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ACCESSLASVEGAS YOUR ACCESS TO THE LAS VEGAS MULTI-FAMILY HOUSING MARKET

April | May | June 2012

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The American Dream ... Redefined

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Las Vegas Occupancy Corner

page 8 It’s All In the Lingo

Redesign of The Martin Coming Up Aces and Redefining Luxury in Las Vegas The $3 million redesign of The Martin, a residential tower near the Strip, has helped create a new niche in the Las Vegas luxury high-rise residential market. Along with the physical redesign, The Martin has introduced to its residents a new five-star, hotel-like resident services program called Effortless Ownership. The building’s owner, New York City-based iStar Financial, saw this as a niche opportunity in the Las Vegas market. “When we stepped in and started selling it out, we saw there was no shortage of well-qualified buyers who wanted to own a second home in Las Vegas,” Los Angeles-based iStar Financial senior vice president David Sotolov tells MHN. “We realized it was less about the sticks and bricks, and more about the lifestyle of owning a second home.” His firm believed it had the best located condominium project with the highest level finishes and the best construction in town, Sotolov adds. “But focusing on the lifestyle and experience, which drives the decision to buy a second home, we felt we had to reinvest in the building to provide both upgraded physical amenities as well as a significantly higher service level offering,” he says. “In the redesign and rebranding are a redesigned lobby, pool area, landscaping and lounge, as well as upgraded service level in Effortless Ownership.” The Kor Group, the Los Angeles-based firm best known for redeveloping and designing a world-renowned collection of hotels and resorts that includes the Viceroy and Tides brands, undertook the renovation. “The physical renovation took about six months,” Sotolov says. “And we touched on virtually every common area within the project. We did so while residents were living in the building . . . But we had strong coordination with our residents. And at the end of the day, the residents, many of whom were at the grand opening on March 14, were ecstatic about the upgrading.” ARTICLE CONTINUED ON PAGE 4


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April | May | June 2012

Changing Trends in Apartment Living Thinking smaller, a sneak peak at what is trending and what to expect in the future There are some big changes coming to the multifamily residential real estate market that are going to drastically change the way apartment units look and feel. If you’re planning to be an owner, developer or property manager pay attention, here’s a sneak peek at what’s coming down the pipe: Green, Green, Green It’s as if Kermit the Frog has finally permeated the consciousness of developers. Eco-friendly amenities are going to become routine and expected in all new apartment construction. There’s also a newfound emphasis on the 20-minute lifestyle, where everything you need is close by. Providing bicycle storage is important. Next phase: Short-term rental cars attached to apartment communities, for those who don’t own their own vehicle.

Apartments are Going to Get Smaller Eliminating large wasted spaces targets the typically younger, single apartment renter demographic, increases sustainability, and drives down costs. Ceilings will be higher, loft-style, to enhance a feeling of spaciousness. Entertaining at home is out, so there’s no reason to own a dining room table anymore. Appliances are also Going to Get Smaller Despite a nationwide push for healthier eating habits, the real trend for single apartment renters is eating most meals out or out of the freezer and into the microwave. Mini-fridges will make a comeback. This also weighs in to the no-entertaining theory. Pets Will Get in the Door for Less Cost Renters expect to have their lifestyles catered to, and pets are important to them, especially as many singles delay marriage and family to much later in life. Evenly Sized Bedrooms There seems to be no slowdown in the number of shared apartments, so new construction more frequently features multiple bedrooms with the same amenities, like attached bathroom suites, walk-in closets, and exterior doors. Wireless Will More Frequently Be Free People hate paying for it, and it’s a nice perk that an apartment complex can offer its tenants. Those who need high-bandwith service will probably continue to pay for it themselves. Written By: Kombucha and digested from “Changing trends in apartment living” (RENT Cafe Blog)

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The American Dream ... Redefined

your renters. Not just by raising the rent, but by being opportunistic about how you can better meet tenant needs.

Is owning a home REALLY the dream? It’s not and property owners should pay attention

Set a New Goal

The Commerce Department reported that just 66% of U.S.homes were occupied by their owners in the fourth quarter of 2011. That’s the lowest level of home ownership since 1998. So, is the American Dream of owning a home fading away?  Maybe.  But it’s definitely being redefined.  People are taking an extra hard look at the pros and cons of home ownership.  And for many, renting a place that really fits their needs is the dream. This is an opportunity for landlords!  It means three things: Attract the Right Tenants The most successful property owners and property managers know that most tenant problems can be avoided with proper screening upfront, particularly with background and credit checks. Customer Satisfaction is More Important Than Ever  Meeting the needs of your tenants pays off as they stay with you month-after-month, year-after-year.  Think like a tenant instead of a landlord, and you will start to see opportunities to generate more money from

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car or recently started a new job. Be opportunistic and think of how you can make money by responding to new and evolving needs. Some examples are:

Your rental units can be the last and only place your tenants need. Strive to make your properties a place where they can truly settle in and call home. And a 2010 survey by Trulia.com found that of those renters who do hope to become homeowners, two thirds say they will wait two years or more.  So, start engaging with your tenants today to build a more successful landlord-tenant relationship.  It’s a win-win for both of you!

“So, is the American Dream of owning a home fading away? Maybe.  But it’s definitely being redefined.  People are taking an extra hard look at the pros and cons of home ownership.  And for many, renting a place that really fits their needs is the dream.” But what does it mean to “engage your tenants”? Well, start by communicating.  Call your tenants or drop by to see if they have any new needs.  You just might learn they are expecting a new baby, have bought a new

New baby? Recommend a local babysitter or daycare provider.  And give them the opportunity to upgrade to a new unit or home with more space, nicer amenities, a yard for kids to play in and so on. Just bought a new car?  Give them a coupon for a free car wash.  And a great monthly rate to lease a carport or garage that will protect their new treasure. Started a new job?  Give them a popular audio book on CD or tape.  And do you own another property closer to their new work?  If so, help them cut their commute down with an offer for a free moving truck for the day and a discount on the first month’s rent at the new place.  These are ways the best property owners keep good tenants.  And keep them happy.  It’s so rare in the rental industry to find a property owner who thinks from this perspective.  But you can be the first and gain a huge advantage in your market as many of your tenants live out their own American Dream in one of your properties! Written By: Drew DeMasters Drew is a landlord, author and award-winning marketing strategist with nearly two decades in the rental business.

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April | May | June 2012

LOCALEFFECTS growth and other areas in decline. Everything is dependent on location, she said.

Upswing Forecast for Las Vegas Apartment Market

The market has definitely changed from a year ago, McCann said. Concessions at some of WestCorp's properties have been reduced from two months of free rent to one month and move-in specials have increased from $99 to $199.

Research company projects valley will add 2,126 new multifamily units in '12

While housing construction remains below prerecession levels, the tide seems to be turning toward an upswing in apartment construction, a report from the American Institute for Economic Research in Great Barrington, Mass., suggests. Before the housing collapse, developers built five to six times more single-family homes than apartment units. Today, that ratio is about 3-to-1.

With the opening of the 320-unit South Boulevard Apartment Homes, developer Nevada West Partners is paving the way for a new generation of apartment dwellers. When they're not in the fitness room or movie theater, these residents may be logged on to Macintosh computers in the e-lounge, sipping complimentary coffee from Starbucks and waiting for their cars to charge on the electric charging station. South Boulevard Apartment Homes is among roughly 20 multifamily communities completed, under construction or planned for Las Vegas in 2011-12, according to a report from CB Richard Ellis. Las Vegas-based Home Builders Research is projecting 2,126 new multifamily units for 2012, compared with just 433 in 2011, an all-time low. On average, multifamily developers brought 4,831 units to the market each year from 1999-2011. Besides completing South Boulevard apartments, Nevada West Partners has begun grading for 320 units near Wigwam Parkway and Gibson Road in Henderson. "We do believe in the market," said Emily McCann, marketing director for WestCorp Management Group, which manages about 4,000 units at 23 apartment properties in Las Vegas. "Pricing's getting better, concessions are down and occupancy is pretty good. We see this market as still a good market and the future is getting better. Hopefully we'll see an increase in jobs and pay and people will be able to move into nicer apartments." Rents at South Boulevard apartments, near Las Vegas Boulevard and Cactus Avenue, range from about $800 a month 4

for a 644-square-foot unit to more than $1,300 for three bedrooms, McCann said. Interior amenities include a flat-screen television in the family room, stainless steel appliances, granite countertops, dark wood cabinetry and private balcony. With a drastic reduction in land prices, Nevada West Partners was able to build at 25 percent below what it cost to build in 2007, McCann said. In its national apartment report, real estate services company Marcus & Millichap is forecasting that developers will complete 750 units in Las Vegas during 2012, which is 72 percent below the annual average from 2000 to 2010. The hard-hit construction sector will benefit from strengthening visitor volume and convention business as a handful of projects near the Strip break ground, Marcus & Millichap forecast.

Written By: Hubble Smith and digested from “Upswing forecast for Las Vegas apartment market� (Las Vegas Business Press)

Redesign of The Martin in Las Vegas Coming Up Aces Continued from Page 1 Residents are also delighting in Effortless Ownership, which offers a wide variety of resident services, he says. Services include chauffeured Range Rover transportation to and from the Strip, dedicated on-site concierge, hosted cocktail mixers, library lounge gourmet breakfasts and bellman and doorman service.

"Fortunately, the apartment sector will be spared from renewed development activity," the report said. "It will likely stay that way until Las Vegas registers sufficient rent growth to justify development, property prices firm and lenders gain enough confidence to originate construction loans."

The building initially suffered from the misfortune of having been introduced during the low point of the recent recession. It was originally 80 percent pre-sold during its 2007-08 construction. But only 30 of the pre-sale buyers ended up closing, Sotolov says, adding iStar Financial grained control of the property roughly one year after its 2009 completion, and then sold another 100 units.

WestCorp's McCann said it's hard to gauge what the market is like in Las Vegas because there are some pockets of

The fourth quarter of 2011 was the strongest sales quarter to date, and has been followed by brisk sales through the


5 opening weeks of 2012, he reports. The Martin has 374 condominiums, and the building is approaching 40 percent sold. “When you see an owner reinvesting a couple million dollars into a project, and then see an increased velocity of sales from buyers who want to own a piece of Las Vegas, it’s a vote of confidence in the market‘s recovery,” Sotolov says. Written By: Jeffrey Steele and digested from “Redesign of The Martin in Las Vegas Coming Up Aces” (Multi-Housing News)

Two Downtown Hotel / Casinos Undergoing Renovations Is Vegas Back on a Roll?

hotel. A 16-room addition (bringing the total number of rooms to 122) is "fun to talk about in the context of Las Vegas," where some Strip hotels boast more than 4,000 rooms in a single property. The Golden Gate also will add 4,000 square feet to its casino, which, Brandenburg said, is unique, not just for its dancing dealers but for its vibe. "Our casino feels like no other casino in town," he said. "There is no other that says they've been here for every sunrise since the town started." Renovations are expected to be completed by mid-summer. Oh, and the $1.99 shrimp cocktail that's almost synonymous with the Golden Gate? Will that return? "The intent is to keep it at $1.99," Brandenburg said, noting it had been that price for 17 years. (That's the price in the deli; it's $2.99 in the restaurant.) Nearby, Fitzgeralds Casino & Hotel is transitioning to a new name -- the D -- and a new look (contemporary). If you go to the old Fitzgeralds website, you’ll find that it already clicks over to the D. In honor of that transition, on Saturday, patrons who buy in at table games for $300 or play $100 in slots will receive a kelly green shirt (it’s St. Patrick’s Day, remember) that says, on the front, "I got lucky at the D" and on the back "Started drinking at Fitz and woke up at the D."

Well, maybe not a roll but certainly trying to push its way clear of a recession that showed its unemployment, 3 1/2 years after economy tanked, at 13.1% in January. (That’s an improvement from 14.4% in January 2011.) Some more glimmers of hope (the opening this month of the Smith Center For the Performing Arts was one of the first) come from the announcement this week of two overhauls of downtown Las Vegas casinos. The Golden Gate Hotel & Casino, at 1 Fremont St., will remain open while it pours $14 million into expanding the casino and hotel, which opened in 1906 as the Hotel Nevada. It’s been 50 years sinice the property has had "meaningful expansions or renovation," said Mark Brandenburg, president and co-owner. Look for the addition of a five-story hotel tower, with two penthouses and 14 suites, to what Brandenburg calls a boutique

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close April 30 in preparation for the transformation into the $550-million Linq entertainment and retail area, aiming for a 2013 completion. Oshea’s, between the Imperial and the Flamingo, is owned by Caesars Entertainment. (Watch for L.A. developer Rick Caruso's hand in this project.) One of the features of the new area will be a giant observation wheel, a la the London Eye. The Eye is about 443 feet tall. The Linq’s wheel is projected to be 550 feet. As usual, everything is bigger in Las Vegas.

Written By: Catherine M. Hamm and digested from “Las Vegas: Two downtown hotel/casinos undergoing renovations” (Los Angeles Times)

Local Apartment Occupancy Slips in Fourth Quarter Sustainable gains in population, jobs necessary for recovery Average apartment occupancy in Las Vegas dropped to 91.1 percent in the fourth quarter and landlords pulled back slightly on asking rents to $743 a month, business research firm Applied Analysis reported.

Its 638 rooms and suites will be renovated, and the casino will be on two floors: The first will be the contemporary casino, which will features the D's dancing dealers. Taking the escalator to the second floor, patrons will find an old-fashioned casino, including vintage slots. The property, like the Golden Gate, will remain open during the redo and is expected to be completed later this year. Up on the Strip, you can say goodbye next month to little Oshea’s Casino, which will

Occupancy slipped 1.6 percentage points from the previous quarter and half a point from a year ago, while rents dipped from $752 in Q3 and $756 a year ago. The apartment market showed improvement last year compared with the housing market, though broader conditions continue to push down occupancy and pricing. "While population and employment indicators have reported some bright spots, consistent and sustainable gains will be required before housing conditions demonstrate a path to recovery," Applied Analysis project Manager Jake Joyce said.

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OCCUPANCYCORNER

Las Vegas Metro Occupancy Trends March 2011 through February 2012 92% 91% 90% 89% 88% 87%

90.69% 90.49% 90.77% 90.76% 90.51% 90.58% 90.95% 90.70% 90.62% 90.21% 90.17% 90.33%

86%

April

June

August

October

December

February

Source: Spencer Ballif and Jeff Swinger of CB Richard Ellis (Las Vegas) (116,181 Apartments Surveyed in February 2012)

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MARKETACCESS

Las Vegas Multifamily Snap Shot

Source: Colliers International

LAS VEGAS MARKET COMMENTARY – OVERVIEW FOR 2012 According to Real Capital Analytics, there are 13,389 units in distressed multifamily projects in Southern Nevada. The distressed category includes properties that have received a notice of default, as well as troubled properties and those that are in some stage of the foreclosure process. This is an increase from last quarter’s 12,909 units. Over the past twelve months, distressed multifamily projects consisting of 7,160 units have been resolved and another 544 units have had their loans extended or restructured. Distressed properties that were resolved had an average occupancy rate of 88 percent. Multifamily sales have shown significant recovery in 2011 from the low-point hit in 2009, when only 822 units sold. In the fourth quarter, sales encompassed almost 7,000 units at an average price per unit of $52,900. This is an increase not only in the number of units sold over 2010, but also an increase in the average price per unit. The average cap rate also increased from 2010 to 2011, finishing at 8.3 percent.The coming year will bring a plethora of multifamily mortgage maturities, and with little ability to refinance, those maturities will bring a wave of defaults. To date, mortgage holders in Southern Nevada have been holding off those defaults, creating an artificially low supply of investment properties in the market, especially when compared to other large cities in the Southwest. When the wave hits, however, mortgage holders may have little choice but to take the properties back and put them on the market, creating downward pressure on prices and a potential bonanza for investors. On the down side, the election cycle of 2012 has the potential to cool off investments until folks have a better idea of where the tax code is heading beyond 2012. The coming year will bring a plethora of multifamily mortgage maturities, and with little ability to refinance, those maturities will bring a wave of defaults. To date, mortgage holders in Southern Nevada have been holding off those defaults, creating an artificially low supply of investment properties in the market, especially when compared to other large cities in the Southwest. When the wave hits, however, mortgage holders may have little choice but to take the properties back and put them on the market, creating downward pressure on prices and a potential bonanza for investors. On the down side, the election cycle of 2012 has the potential to cool off investments until folks have a better idea of where the tax code is heading beyond 2012. Las Vegas is the only major market in which multifamily investments have not completely recovered. The artificially low supply mentioned above has kept prices higher than in other markets and driven cap rates for well located Class A and B properties in the range of 6.0 to 7.5 percent. A wave of defaults may well change this dynamic. The story of 2012 and beyond may be the Downtown submarket. With Zappos definitely moving into a new headquarters in Downtown and various investors lining up something in the neighborhood of $500 million to invest in real estate, a renaissance may be in the cards. The number of new residents in Downtown is still unknown, and could be fewer than many think, but as Downtown becomes the hip place to be in Las Vegas, demand for high quality multifamily in the area will rise. There is vacant land to be had in Downtown for development, but the trick may be in negotiating the right price.

Access Investment Offerings ASKING PRICE

PER UNIT PRICE

Pecos Terrace (184)

COMMUNITY (UNITS)

$ 12,769,327

$ 69,399

Colliers International / 702.836.3717

Tamarus Village (87)

$ 3,700,000

$ 42,529

NAI Sauter Companies / 702.383.3383

Aldonsa (80)

$ 2,750,000

$ 34,375

Hendricks & Partners / 702.866.6239

Olive Properties Apartments (85)

$ 2,500,000

$ 29,411

NAI Sauter Companies / 702.383.3383

Alpine Motel Apartments (42)

$

$ 20,214

Cushman & Wakefield / 702.373.2856

849,000

BROKER / CONTACT INFORMATION

Access Recent Transactions CLOSING PRICE

PER UNIT PRICE

CLOSING DATE

Sahara Glen (268)

COMMUNITY (UNITS)

$ 9,800,000

$ 36,567

March 8, 2012

Desert Rose (236)

$ 2,100,000

February 7, 2012

Pacific Investments

Wynn Palms (555)

Unpublished

Unpublished

January 31, 2012

Wells Fargo Bank - REO

Las Palmas (393)

$ 20,000,000

$ 50,891

January 27, 2012

Karlin Real Estate

Pinnacle Apartments (60)

$

$ 14,583

January 13, 2012

Sy Dardashty

875,000

$

8,898

BUYER PEM Real Estate Group

For additional information and / or broker information on Access Investment Offerings and / or Access Recent Transactions contact Bret Holmes at 702.699.9261.

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April | May | June 2012


ACCESSLASVEGAS

April | May | June 2012

INVESTORINSIGHT It’s All In the Lingo Industry keywords can be the difference between your occupancy being “in” the black or “out” the back door key·word also key word (kwûrd) n. 1. A word that serves as a key to a code or cipher. 2. A significant or descriptive word. 3. A word used as a reference point for finding other words or information. So, how important are “in” and “out” keywords? VERY important when talking to employees, renting an apartment or just living in our industry. Let’s take a moment to study the “ins” and “outs” in 2012. This is based on more than 500 contributions from more than 100 National Apartment Association (NAA) members, supplier partners and NAA staff. If some of these keywords or phrases look odd, the internet was invented especially for you ... Google it! This could make or break how you conduct business with yourself, your employees and your potential residents the remainder of 2012.

★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★

Maintenance magician Online signature High spouse turnover Cross-Training Words With Friends Walkability Score Pattern Formica Occupancy Reverse-mentoring Therapy dogs Sharkbite plumbing fittings Tangerine Tango Customer service Knowing residents by what they love Laptop checkouts Bed bug insurance SoLoMo (Social, Local, Mobile) Revolution K-Cup stations Digital natives Anniversary That’s what my parents used to have “I can help you.” Name tags with conversation starters Revenue management 24-hour pool Efficient floor plan Team-based commissions Dealing with hoarders PHA allowances

★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★

every 72 seconds Flash animation Lead paint Consumed by Facebook Knowing residents by name Onsite DVD libraries Bed bug paranoia Google Buzz Full recerts on 100% communities Day-old pot of coffee Gen Y-specific Lease expiration That’s the way we’ve always done it “How can I help you?” “My name is…” Let’s make a deal Cleaning your own pool Too big to fail Agent-only based commissions Alternative utility allowances

Multifamily Acquisitions and $5 Gasoline

WHAT IS OUT ★ ★ ★ ★ ★ ★ ★ ★ ★ WHAT IS IN ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ 8

Angry Birds Keyword proximity Whoopie pies Community blog Open integrations TV Everywhere Paint sprayer Backpack Parents Mobile app cookies Siri Ancillary income Pinterest

★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★

Angry community reviews Keyword stuffing “3 months free rent…Whoopee!” Community newsletter Technology (and pro sports) lock-outs “I want my MTV!” Paint roller Helicopter Parents Otis Spunkmeyer cookies in leasing office “Sorry, I don’t know.” Debit card fees Bulletin boards Maintenance technician Print and scan…and print High resident turnover “I wish I could, but that’s her job.” Bugging the neighbors with your drama Freeway exit number Cold granite and glass Occupy “What’s a Twitter?” The Indianapolis Colts Compression plumbing fittings Changing your mind about social media

The price of gasoline impacts every part of our lives from the food we eat to the cars we drive and our selection of a place to live. Include real estate investing in this grouping.  In my self-imposed naivete I believe oil prices should be $35-75 per barrel.  What keeps prices above these levels are things un-related to actual oil production;  like presumed un-rest, the 24-hour news cycle, three guys in Luxembourg hoarding contracts in an attempt to keep pressure on supply (when supply is excessive).      I remember Christmas 2008.  This is a few short months after Lehman failed and the Troubled Asset Recovery Program


9 (TARP - how many acronyms does it take to spend a billion dollars?) was all the rage in Washington DC.  Momentarily, the national average for a gallon of gasoline was $1.72 a gallon.  It was an economic “dark hour’ and oil was $40 a barrel.  When Fixed Costs Rise, People “Circle the Wagons”  Food, fuel, shelter are three unavoidable costs related to the “carbon footprint” of our existence. Sometimes “food inflation” is attributed exclusively to the costs of transport.   Increases in food, fuel or shelter means having to cut back in some other area.  The most volatile of these expenditures is fuel.  When fuel rises, renters look for ways to decrease their housing expenditures.  Here is the trade off: rent a newer/bigger place for less money further away from my job and pay the difference in fuel consumption or live closer to my job in a smaller place, for more money, and pay less for fuel consumption.  What most renters fail to realize is that rent growth is more likely at the close-in location. Multifamily owners in tertiary markets become imperiled as individuals and family’s previously willing to live the rural life and take on the commute can no longer justify this lifestyle as fuel prices increase. 

Properties closer to job centers thrive, properties further from job centers suffer. Since oil prices are somewhat “sticky” on the way down, once this trend begins it reverses ever so slowly.

“technology” called roads rather than a spoke and hub train system. When reviewing potential acquisition candidates always consider proximity to jobs and rapid transit. Also check on the municipalities budget to maintain existing rapid transit systems.  You don’t want to be the last one to know that bus service that is now in front of your development is soon to be re-routed with the next closest stop a mile away. Written By: John Wilhoit, Jr. and digested from “Multifamily Acquisitions and $4 Gasoline” (Multifamily Insight Blog)

Cities With Opportunity Where are apartment investors focusing their efforts? The multifamily sector continues to be the favored asset class of most commercial real estate investors because the downside risk is relatively limited. Even if job growth continues to lag, slight job creation will result in many Americans who moved home to their parents returning to apartment living—and those who have “doubled up” (or “tripled up”) with roommates during the economic downturn will soon be trading up to a place of their own in a studio or one-bedroom apartment. This activity would be a boon for the apartment sector. In fact, according to CBRE Econometric Advisors, the third quarter of 2011 marked the transition from the recovery phase of multifamily into the expansion phase. The sector returned to -- and surpassed -- the previous peak in terms of revenues. By that metric, it’s definitely ahead of other property types.

From a European perspective we American’s are wimps when it comes to our low tolerance for pain at the pump. Consider fuel today in London and Paris is approaching $10 U.S. per gallon. Consider also, that both of these cities have tremendous infrastructure in mass transit. 

Research conducted by Reis Inc. shows that rent growth varies dramatically from market to market, but the average national rent growth is expected to surpass the rate of inflation this year. And CBRE Econometric Advisors predicts that the U.S. multi-housing vacancy rate will hold steady at 5.5 percent in 2012. That’s down 60 bps year-over-year and 190 bps from its peak in 2009. They also predict a decline of an additional 30 bps in 2013.

For “people transport” in many major U.S. cities we continue to utilize older

So where are apartment investors focusing their efforts? While industry experts don’t

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agree on every market, they do all note that markets with high concentrations of high-tech employment will likely lead the growth in the multi-housing recovery. San Francisco, San Jose, Austin, Denver, and Seattle are among the top performers. Investors are also bullish on the New York and Washington, D.C. metro areas.

In addition to New York City, which typically sees tight vacancies and rental growth, the metro area as a whole -including Westchester and Fairfield counties, for example -- has also been faring well. In D.C., despite the expectation that the government will cut spending (and jobs), investors expect the metro market to remain strong. Marcus & Millichap’s Hessam Nadji includes Boston, Orange County, San Diego, Austin, Seattle and Minneapolis on his list of top performers. That’s because these markets have low vacancies, the potential for strong job growth and, in the short term -- with the exception of Austin -- little to no construction on the horizon. Industry watchers also point to secondary markets that are considered promising for the year to come. These include Pittsburgh; Albuquerque, N.M.; and El Paso, Texas, although the growth in these areas is likely to slow down a bit because these are fairly affordable markets and more people will likely begin to pay attention to where rents are relative to the cost of buying homes. Are there any markets to avoid? Some markets still have some catching up to do. Las Vegas, for example, remains 20 percent below its pre-downturn revenues, while Phoenix is still off by about 12 percent. Atlanta, meanwhile, is down 8 percent, and Los Angeles remains off by about 6 percent. However, these markets

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ACCESSLASVEGAS should see stronger job growth and limited new supply in 2012.

April | May | June 2012 assets, as they may be able to get a little more yield.

grew by 1.7 percent, 3.6 percent, and 3.2 percent, respectively. And, at the depths of the recession in 2008 and 2009, while existing-home sales barely eclipsed 4 million, rent rates fell 0.3 percent and 4.1 percent, respectively. So it’s possible for the rental and for-sale markets both to surge and stall in step with one another. Rental Occupancy

Houston, Dallas, Phoenix, Tampa and Orlando continue to suffer from relatively high vacancies, but they are expected to recover rapidly over the next 12 to 18 months. Nadji points to a number of overlooked markets such as Detroit, Milwaukee, Indianapolis, Chicago, and Portland, Ore. These are markets that don’t typically see much investor interest, but, according to Nadji, they are in many ways the diamonds in the rough. Nadji also says that because of the resulting pressure on pricing, capital may begin to look at somewhat lower-quality assets -- Class B and B- product in the best markets -- as well as those assets further from the core. “As the risk appetite grows and the spread between the top-tier properties and the Class B/B- properties really steer investors toward the higher yield, you’re going to see capital start to move out a little bit,” said Nadji. Still, he doesn’t expect Class C assets or tertiary markets to benefit much in 2012. “It’s a migration of capital down the quality chain -- but not too far,” he asserts. Many investors are starting to look at secondary markets. Even markets that they had once shied away from -Charlotte, Raleigh, Atlanta, Dallas and Houston, because of an overabundance of new supply -- are seeing strong job recovery and are being driven by the healthcare, biomedical, technology and energy sectors. Phoenix has also seen a strong return on investor appetite and Portland, Ore. is back in favor, with an overflow of jobs coming from Northern California. Investors are expected to begin shifting their interest from urban to suburban

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Written By: Diana Mosher and digested from “Apartment Market: Cities with Opportunity” (The Balance Sheet)

2012 Apartment Investors are in for a Great Ride Just in from Multi-Family Executives “Fasten Your Seat Belts, 2012 Promises to Take Multi-Family Drivers on One Hell of a Ride.” “Everything is just ripe for a robust apartment market. I’m always looking for problems. But these numbers are just some of the strongest I’ve seen.” said Johnsey, president of Dallas-based research firm Axiometrics. Market researchers, Wall Street analysts, REIT executives, multifamily players all see a sure bet for a bountiful 2012. Their most basic building block, rents, are going up. Undersupply and increasing demand suggests higher net operating incomes and higher returns for yield-starved investors. After national rent growth of 2.3 percent and 4A.7 percent in the prior two years, Greg Willett, who heads the research and analysis team at Carrollton, Texas–based MPF Research, forecasts 4.5 percent growth in 2012 but suggests that 6 percent growth would hardly come as a shock. Rent vs Buy? Existing-home sales volumes don’t correspond consistently with rent trends, nor do they diverge in a predictable way. In 2004, 2005, and 2006, as more than 6 million existing homes sold annually, rents

As occupancies have risen from the low to mid 90s in the past couple of years, apartment owners have gained pricing power. In fact, with occupancies at 94.8 percent nationally as of early January, according to Reis, Severino says it may now be the moment for owners to hit the gas on rent increases. “We didn’t have a tremendous amount of job creation and we got vacancy declines and rent increases [in the past year],” Severino says. “Add [more job creation] to an already tight marketplace, and it’s sort of like throwing gas on a fire.” Owners have gone so far as to welcome move-outs. They “seem to be focused on maximizing revenue through turnover in leases,” says Sarah Bridge, founder and managing member of RealFacts, a Novato, Calif.–based rental data provider. New Supply? In the past, nothing has stopped a recovery faster than overbuilding. After a pre–market-crash completions peak of 3,320 units in 2008 and 3,114 in 2009, new multifamily units coming on line fell to half that total in the past two years. The next 12 months could bring a slight uptick, but experts think it unlikely that new units will clog the multifamily freeway with oversupply, for at least3 more years, as it catches up with the number of new renters. “Limited new construction will be a strong positive for apartments in 2012,” said Jay Lybik, VP of market research for Chicago-based Equity Residential, at the National Multi Housing Council Apartment Strategies Conference last month. Surely, an exhilarating ride awaits multifamily this year. Written By: Alexis McGee and digested from “2012 Apartment Investors are in for a Great Ride” (Alexis is Blogging)


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MANAGEMENTMINUTE How an Internet Leasing Agent Can Help Property Managers Thinking “outside the box” can out-lease traditional property management The traditional property management model has been to staff your office with leasing agents and they will handle all of the sales aspect of renting the apartment; from the initial screening, the showing, the application, and even move-in details. Yet, today, because of an enhanced Internet presence, management companies are seeing an increased number of people leasing sight unseen.  This group of people typically includes tech-savvy individuals who do everything on the Internet, as well as out of town or out of state individuals who are looking to move into the area and need a place to live. While a traditional leasing agent can certainly handle those duties at a smaller property, for larger dwellings, it may make sense to find a tech savvy individual to handle online inquiries.  Here are some of the duties an Internet Leasing Agent can perform:

nearby are able to determine if the area is suitable for their needs and how close amenities such as grocery stores, shopping malls and parks are, an applicant 2,000 miles away will not know. While that information is easily available on the Internet, save potential applicants the research time and provide them with an honest assessment of the area.  They’ll appreciate it. Follow-Up – while most people will know in a reasonable amount of time whether a place is suitable, placing a courtesy call to out of state individuals to ask if they need

any additional information will help keep your property on their radar. Moving is always difficult in good circumstances; moving thousands of miles is very stressful. They’ll be grateful for the help and will remember it come decision time. While not every property will need a dedicated leasing agent to handle Internet leasing requests, larger properties may soon find it an indispensable position. Written By: Mary Girsch-Bock and digested from “How an Internet Leasing Agent Can Help Property Managers” (PropertyManager.coml)

Placing Ads – an Internet Leasing Agent can place non-traditional ads in strategic areas throughout the country. If you live in Chicago and have a high number of people moving into the area from Indiana, it would make sense to run some ads on Indiana specific sites, such as a local Chamber of Commerce, or even a traditional print ad in the local newspaper.  This could easily be done throughout the country for little cost. Handling long-distance leads – often these leads need more time to develop, and the initial wooing can last several months.  Make the time to place a personal call to anyone who fills out information on your website, or has accessed virtual tours or photos on your website. Develop a specific procedure for dealing with out of state applicants.  While those

ACCESSLASVEGAS

April | May | June 2012


ACCESSLASVEGAS

April | May | June 2012

Don’t Take Our Word for It ... Ask Our Clients! Nobody can give you a better picture of your property management company’s service than a current customer. Ask your property management company to give you the names of three clients with similar properties. Get in contact with those people and ask them questions that you feel are important to the success of your property. They can tell you best and can usually give a good picture of the strengths and weaknesses and their contentment with the service. Ask yourself, is your current property management company up to completing this simple task for you? If not, they may not be the right property management company for you. We know we are right for any asset. We are not only Advanced in our thinking, we are Advancing our clients thinking to levels never before seen in Las Vegas. Just ask them. We care about our assets and so do our owners. Why? Because we think like owners and give you the attention most property management companies can’t ... Don’t you want your asset to be Advanced? Get the most Advanced leadership in the industry today, contact Advanced Management Group directly at 702.699.9261. In a market that changes daily, sometimes hourly, your asset can’t afford anything less than being Advanced.

For information, article consideration and featured columns ACCESSLASVEGAS can be contacted at 702.699.9261. The publisher of this newsletter is:

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Q2-2012  

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