U.S. Apartment Markets Outlook

Size: px

Start display at page:

Download "U.S. Apartment Markets Outlook"

Ashlie Curtis
6 years ago
Views:

1 Market Advisory Services U.S. Apartment Markets Outlook Recent surge in absorption lays foundation for better performance ahead 1

2 Year-Year Change in Employment (000) May y-y 2015 Market Market Advisory Update Services Young Adult hiring improved in early ,500 1,187 1, ,000-1,500-2,000 Source: U.S. Bureau of Labor Statistics household survey 2

3 1Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2015p Occupancy Year-Year Effective Rent Growth Market Market Advisory Update Services Occupancy, rent growth accelerated further through Q1 100% 10% 95% 95.4% vs 94.3% equil 5% 4.6% vs 2.7% equil. 90% 0% 85% -5% Equilibrium Occupancy, 94.3% Occupancy Rent Growth Source: 3

4 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 Apartment Sales Volume (trailing 12 months, billion $) Market Investment Advisory Markets Services Apartment sales reach $125b/yr thru 1Q15; one-offs strong $140 $120 $100 $80 Entity Portfolio $60 $40 Individual $20 $0 Source: Real Capital Analytics 4

5 Expected Annual Rate over Coming 10 Years Market Investment Advisory Markets Services 12% as expectations for returns over the next decade continue to decline across investment classes 10% 8% Expected S&P 500 Return IRR Target of Current Apartment Investors 6% 4% Expected 10-Year Treasury Rate * 6.90% 5.45% 3.98% 2% 0% *Survey question regarding 10-Year Treasury expectations changed in 2014, not comparable to prior surveys Sources: RERC, Federal Reserve Bank of Philadelphia Survey of Professional Forecasters 5

6 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 Total 5+ Multifamily Units Started (quarterly, 000) Market Apartment Advisory Starts Services Total 5+ starts slowed slightly in 4Q14 and again in 1Q Total 5+ Multifamily Starts by Quarter Total 5+ Multifamily Starts by Quarter (seasonally adjusted) Not seasonally adjusted Source: U.S. Department of Commerce; 6

7 Rental Apartment Units Market Market Advisory Outlook Services Solid demand in tracks net completions 400, ,000 Net Absorption New Completions 200,000 Net Completions 100, , , ,000 Source: 7

8 Market Market Advisory Outlook Services Apartment Market Tour Early recovery, now between booms: DC Well into the development cycle: Dallas West Coast rotation: Los Angeles Late recovery: Atlanta 8

9 Market Metro Advisory Stories Services March 2015 year-year gains in all markets; 3%+ in many Employment Growth 12 Months ending March New York 151.6k 2. Los Angeles 113.3k 3. Dallas 91.0k 4. Houston 82.5k 5. Atlanta 80.5k 12. Washington DC 50.7k Employment Growth Rate 12 Months ending March San Jose 5.5% 2. Orlando 4.6% 3. San Francisco 4.3% 4. Riverside 4.2% 5. Dallas 4.0% 13. Atlanta 3.3% 23. Los Angeles 2.7% 34. Washington DC 1.6% U.S. 2.4% Source: U.S. Bureau of Labor Statistics establishment survey 9

10 San Jose Charlotte Austin Seattle Nashville Houston Raleigh Orlando Dallas Portland Kansas City Denver Orange County Tampa Fort Worth Columbus W Palm Beach Miami Atlanta Phoenix Indianapolis Riverside Salt Lake City San Antonio Boston Washington DC Las Vegas Los Angeles Norfolk Philadelphia San Francisco Oakland Baltimore Minneapolis Jacksonville San Diego St. Louis New York Fort Lauderdale Chicago Cincinnati Detroit Sacramento Market Metro Advisory Stories Services Starts rates* through March: 5% in SJ, Charl, Aus; Dal 3½%; Atl only ~2%; DC and LA ~1½% 6% YE Mar 5% 4% 3% 2% 1% 0% *Starts rate = last 12 months starts as % of existing apartment stock Source: 10

11 Market Advisory Dallas Services Apartment Market Outlook: Dallas 11

12 Market Advisory Dallas Services Construction is booming so is renter demand 17,500 15,000 12,500 10,000 7,500 5,000 2, ,500-5,000 Annual Absorption and Completions/Net Completions DAL1Q15 Absorption Absorption Forecast Completions Completions Forecast Net Completions Net Completions Forecast 12

13 Occupancy Effective Rent Growth Market Advisory Dallas Services More out-performance ahead, but moderating 100% Occupancy & Effective Rent Growth DAL1Q15 10% 95% 5% 90% 0% 85% -5% 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 Equilibrium Occupancy Occupancy Occupancy Forecast Year-Year Rent Growth Rent Growth Forecast 13

14 Market Metro Advisory Outlook Services 70% of markets should see 3%+ rent growth/year Source: 14

15 Market Advisory Services Questions/Discussion 15

Volunteering in Oklahoma City, OK

6/17/2010 Oklahoma City Profile - Volunteering in information on volunteering and civic engagement Volunteering in Oklahoma City, OK Statistics for this area were collected within the Oklahoma City Metropolitan