The Impact of Oregon’s New Rent Control Law By Tyler Johnson and Lee Fehrenbacher, HFO Investment Real Estate
The increase in new laws and regulations impacting landlords and tenants in Oregon and Portland has caused some heartburn for apartment owners concerned about the impact these policies will have on their assets. But—while there has been a dip in sales activity this year—values in the short term have been relatively unimpacted, and transactions in the suburbs have picked up. (See pages 2-3 of this newsletter for a rundown of these policies)
A sharp increase in Clark County Institutional sales
Clark County is the only Metro area county not located in Oregon. Through Q3 2019, Clark County has seen a 156% increase in sales volume compared with all of 2018 in sales over $10 million, with roughly $336.5 million invested across ten transactions. This compares to approximately $131 million across three transactions in 2018. The average sales price per unit over the same period also increased by 18.8% percent to $211,935. Three of Vancouver’s four largest post-recession deals closed in 2019. One of those transactions—the HFObrokered 387-unit Green Leaf River Pointe—sold for $68.8 million to an out-of-state buyer. This marked the fourth time the asset sold since the recession, with its value increasing by 125% since the first sale in 2010.
HFO Sale: Bethany 5
67 Units in Portland, OR • $19.2 million
20 HFO Investment Real Estate • (503) 241.5541 • www.hfore.com
Rents increased 95 percent over the same period. One sign of the uptick in investor interest in Vancouver has been the increase in offers on institutional properties there. In August 2018, the 334-unit Meadow Wood Apartments generated more than double the number of offers typically seen for Vancouver listings. The property sold for $54.75 million at a 4.68 percent cap, after the buyer received more than 20 offers.
Effects on private client sales
Private client transactions of less than $10 million in Clark County are also on track to match or outpace 2018. While approximately $25 million across nine transactions, has closed as of Q3—compared to the roughly $63 million across 14 sales in 2018.