10 Markets to Watch

From the December Issue of Units Magazine.
by Jeffrey Lee

Participants in the Emerging Trends in Real Estate 2011 survey believe the 24-hour cities will always dominate and outshine secondary markets.

This year, the top markets selected by survey respondents offer no surprises. Washington, D.C., pulls away from the pack, followed by San Francisco, Boston and Seattle, as the pre-eminent gateway cities. Houston and Denver solidify rankings, and respondents show faith in Southern California’s resiliency, despite recent setbacks.

While ratings improved for markets from coast to coast over 2010’s results, the gap between top and bottom continues to widen. More than 60 percent of surveyed cities still fall below “fair” ratings for commercial and multifamily housing investment prospects. Following is a snapshot of the top 10 markets ranked by survey respondents:

Washington, D.C. Never far from the top, the nation’s capital will hold onto its top ranking as long as the economy labors. The federal government never downsizes, while lobbyists and consultants swarm legislators and agencies hoping to influence or stop regulatory changes. All the activity cushions property markets and attracts investors. No market benefits more from core buyers’ recent flight to quality, driving prices back up.

New York. TARP and Fed funds directed at banks helped financial markets and eased job cuts, triggering the biggest
ratings jump for New York. Apartment rents rebound along with coop/condo prices, which registered only minor drops in top neighborhoods.

San Francisco. The country’s most volatile 24-hour market, the City by the Bay now offers investors excellent near-market-bottom buying opportunities, particularly in apartments and hotels. The market also sidesteps some of its state’s fiscal mess, performing better than Southern California. Tech and life science industries flourish around top-flight universities (Stanford, UC Berkeley), help attract brainpower, and sustain expensive regional living standards.

Austin. A smaller Texas market that scores high ratings. Survey participants note, “Everyone wants to live in Austin.”

As the state capital and home to a major university (hook ’em, Horns), Austin is one of the few cities in the Sunbelt with growth restrictions.

Boston. This venerable 24-hour city registers high marks for livability, controlled development, and a highly educated labor force, but lacks economic vibrancy. Apartment rents will track back up as expensive for-sale housing keeps tenant demand high for multifamily units.

Seattle gets a boost from in-migration to the area, adding 160,000 new residents since the recession.

San Jose aligns with San Francisco gateway benefits, including a flourishing tech and life sciences industry.

Houston is expected to emerge stronger from the recession than most cities, creating more real estate demand.

Los Angeles remains an attractive location with Southern California serving as the most important gateway to the Pacific Rim and Latin America.

San Diego tracks closely to Los Angeles with its desirable climate.

Apartment Industry Study Explores Smoking Rates Among Employees

Apartment Industry Study Explores Smoking Rates Among Employees

A group of multifamily housing property management industry human resource (HR) professionals are working together to decrease the number of smokers within the apartment industry workforce and promote healthier lifestyles for those employees and their families.

Towards this effort, a small work-group comprised of HR professionals at AMLI Residential, Archstone, Milestone Management, Equity Residential, Banner Property Management, Waterton Residential and Post Properties collaborated with Lockton Companies, an employee benefits consulting firm, to develop and conduct an industry-wide survey to evaluate current smoking prevalence rates, the types of smoking cessation assistance programs offered, and methods for incenting participation in these programs.

The survey was conducted September 2010 with report findings (and a companion white paper) released Oct. 29, 2010.

Survey Participants. Forty-seven companies representing in excess of 30,000 covered employee lives completed the survey.

Key survey findings:

• While most companies didn’t track tobacco use in their workforce, for the 34% that did, their results mirrored the U.S. adult population at large with a prevalence rate of ~21%.

• Just over half the respondents (53%) reported offering some form of tobacco assistance as defined in this survey.
• 36% of those not currently offering any program elements plan to offer at least one next year.

• 45% offered tobacco cessation assistance designed to help people successfully quit tobacco use (i.e., Free & Clear, quitnet.com, state-based tobacco quit lines, American Lung Association, wellness vendor, EAP or medical carrier based program).

• Of the 25 companies offering some form of tobacco cessation assistance as defined in the survey, 36% provide a contribution incentive for non tobacco users, and 76% provide coverage for smoking cessation drugs and/or nicotine replacement therapy (NRT)

• None of the survey respondents said they offered other types of incentives for non-tobacco users (i.e., gift card, one time paycheck contribution, FSA contribution, HSA/HRA contribution).

Those interested in obtaining a copy of the survey results and white paper can contact Leslie Silverman from AMLI Residential at 312/283-4885 or lsilverman@amli.com or Ken Wexler from Lockton Companies at 312/669-6787 or ken.wexler@lockton.com.

2011 NAA Call For Entries

Submission Deadline is Friday, March 18, 2011.

The NAA PARAGON Awards recognize excellence and leadership in the rental housing industry. These national awards celebrate that builders, industry professionals and affiliated apartment associations make unique contributions to our industry. For the winners, a PARAGON award represents a milestone along the path to personal and professional achievement. For our industry, the winners demonstrate characteristics that benchmark success.

Winners will receive their PARAGON award during the 2011 NAA Education Conference & Exposition held June 23-25 in Las Vegas. They will also be featured in the September 2011 issue of units magazine, NAA’s monthly publication that reports on the apartment industry.

All NAA members are encouraged to submit their entries representing models of excellence for our industry in one or more of the following categories. Click on the award categories below for more information, including the award application form for each:

Affiliated Association Awards Communications Community Service Education Government Affairs Membership Development Builders, Owners and Developers New (less than 5 yrs) - (2) Small (up to 150 units) Large (more than 150 units) 5-20 yrs - (2) Small (up to 150 units) Large (more than 150 units) 20+ yrs - (2) Small (up to 150 units) Large (more than 150 units) Green - (1) Specialty any category - (1) Affordable Military Student

NAA Individual Achievement Chris Christenson Association Executive of the Year Independent Rental Owners of the Year (fewer than 100 units & 101 – 500 units) National Suppliers Council Achievement NAAEI Individual Achievement NAAEI Designate/Certificate Holder Awards: Certificate for Apartment Maintenance Technicians (CAMT) Certified Apartment Manager (CAM) National Apartment Leasing Professional (NALP) Professional Designate of the Year

Raise Rents, But Offer An Early Lease Discount

None of us want to pay more money for the apartment or house we are renting. Most of us have trouble increasing our customers’ prices when we ask for a new renewal commitment. One of the things I’ve learned is that perception is reality. So the key to raising the rents while keeping resident retention high is to help your residents perceive that they are getting a bargain.

The Programs: Three months before their lease renewal date, send them a Rent
increase/ Lease notice. Include an early bird incentive to get them agree to the rent increase and sign immediately, thereby preempting a search for a new place to live. For example, let’s say you are trying to increase your rate by 5 percent on an $800-per-month rental unit, which comes out to $40 per month. Send them a rent increase for 8 percent, but offer them a 3 percent discount if they come and renew the lease within the next two weeks, a 2 percent discount if they come in within four weeks, and a 1 percent discount if they come in within five weeks.

Design the letter to outline the savings for each percentage offer. For example:
· The 3 percent discount would equal $24 per month or $288 per year.
· The 2 percent discount would equal $16 per month or $192 per year.
· The 1 percent discount would equal $8 per month or $96 per year.

The residents perceive that they are saving $288, while you’re increasing revenue by $480 per year. The resident may ask for the full percentage of savings during the course of the three months, but that’s okay. You still get the same perception and same revenue.

The keys to success are to design and test different initial rent increase notices, incentive pieces, and reminder cards announcing the end of another discount.

Projected Results: You will be able to test this program on a monthly basis and determine its net effect. The risks are small, but the rewards are large. One community that implemented the idea received a 65 percent early bird signing response rate!

Contributed by Rick Brown
http://www.smmonline.com/

NAA Intervenes in Missouri Apartments’ ....

...“Potentially, what happens in Missouri could become a test case for other states,” said Greg Brown, NAA’s vice president of government affairs. “We want to protect our members from being denied the right to individually bill residents for utilities, which has been shown to conserve resources.”...

AAKC Members please login to http://www.aakc.us/ and read an important article that coud affect your daily operations.

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We're Social!

The AAKC Social Media Committee was created to enhance the presence of AAKC both locally and nationally.

Through social media, we will bring awareness to upcoming events, seminars, educational opportunities and other ways that current and new members are able to get involved. We are confident through this new committee we will help to strengthen our other committees and encourage new members to join.

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Please Join us for the AAKC Holiday Party & Dinner Meeting

Please join us for this special event in the Rooftop Ballroom, at the Intercontinental Hotel for our December Dinner Meeting & President's Awards Banquet. the AAKC President, Lenora Carpenter will be giving out Awards for:

* Local Vendor Company of the Year
* National Vendor Company of the Year
* Management Company of the Year
* Vendor Volunteer of the Year
* Management Volunteer of the Year
* Vendor of the Year
* Manager of the Year
* Management Executive of the Year
* Vendor Committee Member of the Year
* Management Committee Member of the Year

It will be held on December 7th, 2010 at the Intercontinental Hotel

401 Ward Parkway
Cocktails from 5:00pm-6:30pm
Dinner and President's Award Banquet begin at 6:30pm

Tickets are $38.00 Dinner & Awards Banquet in advance $43.00 at the door

*This event is for AAKC members only.

Members Click Here To Register For This Event Online!

The Boom In Apartment REITs

Rental units are hot again. How to invest.
Stephane Fitch, 12.06.10, 12:00 AM ET


As millions of Americans were looking in vain to unload their homes this summer, Thomas Toomey bought 1,374 of them for an average of $300,000 each. The $412 million outlay left his Denver-based apartment company, UDR, with 58,800 units worth $7.6 billion.
Toomey is buying for a simple reason. He's convinced that rising rents will drive up the profits he can earn leasing out those homes to record levels over the next several years.
"Our industry will do for apartments what Holiday Inn and Marriott did for hotels," Toomey says of his brand-building plans.
Rather than your Realtor, it's your stockbroker who can tell you that a housing boom has been going on in apartment real estate investment trusts for at least a year.
"Apartment demand is rebounding in dramatic fashion," says analyst Andrew McCulloch of Green Street Advisors. With little new development under way rents have risen 5% nationally in the past year, apartment-data firm Axiometrics says. McCulloch expects the gains to flow through as a 12.5% annual average earnings increase over the next two years among the dozen U.S. apartment REITs he follows.
The average apartment stock, meanwhile, has produced a total return (price gains plus dividends) of more than 40% this year. Apartment REIT shares are now at an average 12% premium to their underlying equity values, McCulloch figures. Even so, he rates only 3 of 12 U.S. apartment stocks as "sell."
Even if future gains are more tempered, investors can enjoy average 3.2% yields on apartment stocks (slightly below the overall REIT average) and good prospects that payouts will grow. That's partly because after rising to 69% in 2006, homeownership is heading back down. With the children of baby boomers now in their early 20s and looking to live on their own, the number of renters will grow by 4.5 million, or 13%, by 2015, analyst McCulloch figures.
Why not just buy apartments directly? Diversification, for one thing. UDR owns 58,800 apartments in numerous cities, and Equity Residential owns nearly three times as many units. Professional management is another plus for top REITs.
"On a scale of one to ten for management skill, I rate all the companies I follow an eight, nine or ten versus the private guys," says McCulloch.
Big apartment managers are figuring out how to use amenities like outdoor grilling kitchens, gyms and movie theaters, as well as electronic systems for paying rent or requesting a repair. Facebook-style apps enable tenants to organize parties, find jogging partners or even dates. Such amenities should help keep residents in place even if owning continues to become cheaper relative to renting.
The table shows eight apartment stocks, all rated "hold" or "buy" by Green Street. The picks have an average leverage ratio of 45%. The entire group should benefit from rising rents and pay rising dividends over the next three years.



http://www.forbes.com/forbes/2010/1206/investment-guide-reit-apartment-building-rent-secret-housing-boom_print.html

"Landlords Woo Tenants With Free Wi-Fi"

When 22-year-old graduate student Eric Pitt needs to check his e-mail or begin online research for college courses while at home, he's getting online for free.

Pitt, who lives in Newmarket, is renting an apartment and has a landlord who is paying for wireless Internet access — a service more landlords are beginning to offer to entice renters.

"It's a huge cost savings," he said. "I know it's probably about $70 that I'm saving a month."That can go a long way for a student, added Pitt, who is working on his master's degree in business administration at the University of New Hampshire. When he moved from Rhode Island in August, he said, he was sold on the apartment when he saw Internet was included.

"It's definitely a big selling point," he said. "And the signal strength is good. They put in a new router and it's strong. I've got no complaints."

Tom Toye, owner of Arthur Thomas Properties, manages Pitt's 12-apartment complex. The idea of installing shared secure Internet for a complex is something Toye has been working on over the last three years.

"The real advantage is cost savings," he said. "If it's something people have to save $50 a month, that's an extra $50 they can use for gas money or insurance."

The buildings are provided with one line of broadband shared among tenants. The wireless signal is encrypted and password-protected.

The Newmarket complex is the most recent installation Toye has helped create. The connections are installed at the owner's expense, and rental fees were not adjusted.

"There are two reasons it's a benefit to the owner," Toye said. "It's an amenity for the residential building that keeps the current tenants happy, while giving them less incentive to move on. It also makes it more attractive for new people looking to rent."

Paul Bergeron, a spokesman with the National Apartment Association, based in Arlington, Va., agreed that it can be a useful tool for property owners and managers.

"With consumers demanding greater use, better access and more convenience of Internet connectivity at home, apartment owners who are able to offer options and higher bandwidth to residents can gain an advantage in attracting new residents while retaining those who they already have," he said.

Arthur Thomas Properties has tried it in three other properties and said by now, they have worked out the kinks. When signal strength was straining from routers too far away from apartments, they began cascading routers — connecting one router to another to provide more wireless Internet coverage.

"The biggest trouble we had was trying to get strong signals throughout the buildings because it tends to be multifamily units," Toye said. "We found the routers worked up and down, but not left to right and fixed it."

Arthur Thomas complexes that provide free wireless Internet to its tenants also have maintenance request forms online as well as online rental payment options.

According to Toye, he hasn't seen other small complexes providing such services in the area, but student housing in Durham does provide Internet to students. Those buildings are prewired, he said, adding that smaller landlords who use older buildings, have to rework setups.

For landlords offering free wireless, it's been a boost in rental interest, according to Toye.

"Everybody says it's great, because it's expensive to have," he said. "Even cable is expensive. Most people are looking at $100 just for those services. Everybody is trying to save a few bucks, and this works."

Jule Holcombe of Dover has been renting out extra space in her home for the last four years. She said she offers free wireless for convenience and to help tenants save money.

"I think it seems ridiculous not to," she said of sharing Internet. "It's one house broken up into three apartments, and it seems ludicrous for three people to pay for wireless when we can split that cost."

She said the renters share the passcode for the wireless and in the four years she's been living there, there has only been one time where the connection was disconnected.

"We thought it was an added benefit," she said. "The expense of paying your heat and utility and water — it all begins to add up."


BY RONI REINO
rreino@fosters.com
rreino@fosters.com

Sunday, November 7, 2010

Mission Statement

The Mission of The Apartment Association of Kansas City is to protect owners of multifamily housing from harmful legislation through effective political representation; to offer educational opportunities for professional leadership in the industry; to communicate with our members regarding local, state and national issues; and prudent administration of our resources.