Multifamily Investment Sales Broker at eXp Commercial
P: 630.474.6441
Randolph Taylor


When COVID-19 hit in mid-March, U.S. apartment operators were quick to cut rents as demand all but evaporated. And now, as leasing volumes surge, rent cuts are quickly disappearing in most big U.S. metros – with the notable exception of most of the nation’s largest Gateway markets.

In the week ending June 20, executed rents for new leases inched up 0.08% compared to the same time last year. While this growth is minuscule, it’s a sharp departure from three months of steady rent declines. At one point in mid-April, executed rents nationally were down as much as 6.4%.

Rents are rebounding as new lease volumes have surged. In the week ending June 20, total new lease volumes were up a remarkable 18.6% compared to the same time last year in the same-store dataset.

Executed rents reflect prices in actually signed leases sourced from same-store rent rolls in millions of units running on the RealPage platform. Executed rents are a real-time indicator of market movement – very different from asking rents or “effective rents,” which tend to be lagging indicators reflecting all available units without visibility into what’s signed versus what’s offered. Executed rents not only include concessions (which are often unadvertised and offered during lease negotiations) but also factor in lease term lengths since rents can vary based on the term.

Continuing a pattern seen since COVID-19 first hit, large coastal markets are generally the exceptions to the rule. Executed rents dropped by double digits over the last week in Boston, New York, Los Angeles, San Jose, and Oakland. Rents were also down sharply in Minneapolis/St. Paul and San Francisco. In general, these markets are also not benefiting from the rebound in new lease demand.

Sun Belt and Midwest markets are driving the pricing rebound, just as they have on leasing volumes. Among the nation’s top 50 markets, 30 recorded positive growth in executed new lease rents during the week ending June 20. The largest gains came in what would typically be described as slow-and-steady markets, including Virginia Beach, Memphis, St. Louis, Greensboro, Jacksonville, Columbus, Tampa, Cleveland, and Kansas City.

Nashville was also a strong performer in spite of concerns about its exposure to the travel and leisure industries. Three West Coast metros – Riverside, Sacramento, and Portland – broke the mold and outperformed their peers.

Most hot-growth Sun Belt markets recorded flat to modest gains in new lease pricing. That included Dallas, Fort Worth, Charlotte, Phoenix, Houston, Denver, and Las Vegas. Those were perhaps the most impressive results given high lease-up volumes in most of those markets, reflecting the resiliency of those high-demand Sun Belt metros.

However, a spike in COVID-19 cases in many of those metros will provide a big test over the next few weeks. It’s too early to conclude that new lease pricing has effectively recovered, particularly given continued uncertainty about the state of the economy and the looming expiration of expanded unemployment benefits coming at the end of July.

New lease pricing fell 3% to 5% in a handful of key markets: Atlanta, Washington, San Antonio, Philadelphia, Miami, Orlando, and Austin.

While new lease pricing shows signs of recovering, renewal lease pricing remains volatile. Renewal pricing returned to positive territory for much of May before dropping back down in June. In the week ending June 20, executed renewal rents dropped 1.9% compared to the same time last year. The cuts could reflect public sensitivities around renewals, as well as operator priorities, focused on high occupancy and longer lease terms.



Source: RealPage by Jay Parsons Posted Jun 23, 2020

Multifamily Investment Sales Broker at eXp Commercial
P: 630.474.6441
Randolph Taylor

Downtown Chicago Rents Have Suffered While Suburban Markets Were a Mixed Bag

The  Chicago multifamily market has witnessed a tumultuous period over the past three months due to the coronavirus pandemic.

While thousands of Chicago-area residents have been furloughed or laid off as a result of the accompanying economic slowdown, many landlords throughout the region are expecting rent delinquencies to continue over the next few months and remain stuck trying to balance occupancies at the expense of pushing rents.

Rental growth is highly seasonal in Chicago. Rents typically accelerate in the first half of the year and stagnate or fall slightly in the fall and winter months when renters are less likely to be in the market for apartments and the available stock remains lower. Overall, the Chicago market bucked this trend in 2020, with rents in the Chicago metropolitan area falling by 0.8% during the period of May 15 to May 31.

However, in analyzing daily rent changes in multifamily properties from March 15 to May 31, changes in rent varied widely by submarket. For example, some suburban submarkets with tight vacancies and low asking rents actually showed positive rent growth during this time, while other submarkets with a glut of new supply and higher vacancies showed a large decrease in rent growth. Let’s take a closer look at the worst and best-performing submarkets for rental growth during this time period.

Worst Rent Performers:

Elgin-Dundee Submarket: -2.2%

The Elgin-Dundee submarket, with an inventory of 1,016 units and a vacancy rate of 13.8%, was the worst-performing submarket with rent declines at -2.2%. The submarket currently has 300 additional units underway, making up nearly 30% of total current inventory

Downtown Chicago: -2.1%

The largest submarket in Chicagoland with over 40,000 units, Downtown Chicago saw rents decline by -2.1%. Downtown Chicago has the highest asking rents in Chicago at roughly $2,600 per unit, and with vacancy hovering near double digits landlords have little pricing power in the current environment.

Best Rent Performers

Near North Suburban Cook: 7.1%

The Near North Suburban Cook submarket, with a vacancy rate of 7.2%, witnessed the largest positive growth at 7.1%, or an increase of roughly 10 cents per square foot since March 15. This large acceleration in rent growth was driven by a few large value-add rent increases in older Class B and C properties.

South and North Lake County Indiana: 1.9% and 1.7%, respectively

The South Lake County, Indiana, the submarket is one of the few located outside of Illinois that benefits from being part of the greater Chicago area while largely avoiding its numerous fiscal and tax difficulties. With a vacancy rate of 10.1% and no construction underway, the submarket’s small inventory benefits from extremely low asking rents, at $1,200 per unit, compared to neighboring submarkets. That has helped landlords continue to push rents.

Similarly, the northern portion of Lake County, Indiana, largely benefits from its out-of-state location. While asking rents here tend to be higher than its southern counterpart, at roughly $1,600 per unit, it is still discounted when compared to its closest Illinois submarket, Southern Cook County, which commands an additional $300 per unit.

Given the overall slowdown in activity in Chicago, CoStar expects rents to continue to decline throughout the year as demand formation evaporates and thousands remain unemployed.
Some positive signs remain, however, as Chicago begins phase three of its reopening plan on June 3, which will allow for some nonessential retail and restaurants to reopen with heavy restrictions imposed by social-distancing health measures.


Source: CoStar Denes Juhasz Market Analysts June 3, 2020, 10:09 P.M.

Multifamily Investment Sales Broker at eXp Commercial
P: 630.474.6441
Randolph Taylor


The National Multifamily Housing Council found that April registered a payment rate of 93% compared to the same time last month.

WASHINGTON, DC—When the National Multifamily Housing Council  reported a drop in April rent payments last week , executives acknowledged the numbers could improve as they expected many tenants would be paying late. Turns out, they were right.

In its weekly update to its rent tracker report, the association found that 84% of apartment households made a full or partial rent payment by April 12, up 15 percentage points from April 5.

All told, 90% of renters made full or partial payments from April 1-12, 2019, compared with 91% of renters in March 1-12, 2020, according to the NMHC. That is a payment rate of 93% compared to the same time last month.

NMHC surveyed 11.5 million units of professionally managed apartments in the US, across a wide variety of market-rate rental properties.

Separately, LeaseLock found that payments in April  were only down 5%  compared to January through March for renters that pay in the first 6 days of the month.

“My initial reaction to these numbers is that I am relieved given the size of job cuts,” says Greg Willett, chief economist of RealPage. “What I see right now are manageable challenges.”

Even the Class C apartment buildings, which were widely assumed to have problems given its typical tenant base, are doing relatively well, Willett continues. “Class C is lagging a little bit behind but even these are not in a big hole. The difference [between Class C and Class A and B] is 5 percentage points.”

Individual landlords report similar payment rates. For example, Camden Property Trust CEO Ric Campo reports that the REIT is at a 93% payment rate compared to the pace seen in January and February. “We feel pretty good with the pace. Some tenants that have job dislocations are having more trouble but on other hand people understand they really need to pay their rent because of services the industry provides.”

Avanath Capital, which provides affordable housing, is seeing the same trends, says CEO Daryl Carter. About 85% of its tenants are tax-credited or Section 8 and it is seeing a 93% payment rate as well. The government support has been a help, Carter says. That said, the company is concerned about May rents especially for markets such as Orlando, which is close to the Walt Disney World Resort. Disney has furloughed or laid off most of its employees there, he notes.

Moral Hazard

Indeed, despite the April numbers, the industry is concerned about May payments as unemployment numbers are expected to continue to rise. NMHC president Doug Bibby notes that delays have been reported in getting assistance to residents. “It is our hope that, as residents begin receiving the direct payments and the enhanced unemployment benefits the federal government passed, we will continue to see improvements in rent payments,” he says.

Other stats suggest that apartment renters’ relative timeliness with their April rents may be short-lived. A rise in credit-card payments is also contributing to a higher rate of rent payments,  according to the Wall Street Journal. Entrata showed a 13% increase in credit-card usage in April compared with the first three months of the year an Zego found that the number of tenants paying rent with a credit card during the first week of April rose 30% compared with the same period in March.

Campo, for his part, is concerned about a moral hazard issue taking hold among renters. Rent strikes have popped up in a number of cities, he notes. “The longer this goes on, more people will come to think they don’t have to pay rent. We still need to advocate with Washington to deal with structural issues as evictions.”


Source: By Erika Morphy | April 16, 2020 at 07:28 AM

Multifamily Investment Sales Broker at eXp Commercial
P: 630.474.6441
Randolph Taylor


In an effort to keep renters in their homes and to provide some economic flexibility to multifamily property owners amid the growing COVID-19 crisis in the United States, the Federal Housing Finance Authority (“FHFA”) announced on Monday, March 23rd, that it directed Fannie Mae and Freddie Mac to offer at least 90 days mortgage forbearance to multifamily property owners negatively impacted by the pandemic who have mortgages backed by Fannie Mae or Freddie Mac, with the condition that borrowers taking advantage of the forbearance (i) suspend evictions for renters unable to pay rent as a result of the coronavirus for the duration of the forbearance, (ii) repay the delayed payments in twelve equal monthly installments once the forbearance period ends, (iii) use the proceeds of any business interruption insurance to pay the delayed mortgage payments, and (iv) allow tenants to repay past due rent over a period of 12 equal monthly installments. FHFA’s action follows the moratorium on foreclosures and evictions that it and the U.S. Department of Housing and Urban Development instituted with respect to loans to single-family homeowners.

Multifamily property owners should keep in mind that the forbearance granted under FHFA’s action only temporarily affects their loan payments – it does not affect their maintenance obligations to their tenants in any way. Since many states and municipalities have enacted shelter-in-place orders, there will be more people staying inside at their homes, and thereby increasing the likelihood of wear and tear in their rental areas.

States are taking action on this issue as well with legislation that goes beyond FHFA backed loans.  California, Illinois, Indiana, and other states have taken action to directly suspend or to allow local governments to suspend enforcement of all residential (and in some cases, commercial) evictions even if tenants are not meeting their obligations to pay rent. Additionally, all states obtained eligibility to provide small businesses with disaster relief in the form of Small Business Association loans which will theoretically help small businesses pay rent during this time.

For multifamily property owners and mortgage servicers, it pays to be aware of the ever-shifting policies and regulations that are being promulgated by the federal and state governments and their various housing authorities and regulators daily. We will continue to actively monitor developments in the COVID-19 situation and reactions in the legal community.


Source: Thompson Coburn LLP

Multifamily Investment Sales Broker at eXp Commercial
P: 630.474.6441
Randolph Taylor
Multifamily Investment Sales Broker at eXp Commercial
P: 630.474.6441
Randolph Taylor