Market or MAKE a Market for Your Property

Market or MAKE a Market for Your Property?

Unlike commodity Internet listing services, Marcus and Millichap technology tools come with one-on-one relationships with investment experts across the nation.

We don’t just market properties; we MAKE a market for each property we represent. Our unique transaction platform is specifically designed to maximize value.

Our innovative communications network (MNet) allows our agents to present your property to more qualified investors than any other broker. The Process is orchestrated to maximize a competitive bidding environment to proactively solicit higher sales prices for your property. 

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Existing single-family home sales increased a modest 1 percent over 2017 as limited for-sale inventory kept the market from gaining traction. While many of the factors contributing to a restriction in sales velocity remain the same, changes to the tax code remove some of the incentives to homeownership, and anticipated interest rate increases this spring will bring additional challenges to the future of the housing market.

Continue reading "Tax Law Changes Could Usher in New Challenges For Housing Market, Reinforce Renter Demand"

Fully Occupied Multifamily Properties Open Showing - Wednesday Sept 13th 12-2PM

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Q4 2015 Apartment Trends


Separate studies issued this week share the same conclusion that demand for rental apartments and other housing options will stay at elevated levels largely due to the continued robust household formation and limited affordable housing options, especially for detached single-family houses.

The first study was co-commissioned by the National Apartment Association (NAA), sponsor of NAA Education Conference & Exposition running this week through Friday at the Georgia World Congress Center in Atlanta. The report projects that based on current trends, an additional 4.6 million new apartment units will be needed by 2030 to keep up with demand as younger people delay marriage, the U.S. population ages and immigration continues.

Continue reading "Elevated Demand for Apts. Expected to Remain Due to Household Formation and Lack of Affordable Housing Options"

Bloomingdale apartments sell for $53 million
Chicago apartment landlord Stuart Handler is continuing his push into the suburbs, dropping $53 million on a housing complex in west suburban Bloomingdale.

A venture led by Handler acquired Stratford Place, a 342-unit property near Stratford Square Mall, said Handler, CEO of TLC Management. The seller was a venture of San Francisco-based Friedkin Realty Group, which paid $52.5 million for it in December 2012.

It's Handler's fifth big suburban apartment deal since the end of 2014, when he began to expand beyond his base in Chicago and Evanston. Using a slow and steady approach and targeting the mid-market, he has amassed a portfolio of about 4,500 units, including more than 1,500 outside the city and Evanston.

Handler, who doesn't bring in outside investors on his deals, aims to buy one more property in the Chicago area by the end of the year.

He has nothing fancy in mind for Stratford Place, a property that he classifies as B-plus. The 27-acre complex at 232 Butterfield Road, which has an occupancy rate in the mid-90 percent range, was completed in 1991. He expects to spend $1 million or so sprucing it up but doesn't see a need to do much more.

"It's a strong asset now," he said. "We're just going to move it up to another level."

Suburban apartment landlords have been operating at a high level for the past several years, a period of rising rents, occupancies and property values. The median net suburban apartment rent per square foot rose 3.7 percent last year, according to Chicago-based consulting firm Appraisal Research Counselors. Rents were up 22 percent over five years.

Handler remains optimistic about the market, but with interest rates rising again, he doesn't expect property values to rise much more.

"It's not as hot as it has been, but it's still good," Handler said.

Friedkin Realty, meanwhile, still likes the Chicago market and has been scouting the suburbs and downtown for more properties to buy, said Morton Friedkin, founder and chairman of the company. Friedkin Realty owns eight properties totaling more than 2,100 apartments in the Chicago suburbs. In its most recent acquisition, the firm paid $42 million for a 144-unit building in Des Plaines.

Though other suburban multifamily properties have sold for big gains the past few years, Stratford Place bucked that trend, with Handler paying roughly what Friedkin bought it for more than four years ago.

"We overpaid, and he underpaid," quipped Friedkin.

He expects Stratford Place to fare well under Handler, who can give it more attention than he could from 1,800 miles away.

"Stuart's local to the area," Friedkin said. "He's there to stay, and he's an operator."

Source: Crains Chicago Business May 15th 2017 Alby Gallun

Good News for Multifamily Number of Renter Dominated Cities Keeps Growing
Good News for Multifamily Number of Renter Dominated Cities Keeps Growing

Good News for Multifamily Number of Renter Dominated Cities Keeps Growing: In 21 U.S. cities with a population of 100,000 or more, more than 50 percent of the households are made up of renters, And according to research from ABODO, the number of cities that can claim this is only going to grow.

ABODO earlier this week released a report identifying those major urban areas in which more households rented than owned. Relying on numbers from the U.S. Census Bureau, ABODO researchers found that of more than 400 urban areas with populations of more than 100,000, 21 are composed of at least 50 percent renters.

Now, that number might not seem that great. But ABODO is predicting that the number of renter-majority cities will only continue to grow. The company points to a report from the Pew Research Center saying that 3 million former homeowners moved from owning to renting in 2011. That’s up from 2.5 million who made the same switch in 2001.

There are several cities in the Midwest in which 50 percent or more of the households rent rather than own, according to Abodo. In Columbia, Missouri, for instance, 53.3 percent of households rent, while in LaFayette, Indiana, 52.9 percent rent. In Champaign, Illinois, 52.5 percent of households rent, and in Clarksville in Kentucky and Tennessee, 51.9 percent of households are renters.

What might be most surprising is some of the big cities in which more households don’t rent. In Chicago, for instance, only 36.1 percent of households rent instead of own.

Age, of course, has a lot to do with this trend. According to ABODO, the majority of renters in the company’s list of renter-dominated cities are under 44, with the highest percentage — 24.29 percent — falling between the ages of 25 and 34. Owners are older, with ABODO reporting that 77.16 percent of owners are older than 45.

It matters, too, if a city is a college town. ABODO found that many of the cities on the list are college towns, including, of course, Champaign, Columbia and LaFayette. In these cities, more than 50 percent of renter households were occupied by non-families — many of them, of course, being college students.

What do all these numbers mean? Only that there remains plenty of opportunity in the multifamily sector for both developers and brokers. Renting is becoming the top choice of a growing number of households across the country. And while the majority of cities and communities across the United States remain populated by more owners than renters, you can bet that the number of renters will only continue to increase.

Just look at the centers of such cities as Chicago, Minneapolis, Kansas City, Cleveland and Detroit. In these urban areas — and many others across the Midwest — renting is becoming an ever more popular option. And as the ABODO report shows, this is a trend that isn’t slowing any time soon.


Source: Midwest Real Estate News February 23, 2017 | Dan Rafter

Commercial Real Estate Price Indices Post Fifth Straight Year of Growth


Q3 2016 Apartment Trends

  • The national vacancy rate for multifamily properties across Reis’s largest metro markets did not budge from it 4.4% in Q3 2016.
  • Close to 40,000 new units came online in Q3 2016.
  • Demand remained robust enough to absorb the amount of units that are coming online.
  • Asking and effective rents grew by 1%.
  • Year-over-year asking rents grew by 3.9% and effective rents grew by 3.8%.
  • Most expensive coastal markets' highest priced properties are showing weakness.


Q3 2016 Office Trends

  • The national office vacancies remained moored flat at 16% in Q2.
  • Year-over-year office vacancies have declined 40 basis points.
  • Rents began to accelerate but fell back to its average quarterly level at .4% respectively for both asking and effective rents.
  • Year-over-year rents are seem to be healthy, pulling at 2.7% and 2.8%.
  • U.S. economy creating fewer jobs than in 2015 and 2014.
  • Upcoming November elections a determining factor for firms holding off long-term commitments.


Q3 2016 Retail Trends

  • Regional malls showed some improvement with vacancies declining 10 basis points to 7.8%.
  • Relatively strong asking rent growth at 0.5%; between 0.3% and 0.5% on a quarterly average asking rent growth.
  • Neighborhood and community shopping centers vacancies rising by 10 basis points ending Q3 at 10%.
  • Asking and effective rents both grew by 0.4%
  • Businesses are pulling back on capital spending and long-term investments, waiting on results of upcoming elections.


Q3 2016 Industrial Trends

  • Warehouse and industrial subsector vacancies remained stuck at 10.5% in Q3.
  • Year-over-year vacancies for warehouse and distribution declined by 20 basis points.
  • Asking and effective rents grew by 0.4% and 0.5% respectively, growing 2.1%-2.3% on a year over year basis.
  • Flex/RD showed more activity in Q3, falling 20 basis points to 11.4%.
  • Year-over-year Flex/RD has declined by 70 basis points.
  • Asking and effective rents grew by 0.4%, year-over-year growth in the low 2% range.
  • 75,000,000 SF of new construction for warehouse and distribution for all of 2016.


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Source: Reis Nov 3, 2016


Armageddon on Hold for Four Quarters

  • The national vacancy rate for multifamily remained moored at 4.4% in the third quarter, unchanged since the fourth quarter of 2015 despite the large number of new deliveries.
  • This confirms what we have posited thus far about demand remaining robust even as supply growth increases. With that said, this equilibrium is tenuous and likely won’t last.
  • For markets that experienced either a large increase in rents over the last few years, or a steady influx of new buildings – or both – landlord pricing power is being tested.
  • Market conditions in the apartment market softened a bit in the third quarter, a period they generally see the highest activity and strongest rent growth.


On Pause, Those Fine Hopes for 2016

  • We started 2016 feeling fairly optimistic about the prospects of the office sector. With the national vacancy rate declining by 40 basis points last year, we were poised to finally see an acceleration in improvement in fundamentals for the office sector.
  • With national vacancies remaining stuck at 16.0% in the third quarter, it appears that optimistic hopes about the prospects of the office sector have been put on hold – at least till the fourth quarter.
  • While the numbers disappointed in the quarter, much of the decline was a lagged response to tepid employment and economic conditions in the first quarter.


Two Steps Forward, One Step Back

  • The national neighborhood and community center retail vacancy rate increased by 10 basis points during the third quarter to 10.0%; the retail mall vacancy rate decreased by 10 basis points to 7.8%.
  • Both minor changes represent a reversal in the second quarter when the neighborhood and community center vacancy rate decreased and retail mall vacancy increased, both by 10 basis points.
  • Neighborhood and community centers have lagged due to the slow growth in median household income that has kept a lid on discretionary spending over the last few years.
  • Both neighborhood and community centers and regional malls face competition from newer and fresher retail concepts as well as e-commerce.


A Downshift in Demand

  • The momentum in the industrial market slowed a bit as demand growth decelerated. Nevertheless, vacancy held steady in the warehouse and distribution sector as net absorption exceeded new construction by a small margin.
  • Although the industrial sector has outperformed other property types in terms of occupancy growth, the down-shift observed in the third quarter puts the asset class on par with office and retail which followed a similar pattern.
  • Echoing the sentiment we expressed last quarter, the slow but steady rate of growth should continue going forward as most metros continue to see demand growth for industrial space.
  • Vacancy declined in the Flex/R&D subsector largely due to a sharp drop in new construction.
  • Net absorption slowed somewhat but remained positive. Market rents increased but also at moderate rates, similar to the second quarter.
  • Once again, every metro posted positive rent growth for the quarter, although some outperformed others.


New Construction at the Cusp of Economic Change

  • The third quarter of 2016 was marked by a somewhat consistent trend – a pronounced pullback in new completions, relative to recent quarters.
  • This is readily apparent in the apartment and office sectors, but less so in neighborhood and community shopping centers where supply growth has been anemic for several years anyway.
  • What caused this pullback – especially in multifamily where we were expecting a deluge in new supply?
  • Any pickup in activity for new completions is likely to be driven by projects that are already in the pipeline, just waiting to come online in what may well be a deluge for the apartment sector in the fourth quarter.

Source: REIS

Q2 2016 Apartment Cap Rate Trends

Q2 2016 Apartment Cap Rate Trends


Just when we think the apartment market can’t get any stronger, we hit the equivalent of 88 miles per hour and see cap rates reaching a new record-low level. We observe that the mean cap rate, illustrated by the dark blue line in the chart, declined by 10 basis points to 5.7% during the second quarter. The market continues to reach record-low levels and the average commercial real estate cap rate has now been below 6% for all of 2016.

It remains remarkable that this far into an economic expansion that investors are willing to pay such a premium for apartment properties. Certainly, the low-yield environment around the world plays a big role, especially given the relative strength that we have observed in apartment fundamentals. But ultimately what this shows is that investors, despite new supply growth, continue to be bullish on the apartment sector, even if only on a relative-value basis.

As the mean cap rate has continued to fall over time, it is unsurprisingly pulling down the 12-month-rolling cap rate, depicted as the red line in the graph. Due to the strong downward trend in the market, that metric has now fallen below 6% for the first time ever, reaching 5.9% during the second quarter. This demonstrates that these sub-6% cap rates are a longer-term, durable phenomenon and not a one-quarter anomaly.

The downward trend in cap rates for multifamily properties is also dragging down the historical long-term average cap rate, shown as the dashed line in the chart, which has now fallen to 6.5%.

The environment remains ideal for apartment cap rates to remain at or near historically low levels and possibly fall even further. Nothing fundamental has changed between this quarter and last quarter to alter that view. While hearing anecdotally from clients that they are starting to balk at such high apartment prices, that looks more like the exception these days based on the cap rates for properties in the market that are actually trading.

Source: REIS  Ryan Severino on Aug 29, 2016

The suburban market is neither too hot nor too cold, with demand strong enough for landlords to push through moderate rent hikes—and for the market to absorb a rising supply of apartments

Investor Pays 60 million for Naperville Arbors of Brookdale Apartments

Investor Pays 60 million for Naperville Arbors of Brookdale Apartments

A local landlord sold a Naperville apartment complex for $60 million, nearly twice what it paid for the property when the real estate market was in the dumps.

Prime Property Investors sold the Arbors of Brookdale, a 281-unit property on the suburb's northwest side, to Friedkin Realty Group, a San Francisco-based investor that has been a busy buyer and seller of apartments in suburban Chicago, according to DuPage County property records.

The deal is the latest of many showing how investors that bought during the bust have been handsomely rewarded for taking the risk. Prime paid $32 million for the Arbors in December 2009, as the market was bottoming out, and cashed out earlier this month for $59.7 million, or $212,000 a unit, county records show.

Prime rode the market higher, but it also spent $2.1 million on new roofs, mechanical systems and other improvements, said Michael Zaransky, the company's co-founder and co-CEO. In addition, the firm also renovated about 40 apartments in the past couple years, allowing it to raise rents on some units by as much as $200 a month, he said.

The property's appreciation “wasn't just a market timing thing,” he said.

The property's rental revenue rose 140 percent over the nearly seven years Prime owned it, Zaransky said. Friedkin Realty plans to continue the apartment renovation plan, said Morton Friedkin, the firm's founder and chairman, a move that could further boost the property's revenue.

“There's additional income to be realized,” he said. “I think the property has lasting value. It's got great architecture and great location.”

How much further Friedkin Realty will be able to raise rents will depend on the market, which has been on a roll for the past several years. The median suburban rent per square foot has risen nearly 32 percent—about 4 percent annually—since Northbrook-based Prime bought the Arbors in 2009, according to a report from Appraisal Research Counselors, a Chicago-based consulting firm.

Wagering that rents will keep rising, investors continue to bid up prices of apartment buildings, tempting many landlords to cash out. By mid-year, major suburban Chicago apartment sales totaled $750 million and, taking into account what's currently on the market, they could top the full-year record of $1.2 billion set in 2007, according to Appraisal Research.

The Arbors is considered a mid-tier, or Class B, multifamily property, with monthly rents ranging from $1,225 for a one-bedroom unit to $2,100 for a three-bedroom, the report shows. The property at 1373 Ivy Lane was 100 percent occupied at the time of the sale, Zaransky said.

With the Naperville sale, Prime no longer owns any apartment buildings in suburban Chicago, leaving it with properties in Texas and Denver. Yet that doesn't mean it's leaving the Chicago market, Zaransky said.

“We're still active in looking and would love to own other assets here,” he said. “I still think the suburban Chicago apartment market is strong and vibrant.”

Friedkin Realty, meanwhile, owns more than 2,700 apartments in the Chicago suburbs and is looking for more. It is in the final stages of buying another suburban apartment complex, Friedkin said, declining to provide more details because of a confidentiality agreement.

Source: Chicago Real Estate Daily, Crains Chicago Business August 31st, 2016 By Alby Gallun