ACCESS LASVEGAS OCTOBER | NOVEMBER 2009
YOUR ACCESS TO THE LAS VEGAS MULTI-FAMILY HOUSING MARKET
Foreclosure Frenzy Now Leaking Into Las Vegas Apartment Market Even apartment buildings aren’t immune to foreclosures. Las Vegas apartment market analyst Michael Belnick said owners are facing some rough times with 6 percent of the buildings in default or foreclosure. More than 300 notices of default have been issued, he said. “When markets get this depressed, there are usually opportunities,” Belnick said. “And, yes, there are today and will be for a while.” Loans for apartment buildings, however, are a challenge and almost all of the deals are cash, Belnick continued. The biggest area to capitalize on is low-end fourplexes. Buyers are paying cash and rehabbing buildings and getting a 15 percent to 20 percent return, he said. The units are being rented because they are in great condition after they are refurbished, he added.
Overall, the economic slowdown and competition from the housing market are taking a toll on apartments. Occupancies dipped to their lowest levels in more than a decade, according to the research firm Applied Analysis. At the same time, average rents fell to where they were three years ago. Applied Analysis Principal Brian Gordon said a frail job market and price depreciation in the housing market have weakened demand for apartments. Las Vegas’ jobless rate was 12.3 percent in June. The firm said apartment complexes are reporting increasing delinquencies and evictions, a trend that isn’t expected to improve this year. By the end of June, the valleywide occupancy rate fell to 90.5 percent, down from 93 percent at the end of 2008’s second quarter. Over the past 10 years, the average occupancy rate has been 94.2 percent, according to Applied Analysis. Continued on Page 9
ACCESSLASVEGAS October | November 2009
UNDERSTANDING TODAY’S RENTER The New Economy Renter: Price-Driven or Amenity-Prone? Apartment amenity packages make a comeback as a technique for attracting rent prospects and protecting properties from deeper rent concessions. Source: Chris Wood, Multifamily Executive
Coal-fired, brick-oven pizza. Despite the economy, droves of discretionary income-minded people continue to descend on Grimaldi’s Pizzeria underneath the Brooklyn Bridge for a taste of the brick-oven bounty that is consistently rated not only tops in New York City, but one of the best pizzas in the country. Lines often extend out the door and for several blocks up Old Fulton Street, there’s no delivery, and Grimaldi’s sells by the pie only, not by the slice.
prospective renters, who seemed to be entirely price-driven, counting every cent and cross-shopping every concession. But recent community lease-ups seem to indicate that amenities are once again becoming front-of-mind to potential residents, who, although still extremely cost-conscious, are seemingly open to a larger sales efforts incorporating the full lease value of products and services made available at apartment communities.
After opening up locations in Hoboken, New Jersey, Las Vegas, and Dallas, Grimaldi’s is expanding again: right next door to Rockrose Development’s 200 Water Street, a 32-story high-rise newly converted from New York University faculty housing into 576 rental residences. Amenities in the pet-friendly building include a 24-hour doorman, laundry room, valet service, and fitness center. A sixth floor residents' lounge boasts a billiards table and flat-screen TV, a 33rd-floor rooftop terrace offers chaises, card tables, cabanas with sunshades, a BBQ grill, WiFi access, and a waterfall shower.
And it’s not just happening in New York City. “Consumers are voting with their dollars, and what we offer in luxury apartment living and über-amenities offers value and flexibility to prospects,” says Beth Van Winkle, a regional vice president of property operations for Dallas-based Milestone Management, which provides fee-management services for Foster City, California based Legacy Partners (among other clients) across Texas. “We don’t mind calling it luxury at all.”
But all of the perks pale in comparison to the most coveted amenity being offered at 200 Water Street: VIP access to the legendary Grimaldi’s, where residents will enjoy not only front-of-the-line privileges but in-building delivery as well. “I’ve never offered delivery service, and I don’t plan to do it now, but as a company first, we will make an exception and deliver free only within the building,” says Grimaldi's CEO Joseph Ciolli. “We’ll treat (the residents) like family. Even better, if you rent at 200 Water Street, we’ll treat you like the Mayor.”
Legacy at Memorial in Houston opened its doors for lease-up in late July, and Van Winkle is confident that the suite of amenities will be a driving force in attracting rental prospects to the property in addition to helping leasing office associates seal the deal. Amenities at the 330-unit high-rise include valet parking, bell hops, an entertainment lounge
Recession Mindsets Super amenities like those at 200 Water Street were the norm at apartment properties (and many condo communities) across the country a couple of years ago. Before the implosion of the economy and the consequent degradation of multi-family rent fundamentals, apartment owners / operators were seemingly in an amenities arms race to offer up the latest and greatest in the battle to close prospective leads. All of that disappeared along with the wipeout of more than 6 million jobs and trillions of dollars in consumer wealth. For the past year, apartment marketers have shied away from using the term "luxury" to attract 2
Price Protections That’s not to say that rent prospects are just blank-checking their way into amenity-heavy apartments. Even at 200 Water Street, Rockrose has discounted rents to those comparable in the outer boroughs of New York City ($2,045 for studios; $2,470 for one-bedrooms; and $3,715 for two-bedroom units), and is offering “market-based incentives” concessions for the first two months.
“Quality product is important, and the consumer can determine the quality of developments in a submarket very quickly.” with screening and gaming room that boasts every gaming console available, a cigar lounge with humidors; a wine room with private wine storage and coolers; and a pool with al fresco pool-side dining. Prospects strongly responded to similar lease-up and resident retention efforts at the 187 unit Legacy on the Lake and 2,044-unit RIATA communities in Austin, Texas, filling the super-amenitized (Bocce Ball court, anyone?) mega-properties to a 90 percent plus occupancies in several short months. A key to that absorption has been Milestone's and Legacy’s efforts to communicate the value of amenities during lease negotiations. If your property offers a fitness center, that’s a gym membership that a prospect does not have to pay for. Likewise, the pool, entertainment lounges, game consoles, and so on are all consumable services and products that a resident who leases up does not have to shell out cash for. “As we work our marketing efforts, we are not afraid to show the value of having the strength and cardio center, or the wine coolers,” Van Winkle says. “Don’t be afraid to say ‘look what you are going to get’ and communicate the value associated with it. That makes a difference to a savvy consumer.”
consistent trend we are seeing other than the effort to promote the green attributes of communities as an amenity.”
And ultimately, amenity packages are offering dollar value not just to penny-pinching prospects but to apartment communities struggling with occupancy and diminishing NOI in recession-racked submarkets. “It is an interesting time, and it really is becoming a function of cost and value on both sides of the transaction,” Meisenheimer says. “Everyone is just trying new things The Houston-based Finger Cos. opened to offer more value and more appeal to a downtown signature high-rise that will their properties. The alternative is compete with Legacy Memorial for continuing to have to do more and more high-end prospects, and thus offers a 1-acre rooftop garden, a pool and cabana aggressive rental concessions.” lounges modeled after a Ritz-Carlton property in Maui, and an eight-floor amenities level with grand room, pool, coffee and juice bar, and fitness center. “There are a lot of worthy competitors in the market, so we have to do more than build a tower and just have a nice apartment,” says company president and CEO Marvy Finger. “We need to create something that establishes a way of life and encourages an image of exclusivity.” Nonetheless, Finger is not sure if the amenities are difference-makers or just a ticket to the game in his markets across Texas, Illinois, California, Colorado, and Georgia. “Right now, the consumer is really looking for the low dollar, and it’s not the amenities that are closing the deals,” Finger says. “Quality product is important, and the consumer can determine the quality of developments in a submarket very quickly. Then they’ll shop them on price, and will ultimately get closed by the talent of your on-site salesperson.”
The New Economy Renter: Doubling Up or Doubling Down?
Source: Chris Wood, Multifamily Executive
Multi-family owners are about to learn some very new terminology in today’s new economy renters landscape. Expect to hear anecdotal tales aplenty about residents “doubling-up,” the phenomenon by which “stretched and stressed” consumers ditch their one-bedroom apartments and lease-up larger units with two, three, four roommates or more splitting the rent. Doubling-up is considered a multiple blow to already weakened multi-family rent fundamentals: It increases unit vacancies, decreases net operating income (NOI), shrinks the market of prospects, and puts a strain on the
Still, amenities are starting to make a broad, if not exponential, comeback as a preferred tool in that lease sales process. Norfolk, Virginia based Internet listing service ForRent.com is seeing noticeable upticks in amenity offerings across many U.S. markets, according to the company's Midwest north regional manager Ann Meisenheimer, who points to shopping center shuttle services, wake-up calls, babysitting, and gourmet meal preparation as some of the more exciting perks being offered by ForRent.com clients. “But the top amenities right now are more pet perks being built into the communities and companies relaxing existing pet policies even further,” Meisenheimer says. “It is the most 3
ACCESSLASVEGAS October | November 2009
comparatively smaller supply of two- and three-bedroom units. But is doubling-up real? Like the elusive shadow market of foreclosed condos and single-family homes that proves nearly impossible to quantify but nevertheless sucks renters away from the apartment industry, little (if any) national data exists to confirm a doubling-up trend. Many say they feel the pain, and that a rise in one-bedroom vacancies coupled with two-bedroom demand is hard evidence. Detractors claim their submarkets are not feeling that kind of portfolio pressure. “We have not seen this urban myth of a lot of folks who normally resided alone in a one-bedroom apartment flocking to room together in two-bedroom apartments,” says Tom Wilkes, executive vice president of Post Properties and president of Post Apartment Management, which operates the REIT's portfolio of 21,190 units in garden-style, mid-rise, high-rise, and urban mixed-use communities in Georgia, Florida, Texas, New York, North Carolina, and the Washington, D.C., metro. “What we have seen instead is a movement into the smaller apartments,” Wilkes says. “We see residents scaling down: As prospects come in, they desire to be on the property but want to be in the most affordable apartment on that property.” Still, others are clearly seeing the trend, and furthermore recognize a cyclic doubling-up (and un-doubling) of cash-strapped (or alternatively, cash-happy) renters in multi-family housing. “We are experiencing the trend of doubling up in some markets and expect to continue seeing it occur in areas where one-bedroom rents exceed $1,000,” says James Krohn, COO of Phoenix, Arizona based Alliance Residential. “But this scenario is not at all unfamiliar to the multifamily industry. We experienced a similar phenomenon during the [post] dot-com era.” Nationally, market watchers have not seen a preponderance of data pointing
towards shifting renter demographics or disparate changes in occupancy or lease demand based on unit size. “We actually didn't get clearly measurable doubling-up into larger apartments during this recession,” says Greg Willett, vice president of research and analysis at M/ PF Research, the market research arm of Carrollton, Texas-based RealPage. “People probably did it, but if so, a bunch of them likely doubled up into single-family rental homes in the dreaded shadow market. Nationally, the shifts in apartment occupancy during this recession have been virtually identical from one floor plan to another.” One of the few national studies to shed some light on the doubling-up trends comes from Rent.com. In a June 2009 white paper, the Santa Monica, California based Internet listing service (ILS) examined the metrics and search terms corresponding to some 450 million Rent.com apartment searches in 2007 and 2008. Collectively, increases in the use of roommate-centric search language, an upward trend in the number of searches for two-plus bedrooms in late 2008, and a bump in both the minimum and maximum average rent amounts all point toward a national doubling-up trend. “It’s either trading up or doubling-up,” says Rent.com president Peggy Abkemeier, who adds that anecdotally most Rent.com clients seem to have a lot more one-bedroom apartments sitting vacant compare to two- and threebedrooms units. “With the current macro environment of vacancy rates up, effective rents down, and job losses creating cost-conscious consumers, it’s really a combination of all those factors that made us recognize that -- while maybe not everyone is experiencing it -doubling-up is definitely a trend in the marketplace right now.” Western National Property Management president Tom Shelton says that -similar to the hype over the shadow market -- the doubling-up drama is partly derived from industry buzz
becoming a self-fulfilling prophecy. According to Shelton, year-over-year for June 2009, Western National has 3 percent more availability for one bedrooms and 4 percent less availability in two-bedroom units, with surprisingly less availability overall compared to 2008. “So I think the doubling-up assumption is correct,” Shelton says. “But I don’t think it is as drastic as a lot of people think. The numbers are not hugely dramatic.” Likewise Greenbelt, Maryland based The Bozzuto Group is seeing anecdotal evidence of doubling-up across the company’s greater Washington, D.C., metro portfolio, with property managers experiencing a greater propensity among prospects to room together. According to the company’s Lead2Lease system, from August 2008 to June 2009, the preference for studios and two-bedroom apartments slightly increased, and the preference for one-bedroom apartments slightly decreased. “Of course, in terms of sheer volume, studios and one-bedrooms are still more in demand than two bedrooms,” says Bozzuto manager of corporate communications Lauren McDonald. That’s not stopping the company from getting out in front of the doubling-up trend, whether driven by verifiable data or mere market drama. Bozzuto’s recently launched roommate campaign will help facilitate roommate connections and promote the company’s larger, roommate-friendly apartments. The campaign will encompass a Web site, social media pages, advertisements, flyers, and email blasts, all to emphasize Bozzuto’s open arms for solo renters or bosom buddy roomies. “It’s still very much in its early stages,” McDonald says. “But we have recognized that in the current economic environment, consumers are actively looking for ways to save money, and our goal for this program is to help provide one more way for them to do so.
Investor Watch List: Surviving or Struggling? Some Local Markets Short on Good News Source: Les Shaver, Multifamily Executive
On a national basis, rents and occupancies have fallen. Carrollton, Texas-based M/PF Research says occupancies have fallen 30 basis points, while rents fell a percentage nationally. Meanwhile, Novato, California based research firm RealFacts says occupancies nationally have fallen from 92.2 percent to 91.4 percent. On a market-by-market basis, the picture isn’t much brighter. RealFacts says rents only rose in the first quarter of ’09 in three markets: Houston by 0.8 percent; Oklahoma City by 0.3 percent; and Vallejo-Fairfield, Calif., by 0.2 percent. M/PF reports that Washington, D.C., is the only market that saw occupancy and rents rise.
CALIFORNIA Bottom line: Still Struggling
Yes, this entire state is having trouble. With Los Angeles rents falling 5.7 percent, San Francisco rents falling 5.2 percent, San Jose rents dropping 4.9 percent, and Orange County’s rents sliding 4.3 percent, California may have some of the worst markets in the country, according to M/PF. California has seen massive job losses and a staggering amount of foreclosures. But now, there are signs people are purchasing those foreclosures. OKLAHOMA CITY Bottom line: Surviving
The place that added the most jobs in 2008? According to Willett, it was Oklahoma City, which added 2,100 jobs in the year that ended in February. RealFacts says average occupancy in the city was at 93 percent, up 2.8 percent from 2008. Average rents moved to $610 per month, up 2.9 percent from the year before. Since February, however, the city
INVESTORINSIGHT Here is a look at the most discussed markets nationally, which industry watchers seem to think are surviving and struggling.
has lost 3,000 jobs. “Even with the overall number going negative, there’s still decent growth in energy, health care, and government,” Willett says.
PHOENIX AND LAS VEGAS
Bottom line: Surviving
Bottom line: Struggling Considerably
With the stability of the federal government, it’s safe to say that no other market can compare to the nation’s capital right now. The metro was the only market to post gains in both rents and occupancies in the first quarter of 2009. “D.C. pretty much stands alone,” says Greg Willett, M/PF’s vice president of research and analysis. Still, Marcus & Millichap reports that total employment is falling for the first time since 2001.
It’s almost too easy to put these cities on a worst rental markets list. Yet their first-quarter numbers from RealFacts show they still belong. In the first quarter, Phoenix metro area rents fell 1.9 percent to $777, while occupancy levels fell 0.5 percent to 88.2 percent. In Las Vegas, rents fell 1.4 percent to $866, while occupancy levels dropped 1.1 percent, coming in at 91 percent.
Therefore, research and brokerage firms forecast vacancies to rise 100 basis points to 6.4 percent in 2009, while asking rents will likely decline 0.3 percent to $1,360 per month this year.
SAN ANTONIO Bottom line: Watch It Closely
Dallas and Houston have stayed relatively healthy, but Willett thinks San Antonio could be the best bet in Texas.
Right now, it has flat employment, but the Department of Defense is expected to pump 10,000 new jobs into medical facilities at Brooke Army Medical Center and Fort Sam Houston. There isn’t much supply coming into the market, either, and the apartments that have delivered have done fairly well.
Unemployment Rises to 9.7% Nationally Source: MultifamilyBiz.com
The job market continued its long, steep decline in August, with the jobless rate soaring to 9.7 percent and employers continuing to shed jobs, albeit at a slower rate than expected. Analysts generally believe that economic output began rising by late summer. But new Labor Department data released in August shows that that improvement isn't yet flowing through to the job market, as employers remain highly reluctant to add staff. The rise in the unemployment rate rose to 9.7 percent in August, from 9.4 percent in July, resumed a steep upward path that has been only rarely interrupted since the recession began in December 2007. Employers shed 216,000 net jobs, significantly better than the revised 276,000 jobs lost in July and less than the 230,000 decline that forecasters expected. The tally now stands at 6.9 million jobs lost since the beginning of the recession in December 2007. A broader measure of joblessness rose even more sharply than the headline unemployment rate. An expanded unemployment rate that includes people who have given up looking for a job out of frustration and who are working part time but want a full-time job rose to 16.8 percent, from 16.3 percent. The rate of job losses has been declining, if haltingly, since winter. The August numbers, bad as they are, do offer hope that job losses will continue tapering off. Economists generally consider the job loss numbers to be a more reliable month-to-month barometer of the economy than the unemployment rate, and that measure indicated the slowest rate of job loss since August 2008.
ACCESSLASVEGAS October | November 2009
Las Vegas Metro Occupancy Trends September 2008 through August 2009
Source: CB Richard Ellis (102,430 Apartment Units Surveyed in June 2009)
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Multi-Family Snap Shot
Source: The Bentley Real Estate Group
SECOND QUARTER 2009 REVIEW Performance measures within the professionally-managed apartment market in Las Vegas have reached lows not witnessed in recent years. Occupancies for apartment communities dipped to their lowest levels in more than a decade while average asking rents slid to price points quoted three years ago. A frail job market and continued price depreciation in the for-sale housing market both contributed to weakening demand for apartments. At the mid-point of 2009, the valley-wide occupancy rate reached 90.5 percent, which was below the 91.3 percent reported at the close of the first quarter of 2009 and further off the 92.9 percent posted one year ago (Q2 2008). For comparison purposes, the Las Vegas apartment market reported 10-year average occupancies of 94.2 percent. With apartment communities operating at less-than optimal occupancy levels, pricing has suffered. Average asking rents valley-wide dipped to $857 per unit per month. The latest advertised rates were down 3.8 percent from the same quarter of the prior year. On a per-square-foot basis, rents reached $0.95 per month with unit sizes averaging 902 square feet. The combined impact of occupancy and asking rent reductions contributed to a sharper decline of 6.3 percent in potential revenue. There are a few positive signs in the for-sale housing market, though pricing continues to erode and an oversupply condition persists, which is having a negative effect on the apartment market. Another factor impacting demand for rentals is that more than one out of every ten potential workers in southern Nevada is unable to find work, a condition that is putting downward pressure on occupancies and rents; it is also reportedly increasing delinquencies and evictions. These trends are not expected to correct through the end of the year. Longer-run stability in the apartment market will require improvements in the fundamentals in the areaâ€™s two key employment sectors. The leisure and hospitality industry will require stability in pricing and overall demand, a condition that will likely be timed with a national economic recovery. The second area of concern remains a dismantled construction industry that will face a longer recovery cycle. That said, the apartment sector will likely face continued weakness while the pace of pricing declines is expected to slow by the start of 2010. Despite the challenging environment, investors with the ability to hold assets can find opportunity as distressed situations will face higher capitalization rates.
Access Investment Offerings COMMUNITY (UNITS)
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Winsome West Apartments (228)
Realty Executives / 702.743.8991
Somerset Apartments (40)
Steinberg Realty/ 702.738.0344
Evergreen Apartments (313)
The Apartment Company / 760.633.1864
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The Apartment Company / 760.633.1864
Pine Village (275)
The Apartment Company / 760.633.1864
Sandpebble Village (280)
The Apartment Company / 760.633.1864
Summerlin Entrada Apartments (352)
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The Bentley Group / 702.855.0440
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August 31, 2009
Foreclosure - California Mortgage
La Mesa (96)
August 31, 2009
Foreclosure - California Mortgage
Kona Loha (56)
August 31, 2009
Foreclosure - California Mortgage
June 3, 2009
GE Capital Real Estate REO
Tierra Villas at Lone Mountain (98)
April 28, 2009
Tierra Ridge at Sunrise Mountain (98)
April 28, 2009
Tierra Bella at Lone Mountain (98)
April 28, 2009
For additional information and / or broker information on Access Investment Offerings and / or Access Recent Transactions contact Bret Holmes at 702.699.9261.
ACCESSLASVEGAS October | November 2009
Prospects Are Grim For Job Growth In Las Vegas Las Vegas’ economy is going to need more than CityCenter’s opening -- and massive hiring -- to rebound to pre-recession employment levels
Source: In Business Las Vegas
Las Vegas’ jobless rate jumped 92.7 percent since July 2008, the state’s Employment, Training and Rehabilitation Department reported August 21. July’s jobless rate was 13.1 percent, up from 12.3 percent in June and 6.9 percent in July 2008. For the employment rate to return to pre-recession levels, an additional 60,000 jobs are needed, said Brian Gordon, principal of Applied Analysis, an economic consulting firm. In July 2006, as the economy boomed, Las Vegas’ jobless rate was 4.6 percent and the economy had a year-over-year increase of 48,900 jobs. Prospects for job growth in the next six months are few. CityCenter is expected to create 12,000 jobs when it opens in December, and the 3,000 hotel room Cosmopolitan isn’t expected to open until the third quarter next year. CityCenter’s hiring could lower the jobless rate 1 percentage point, Gordon said. “It will certainly help to stop the bleeding,” he said. But the economy needs more jobs to heal. “We need a substantial amount of economic expansion,” Gordon said. “That will certainly take time.” The gaming sector will have to expand, and construction will have to return to normal levels, he said. More is needed, though, and noncore industry sectors will also have to expand to shore up employment levels. “This situation is not going to correct overnight,” Gordon said. In July, 7,800 additional workers in Las Vegas sought unemployment benefits. The figures don’t include workers who have maxed out their jobless benefits, those who have given up looking for work and those who are working fewer hours than they would like.
The state’s jobless rate experienced the largest three-month surge on a percentage basis since 1976, said Bill Anderson, chief economist of the state’s employment department. Nevada’s unemployment rate in July increased to 12.5 percent while the national rate decreased slightly: down 0.1 percentage point to 9.4 percent. Statewide, 9,700 additional workers filed for jobless benefits last month. “For Nevada’s tattered labor market, the bottom of the business cycle can’t come soon enough,” Anderson said. The decline over the past month is attributed to many factors, including government cutbacks, falling convention business and the ongoing drop in construction activity, he said. “Six months ago, the economy felt like it was in a free fall,” said Alan Krueger, Treasury chief economist and assistant secretary for economic policy. “We’re seeing increasing signs the economy is stabilizing ... (but) a lot of work remains to be done,” he said August 7 after the national jobless rate was announced. Krueger touted the federal recovery plan as having a hand in what could be the end of the recession. Anderson said the state will likely lag behind the national recovery. For example, Las Vegas ranks fifth in unemployment of U.S. cities its size.
Continued from Page 8 Those with jobs are receiving fewer increases in benefits and pay, but experiencing cuts to their hours. Since 2007, Nevadans are working fewer hours and are earning less, according to the Labor Statistics Bureau. The weekly average for workers in the private sector was 35.8 hours in June, down 1.7 hours from 37.5 hours in June 2007. During that time, the biggest decline in workers’ hours was in the manufacturing sector, down 2.6 hours from 40.3 hours to 37.7 hours. Workers in the business and professional-services sector also experienced cuts in hours, losing 2.2 hours per week from 37.2 hours to 35 hours. Even with a slight increase in hourly wages -- up 13 cents from $19.59 in June 2007 to $19.72 last June, private-sector workers overall are collecting smaller paychecks. Weekly pay went from $734.63 in June 2007 to $705.98 last June, the bureau reported. On the national level, employers are cutting back on employment costs, the bureau reported. In the past year, employees working in the private sector have experienced the smallest wage and benefit increases since the bureau started recording the numbers in the late 1970s. In June 2008 workers in the private sector received a 3.1 percent increase in wages; this past June that increase dipped to 1.6 percent. Benefits also took a hit, from a 2.6 percent increase in June 2008 to 1.3 percent last June. Nevada’s jobless rate is the third highest in the nation, behind Michigan (15 percent) and Rhode Island (12.7 percent).
Foreclosure Frenzy Now Leaking Into Vegas Apartment Market Source: In Business Las Vegas
Continued from Page 1 Gordon said improvement in the apartment market won’t be seen until the leisure and hospitality industries pick up, which won’t happen until the national economy recovers. The slowdown in
construction is a problem as well, and it will take much longer for that sector to recover, Gordon said.
average of $65,800 per unit, down 24 percent from $86,500 a unit in 2008’s second quarter.
Price declines will start to slow by early 2010, he predicted.
By The Numbers ...
The average rent in the second quarter was $857 per unit, down $12 from the first quarter and $34 from 2008’s second quarter, a drop of 3.8 percent.
Statistics Large & Small Offer Insight on the State of Multi-Family Rent Fundamentals
The highest average rent in the second quarter was $1,010 a month in the southwest valley, while the lowest average was $738 per unit in the northeast valley. Other average rents were: west, $855; central/east, $776; south, $842; northwest, $863; north, $878; and southeast, $970, according to Applied Analysis.
92.2% National Apartment Occupancy Rate as of December 2008 ... it is even LOWER today as you read this statistic. Source: RealFacts
2.5 Months Concessionary rent offered at select shadow condo properties in Florida Source: KW Property Management
2.6 Million Total # of jobs lost in 2008 (1.9 million losses in the fourth quarter alone) Source: U.S. Department of Labor
3.85% Operating cost increase to apartment communities in 2008 due to inflation Source: RealFacts
$99 Lowest “Move-In” amount witnessed in Las Vegas market Source: Southern Nevada Multi-Housing Association
The western valley had the highest occupancy rates at 91.8 percent, while the northwest had the lowest at 88.3 percent, the firm reported. In the second quarter 171 apartment buildings sold, 38 percent higher than the 124 in the second quarter of 2008, Belnick said. Most sales (151) were fourplexes, Belnick said. Of those, 49 percent were repossessions, 45 percent were foreclosure purchases and 6 percent were resales. The 151 sales are 57 percent higher than the 96 in the second quarter of 2008, he said. The average price per unit was $42,000, down 41 percent from $70,800 in 2008’s second quarter. Those complexes sold for an average of $100,300 per unit in 2007’s second quarter. Among complexes of 100 units or more, only two sold in the second quarter, down from nine in the second quarter of 2008, Belnick said. Buyers paid an
31.8% Year-over-year increase in applicants that had been evicted or left a landlord owing money, as of the fourth quarter of 2008 Source: On-Site.com
10 # of notices to vacate received in one day at a 163-unit Cleveland property after a crash in corporate housing leases Source: Landmark Management
20% Approximate vacancy increase among the worst Northeast multi-family operators, versus sub-5 percent increases in better markets Source: Sunrise Management
6 # of straight quarters that the Market Tightness Index has been below 50, indicating worsening occupancy and rent conditions Source: National Multi-Housing Council
ACCESSLASVEGAS October | November 2009
Deliver Service and You’ll Deliver Results Measuring Your Property Management Company: Are They Working for You or Are You Working for Them? Source: Valerie M. Sargent
I recently decided to jump on the bandwagon of addicts everywhere when the contract for my call dropping, battery dwindling, no-coverage-at-home cell phone finally expired. That’s right, it was time for me to (gasping inwardly) become a blackberry owner. What would become of me with so much technology at my fingertips? Would it indeed become my “crack”berry? Like any good customer today, I went online and pored through all of my phone choices available with my chosen carrier beforehand, deciding upon the one I thought was the best deal with the options I needed. The experience that followed at the store with my salesperson, Zak, was nothing less than delightful. It really got me thinking about the importance of customer service in our industry, and how critical it is now more than ever to build a relationship with the prospect to ensure his or her comfort with the very personal decision to rent this new home, this new place to build a life. How we treat our prospects determines our likeability, and as a result, our “lease-ability.”
approachability and willingness to assist, because I had been in cell phone stores before where the salesperson seemed entirely focused on their sales goals or too busy or distracted to help me. Not Zak. He was eager and friendly from the start. It’s the same in our business. When someone is coming to see an apartment for the first time, the greeting you give your prospect sets the tone for the entire visit. I can’t tell you how many community lobbies I have walked into where a greeting was delayed, fake or unfriendly. Those greetings do not help create faith in a leasing consultant; they simply make a prospect feel unwelcome, which makes them less likely to lease an apartment if they don’t feel comfortable from the beginning. When Zak asked how he could help me, I told him specifically what I was looking for, informed him of my research online and told him I had narrowed it down to a few options on which I hoped to get some feedback. Because I was adding a line with them due to another phone I had for a client (testing their service at home before porting my main number), I had concerns about a shared plan that would meet my requirements for both lines. This reminded me that back at our communities, we need to keep in mind that our prospects are more educated than ever before, researching us online and finding out about us beforehand. When you meet them in person, your conversations have to add value to what they have already learned and clarify any questions they might have. You then want to draw them out and engage them during the qualifying and leasing process
When I was in the store and my number was called, Zak greeted me warmly, giving me a genuine smile that instantly set me at ease as we exchanged introductions. I immediately felt he was someone who could help me based on his 10
in order to guide the tour appropriately to ensure you show them exactly what they are looking based for on what they’ve told you. The key is to listen effectively and be an expert communicator.
Zak was phenomenal at explaining how things worked, pointing out critical differences and giving his opinion on phone performance, all while making it very comfortable for me to ask questions. He used encouraging phrases such as, “Awesome.” “For sure.” “No problem.” Youthfully affirmative language that let me know everything would be taken care of as I needed. Zak didn’t have to “close” me – I closed myself once he showed me exactly what I needed and made sure I was content with my choice. That’s how a true sales process works, when you listen to the customer and deliver precisely what is wanted and needed. When prospects present you with qualities they are looking for in a new home, your positive affirmation of their needs gives them confidence in you as a leasing consultant. When you then remember those things onsite and point out solutions that matter to your customers, this is paramount to you getting the lease. Show them what they need, as well as the things you surprise them with by showcasing important features they might want based on things mentioned throughout the visit. Prospects know when you have truly cared and listened to them enough to figure out what they might like before they even realize it themselves. By showing them specifically what they are looking for and listening to their concerns, you create opportunities for the prospects to close the deal themselves, making the entire leasing process easier for everyone. Zak not only helped me get the right blackberry, he made sure the deal I found online was honored, and he upgraded my current client phone. Since I was adding a line, he assessed my usage on the first phone, determined how I would be using each one, and found a calling plan for both that ended up saving me money. I now had far more service and accessibility for much less money. Then, despite other customers waiting in the store to be called upon, he helped me convert my numbers from my other phones, set up my email accounts and gave me some basic lessons on how to work my new little crackleberry since I Continued on Next Page
Solutions. "With LEADS increasing by more than 200 percent in some markets, it is evident our online video product Community Theater is generating the LEADS that deliver leases for property managers."
Continued from Management Measurement was apprehensive. I never felt he was rushed or that he wasn’t completely to our sales interaction. By the time all was said and done, I was educated enough that I could walk out of there and confidently know what I was doing in a basic way. Zak was my hero. You have the opportunity to be someone’s hero every day when they come to see you about a new apartment. Taking the time to make someone feel instantly welcome and at ease in your office helps build trust and is the first step in making sure someone feels at ease in your community. When you then truly hear what your customer wants, care about what they need, and offer the solution they’ve been searching for, you have given excellent customer service. When you deliver service, you deliver results. Your likeability increases your lease-ability! In truth, Zak was a very well trained employee with admirable product knowledge and outstanding customer service skills. We need more people like Zak in the customer service world. You can choose to be one of them. This reminds me, I still need to mail my receipt for a rebate. I suppose his impeccable customer service only gets me so far . . . Valerie M. Sargent is Senior Associate at Yvette Poole & Associates, a consulting firm dedicated to unlocking the dynamic power of people through more well rounded training programs and integration into company cultures. For questions about this article or assistance with leasing and sales training, Valerie is based in Newport Beach, CA and can be reached on her new blackberry at (949) 637-0104, email@example.com or www.ypooleandassoc.com.
Online Video Increases Lead Generation For Rent Media Solutions advertisers who use video in their marketing initiatives reap the benefits Source: MultifamilyBiz.com
Property managers who incorporate video into their marketing initiatives see a significant increase in lead generation, according to For Rent Media Solutions, a leading apartment resource for searching apartments nationwide, and a division of Dominion Enterprises. By monitoring marketing activity in its LEADS™ Dashboard, For Rent has observed that advertisers who add online video to their marketing initiatives increase lead generation by an average of 30 percent and by as much as 309 percent in some markets. In Denver, two For Rent Media Solutions properties that incorporated the Community Theater® video product into their advertising efforts saw an increase in LEADS of more than 309 percent. Community Theater allows property managers to put their communities on display through an online video commercial. Through Community Theater, potential renters get an inside look at the property of their choice. The jump in LEADS that advertisers are experiencing nationwide has been credited to these videos.
More than 80.7 percent of mobile users coming to the ForRent.com mobile Web site can view video, according to Omniture SiteCatalyst®, a Web analytic resource. comScore Media Metrix shows that 81.2 percent of the total U.S. Internet audience viewed online video in June 2009. The average online video viewer watched 453 minutes of video, or nearly 7.6 hours. A recent survey of more than 400 senior-level decision makers, conducted by PermissionTV, shows online video is the top priority for digital marketing budgets. Nearly 64 percent use online video for branded content and video destination and more than two thirds of respondents reported that strengthening relationships with existing customers and prospects is the primary goal of online video initiatives. To learn more about Community Theater, please email firstname.lastname@example.org. For Rent Media Solutions™ is a division of Dominion Enterprises and a leading resource for property managers and potential renters searching for apartments. For Rent Media Solutions operates For Rent Magazine® and publishes 99 magazines covering more than 190 markets nationwide. For Rent Media Solutions also offers four Web sites, including ForRent.com. For Rent Media Solutions is dedicated to the needs of the apartment industry, bringing prospective residents and apartment communities together.
"Audiences across the nation are attracted to online video," noted Terry Slattery, president of For Rent Media 11
ACCESSLASVEGAS October | November 2009
Advanced Management Group’s Growth Continues In Apprehensive Market Celebrating their three year anniversary, Advanced Management Group continues to grow their portfolio in a market which has been apprehensive to management change over the past two years. Advanced Management Group recently added 4 new properties to their expanding portfolio, bringing the total number of units managed to just over 1,600. This includes 10 multi-family properties and 1 commercial development. With more than 40 years of property management experience, Advanced Management Group offers extensive market knowledge and consistent management principles. Advanced Management Group has utilized an innovative management fee structure, which incorporates accountability and a vested interest in the property owner’s bottom line. The results have been like no other management companies in Las Vegas. The fee structure is strictly based on the financial performance of owners properties they manage. This encourages superior property performance with a financial reward for everyone. To learn more about this unique management solution contact Bret Holmes, President of Advanced Management Group, at 702.699.9261. Advanced Thinking, Advanced Solutions, Advanced Results that’s Advanced Management Group. For information, article consideration and featured columns ACCESSLASVEGAS can be contacted at 702.699.9261. The publisher of this newsletter is The Internal Press.
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Access Las Vegas - October November 2009