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| Michael Bull |
ATLANTA, GA (Feb. 13, 2013) – The U.S. apartment segment
turned in another strong performance in 2012, and even though overbuilding could
become a problem in certain areas, the sector appears set for at least several
more years of almost optimal health.
That was the
consensus of a panel of multifamily experts on the most recent episode of the
“Commercial Real Estate Show” radio program, hosted by Michael Bull of
Bull Realty. Bull and his guests provided an enlightening look at the sector,
discussing occupancy rates, rent growth, new construction levels and the
effects of low interest rates on investment-sales activity.
 |
| Ronald Johnsey |
The national
apartment occupancy rate improved 60 basis points in 2012 to end the year at
94.3 percent and should finish 2013 just shy of 95 percent, said Ronald
Johnsey, president of AxioMetrics, an apartment-research firm. Nationally,
effective rents increased by an average of 3.6 percent last year, a slight drop
from the 4.2 percent growth of 2011, but still an impressive figure, he added.
“If you get anything
over 3 percent, you’re doing really well,” Johnsey said. The national
effective-rent rate should grow by another 3.6 percent in 2013, he predicted.
 |
| Norman Radow |
2012 also was marked
by increasing renter demand for Class-B and class-C apartments as tenants
looking to reduce their living expenses began moving out of more upscale
properties where rents have skyrocketed in recent years, according to Johnsey.
As a result of the
sector’s recent success, construction of new apartments is beginning to pick
up, guests noted. Approximately 85,000 units were delivered in the United
States in 2012, a figure that is expected to nearly double to 168,000 units
this year, Johnsey said.
According to
Johnsey, almost a third of this year’s new units will be concentrated in six
markets: Austin, Texas; Dallas; Houston; New York; Seattle; and Washington D.C.
“Those are the markets we really need to look at and worry about oversupply
having a big impact on their performance,” he said.
 |
| Jerry Wilkinson |
Climbing rents and historically cheap financing make this a
great time for investors to purchase apartment properties, said Norman Radow,
CEO of The RADCO Cos. Locking in a long-term, assumable loan at a low rate also
will ensure there is demand for your property down the road when interest rates
have increased, he added.
“You’re almost
selling the loan as much as the real estate,” Radow said.
The single-family
housing market has begun to recover, and that will actually benefit the
multifamily sector by creating a variety of jobs and thus creating more
renters, said Jerry Wikinson, chairman of The Wikinson Cos. and
immediate past president of the National Apartment Association. “We view the
recovery in housing overall as a good thing,” he said, although he also
predicted the recovery to proceed slowly.
 |
| Andy Lundsberg |
Andy Lundsberg, vice president of Bull Realty’s
Apartment Group, said the apartment investment-sales market should remain
healthy for a while. “There’s strong demand and a lot of competition [among
buyers], which is driving supply [of for-sale properties] down,” he said. “It’s
very competitive.”
“If you’re an owner, it’s a great time to sell,” Lundsberg
added. “If you’re a buyer, take advantage of those low interest rates and buy
now.”
The entire episode on the U.S. multifamily market is
available for download at
www.CREshow.com.
The next “Commercial
Real Estate Show” will be available Feb. 14 and will examine tax strategies for
commercial real estate investors.
Contact:
Stephen Ursery
The Wilbert Group
Office: (404) 965-5026
Cell: (404) 405-2354
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