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

Fully Occupied Multifamily Properties

Next Scheduled Showings:   Wednesday Sept 13th 12-2PM
Please Confirm if Attending one or both showings.
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.

 

Coldwell Banker Commercial Real Estate

A subsidiary of Realogy Corporation, Coldwell Banker Commercial (CBC) is a worldwide leader in the commercial real estate industry. The CBC brand has its roots in the oldest and most respected national real estate brand in the country. Coldwell Banker Commercial has the largest commercial real estate footprint with over 3,500 professionals nationally, over 16,000 listings, nearly double that of the nearest competitor, averaging 13,000 transactions annually valued at over $4 Billion. Providing comprehensive Commercial Real Estate Services to the Greater Chicago Area and Nationally through our vast network of professionals and Global Client Services team.

Contact us:

 

Source: Reis Nov 3, 2016

reis-apartments

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.

reis-office

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.

reis-retail

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.

reis-industrial

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.

reis-construction

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

Fully Occupied 4-Unit Apartment Building For Sale Lemont IL

Fully Occupied 4-Unit Apartment Building For Sale Lemont IL

New Listing Fully Occupied 4-Unit Apartment Building For Sale Lemont IL

Fully occupied 4-unit brick apartment building in quiet Lemont neighborhood. Three 2-Bedroom units and one 1-Bedroom. Under 5-units and will quality for lower downpayment and lower rate residential financing. Well maintained property with new roof, approx 70% new vinyl windows, refinished hardwood floors & tiled baths. On-site laundry (owned) providing tenant amenity & added income. 4 off-street parking spaces and storage for each unit.

Download Brochure


Multifamily Services

Coldwell Banker Commercial® (CBC®) multi-family professionals are well-versed in the unique elements and trends that shape successful multi-family transactions. With access to local, national, and international market data and industry trends, CBC professionals can provide the knowledge to help you make informed decisions and design the ideal real estate solutions that meet your needs. In addition, professionals can leverage their relationships with fellow CBC professionals in over 250 companies around the world to access a larger pool of potential investors and tenants.

CBC professionals will help you maximize the value of your assets prior to sale through property rehabilitation and marketing. If you are purchasing a property, they will assist you in making an informed and profitable purchase. For owners of multiple properties, CBC professionals can help evaluate each property based on current market conditions and future trends for each specific location. By completing transactions in nearly every US state last year, CBC multi-family professionals are well versed in the anomalies of every market and are ready to assist with your transaction.

CBC professionals will assist you in any of these services:

  • Acquisitions
  • Appraisal and other Valuation Services
  • Investment Analysis
  • Consulting
  • Dispositions
  • Management
  • Property and Facilities Management
  • Strategic Real Estate Planning
  • Market Surveys and Analysis
  • Due Diligence and Feasibility Studies

CONTACT US:

Q4 2015 Apartment Trends

Q4 2015 Apartment Trends

Strong Profit Growth Keeps Apartments as Favored Property Type

Apartment property performance in 2015 continued to outperform even the strong performance seen in 2014 and 2013, according to the latest financial data collected on thousands of multifamily complexes. And the net operating income performance for the property sector may still head higher.

The combined 2015 net operating income at nearly 5,900 conventional multifamily complexes reporting year-end numbers totaled $8.16 billion, according to Fannie Mae and Freddie Mac data collected through April and analyzed by CoStar Group. Those complexes contained 1.16 million apartment units -- consequently representing NOI per unit of $7,044.

CoStar analyzed property-level data on collateral backing loans securitized by Freddie Mac and Fannie Mae. Since conventional multifamily properties make up the bulk of that collateral, student, senior and manufactured housing was excluded from this analysis.

For the nearly 4,800 units that reported full-year NOIs for the last two consecutive years, NOI/unit increased 5.2% year over year. Those properties represented nearly 914,000 units. The 2015 increase outpaced growth in 2014 and 2013 of 4.09% and 5.01%, respectively, according to separate research conducted by Wells Fargo Securities.

Multifamily properties securitized in CMBS conduit offerings appeared to be faring even better posting year-over-year NOI gains of 7%, according to Wells Fargo Securities.

Priciest Properties Appear to Lead Increase

The year-over-year increase seems to be a top-down phenomenon. For multifamily properties with 2015 NOI/unit of $5,000 or more (about 607,400 units), the annual NOI increase came in at an average of 5.9%, according to CoStar analysis.

In properties where the 2015 NOI/unit was anything less than $5,000 (about 310,300 units), the annual NOI increase came in at an average of 4.4%.

By apartment complex size, the largest complexes of more than 500 units posted the lowest increase in NOI of just 4%. Apartment complexes ranging from 100 to 500 units appeared to be a 'sweet spot' for NOI, posting NOI increases of 6.1%. Smaller complexes of less than 100 units posted NOI of 4.9%.

NOI decreases were reported for 216,930 units, which account for about 24% of units reporting NOIs for the last two years. And only five properties totaling 433 units reported NOI losses for 2015.

Occupancy Flattened Out

The average annual physical occupancy for the reporting properties was static coming in at 94.3% for both 2015 and 2014.

In total, nearly 40% of the properties reporting physical occupancy for the last two consecutive years reported decreases in occupancy. Those properties represented 402,838 units, about 44% of units.

Notably, however, profitability continued to grow even as occupancy declined. Net operating incomes shrunk in less than 30% of the properties reporting occupancy declines. Overall NOIs in those properties grew year over year by $128 million.

Also, judging by recent performance at the newly opened properties, there is still strong demand for multifamily units. Of the properties reporting, 205 of them containing 7,585 units were newly constructed in 2014. At year-end 2015, their average occupancy was 94.2%. Additionally, properties delivered in 2013 were reporting 2015 occupancy of 94.7%.

“The occupancy and NOI findings from Freddie and Fannie are not surprising, as they are consistent with what we’ve experienced within our own multifamily portfolio,” said Yvana Rizzo, senior vice president of asset management for Resource Real Estate in Philadelphia, which owns and manages a portfolio of real estate investments with an aggregate value in excess of $3 billion, including approximately 25,000 apartment units.

"NOI growth has been driven by a top line increase in rents, which is simply a result of the powerful supply/demand dynamic in this sector," Rizzo added. "We’re still very optimistic about current state of the apartment market and the favorable imbalance of demand over supply. This trend is being driven by a shift in people’s preference towards renting over homeownership."

High rental demand is coming from Millennials, the middle-class workforce and retiring boomers, she said.

Multifamily Remains Q1 Growth Leader

Estimating NOI based on changes in rent and estimated expenses for the entire apartment sector nationally, CoStar Portfolio Strategy, the company’s analytics group, is projecting that NOI growth for the multifamily sector this year will outpace last year.

Actual quarterly NOI growth in the first quarter of 2016 came in at 2.94%. CoStar is projecting that NOI will increase in each of the next four quarters peaking at 5.22% in the first quarter of next year. This would be the best performing period on record for apartments since the last market peak in 2007.

NOI growth is expected to begin to taper off quarterly in the second quarter of 2017 and decline slightly each quarter through 2020, the last year of the current projection.

Apartment property price growth has also been strong. CoStar’s April 2016 Multifamily Repeat Sale Index expanded 0.8% in the first quarter of 2016 and 9.9% in the 12-month period ending in March 2016. These were the strongest quarterly and annual rates among the four major property types.

Multifamily remains the only U.S. property index to have regained its pre-recession peak, ending the first quarter of 2016 18.8% above its previous high level in 2007. Notably, the CCRSI's Prime Multifamily Metros Index has skyrocketed to 44.9% above 2007 levels.

While an unprecedented pipeline of new supply is beginning to exert pressure on multifamily fundamentals nationally, vacancy rates remained relatively tight at 4.4% in the first quarter of 2016.

Softening on the Horizon

Nationally, the outlook for the multifamily sector for the rest of this year is for some softening of rent fundamentals, according to Fannie Mae economists.

Rent growth has been exceptionally strong since 2011. It has remained in the 3% range over the past two years. The expectation for 2016 is that rent growth will once again be positive, but that it will ease slightly into the 2.5% to 3% range due mainly to a large amount of new supply should come online in 2016.

Fannie Mae expects much of the new supply will be concentrated in about 12 metros. There is approximately 330,000 apartment units expected to be constructed this year, according to CoStar data. About 48% of those units are expected to be delivered in these 12 markets:

Market Name -- Number of Units

Houston -- 27,553
Dallas/Ft Worth -- 21,038
Washington, DC -- 12,310
Long Island -- 11,806
Atlanta -- 10,282
Northern New Jersey -- 10,004
South Florida -- 9,957
Austin -- 9,696
Charlotte -- 8,806
Chicago -- 8,535
Denver -- 8,488
Nashville -- 7,741

“As an investment, we feel multifamily makes sense as long as investors are selective and focus on the right product in the right markets,” Resource’s Rizzo said. “We think the best opportunities are in the older, existing Class B communities that are ripe for rehabilitation. Ideally they are located in suburban communities with employment growth and strong schools.”

“Not only are these desirable areas to live but they are places where it is extremely difficult to build new supply. High-end, Class A, luxury apartments make up the majority of new construction. They are expensive and tend to be located in urban areas,” she added.

Source: CoStar Mark Heschmeyer May 12, 2016