proactive.

Third party companies can help you manage your social media and more organizations are hiring these firms to stay on top of their community’s social media presence. This can be an effective way to manage the process, maintain consistency and improve your customer’s experience.

From Pam McKenna, 2014 Multifamily NW President

January 7, 2014

Now Is the Time to Really Go For It

Filed under: Business Development — Tags: , , , — Mary Daggett @ 9:00 am

If you are not rapidly growing your business now, you likely are not really in business.

If you are in the apartment or related business and you agree or are challenged by this observation then you are alive and pushing for opportunity, if not it’s doubtful. The same amount of effort and imagination spent staying alive during the economic down turn will now produce three times the result, not only because we are in the up side of our business cycle but because basic economic and demographic changes are causing long term market changes that favor the apartment business. The wind is at our backs.

Look around and see who is doing things. They are not always the same people as before. Question all your old assumptions about what can be done and what to avoid. Get energized by moving out of your rut. Yes, you are in one, we all are to some degree. Seek others who are doing the same in your business and other businesses. Action and enthusiasm are infectious just the same as doubt, fear and same old – same old.

Almost every time I engage with Multifamily Northwest events, classes, committees etc., I come away with a new clue, idea, contact etc. When I am open-minded I see new things I can do or use and often remember things I had forgotten. If you are a member and not getting the same, you’re probably walking wounded not really in business and worse yet, it’s your own fault.

First you have to show up. It’s been said by a lot of successful people, 85% of success is just showing up, which includes having an open mind.

The table talk at all sorts of events and projects is ripe with shared experience, observation, added perspective, angles and possibilities. Rub shoulders with new people. You already know what your current crowd knows or thinks they know.

Portland and Oregon’s other major cities are growing. Just read the October Apartment Report put out by Multifamily Northwest. Its straight talk with specifics and mostly all positive. More people need places to live and larger numbers have more money to pay for them. More properties and management need more products and services. There is a new energy out there and you can be a part of it. Get refreshed, take some initiative, get active or join. You may find your head isn’t on as straight as you thought. You can’t get it if you don’t plug in.

In this environment risk is less risky and more largely rewarded. Remember you are either growing or dying. There is no such thing as just holding your own.

From Jerry Mason – Westland Investments

Multifamily NW 16083 SW Upper Boones Ferry Road Suite 105 Tigard, Oregon 97224 Phone: 503-213-1281 / Toll Free: 800-632-3007 / Helpline: 503-972-3363 / Fax: 503-213-1288 Hours of Operation: M-F 8:30am-5:00pm