Industry News | Wk of September 16
HOT & RELEVANT TOPICS
Lenders Won’t Cover Rising Construction Costs on Multifamily Projects
Apartment developers have been forced to put more equity into their new properties. That’s because lenders are balking at covering the rising cost of construction in the loans, particularly as the current cycle matures. Although lenders remain eager to offer multifamily loans at low-interest rates, they are not typically enough to cover the increasingly rising cost of development. That means developers often have to accept lower profit margins to make their deals work. Read Bendix Anderson’s article in National Real Estate Investor.
Tech-Driven Renters Define Mixed-Use
The lines between multifamily asset classes are being redefined, and tech is at the center of the transformation. Today’s hyper-connected prospective resident values flexibility, convenience and personalization, which all go against the traditional real estate roots of location, long-term commitments and scale. This is causing new housing-class models to emerge, as amenities such as co-working spaces and concepts such as co-living exemplify shift. Space is becoming reimagined and rigid divides between assets classes are blurring. Read Sarah Yaussi’s article in Multi-Housing News.
Overcoming Leadership Barriers and Bias
The numbers tell a clear story. The pay gap between men and women range from 11 to 31 cents on the dollar depending on what state you’re in. Only 23 percent of C-suite executives in the multifamily industry are women. Aware of this disparity, many of the industry’s women are taking matters into their own hands and utilizing their strengths to overcome the barriers and bias. “We have a hard time accepting compliments, and we tend to say, ‘Oh it was a team effort,’”
Red Peak’s Lori Snider said. “Do not be afraid to toot your own horn. It’s really important to claim your own achievements.” Read Lindsey Bernhardt’s article in UNITS Magazine.
IN THE NEWS
Flood Threats Rise for Apartment Properties Nationwide
Initially, 2019 appeared to be a sedate year from a meteorological perspective. But in August, the National Oceanic at Atmospheric Administration revealed that tropical storm activity could vastly transcend typical levels and expects 10 to 17 to hit the Gulf of Mexico and East Coast before the end of the year. That has sparked concern in the apartment world, which deals with a relatively weak private flood insurance market. That raises the importance of the federal flood insurance program, but the program is under enormous financial stress. Read Kevin Donnelly’s article in Multifamily Executive.
Regulation Could Push Investors Out of California
The rent-control debate is not over in California. Though Prop 10 failed in November, the state’s AB 1482 (known as the “anti-rent-gouging bill) passed by a 46-22 margin. It will next go to Governor Gavin Newsome, who is expected to sign it. The bill will put restrictions on how much rents can be raised, and the California Apartment Association is not a fan of the measure, according to LA Magazine. The CAA claims investors will be hesitant to enter the market at a time when the state desperately needs more homes. Read Kelsee Maree Borland’s article in GlobeSt.com.
Average U.S. Rent Climbs to $1,472 in August
The average U.S. rent ascended to $1,472 last month, representing a slight uptick from July and a 3.3 percent increase ($47) from August 2018. Wichita, Kan. remained the nation’s most affordable locale with an average monthly rent of $697. San Francisco remained on the other end of the spectrum with an average rent of $4,272, meaning average renters spend more than $50,000 annually on rent. Indianapolis boasted the most affordable rent among the top 20 metros at an average of $876 per month. Read Alcynna Lloyd’s article in Housingwire.