Vacancies put multifamily market in hard spot – Riverstone Residential Group – Steve Davis

From the article –

“In the meantime, Riverstone’s more upscale properties, such as The Louisa and The Asa in the Pearl District, are competing fiercely for a diminishing group of tenants who can afford to pay $2,000 per month in rent. Property owners like Riverstone are refocusing on customer service in lieu of lowering rents even more.”

“Now, property management, customer service and marketing in the right locations are starting to matter again,” Davis said. “There is a new consumer consciousness that is influencing higher caliber communities. We’re seeing owners scrambling and fighting for the same core group of renters.”

“To keep tenants, Riverstone has begun holding resident appreciation parties in the common areas of its downtown apartment buildings. By spending a little extra cash on food and drink for its residents, Davis said he hopes tenants will view their apartment complex as more of a community, and that retention rates will improve.”

Note – The key words here are “more upscale properties” and “higher caliber communities.” Not to be confused with their “less upscale properties” and their “lower caliber communities.” The focus at those properties is NOT customer service. katy

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January 26, 2010
BY: Nathalie Weinstein 

In 2010, multifamily property owners will decide their future, according to a year-end report issued recently by Colliers International.

Multifamily property values have declined due to higher vacancy rates caused by Portland’s high unemployment rate, according to the report by Gary Winkler and Beth DuPont of Colliers International. He said owners this year will choose whether to stay in the multifamily market for the long term or bail out.

According to the report, owners are making less money on their properties as they keep rents flat to retain remaining tenants. While some owners this year may use their remaining cash toward marketing, cosmetic improvements or deferred maintenance, others could decide to sell.

“Property owners have to decide if it’s worth it for them to stay in the market in the long term or if it’s time to move away,” Winkler said. “We will continue to see value loss into 2010. But cap rates are going up and will continue to do so. Owners must approach their properties with the knowledge that what you get by selling today is not what you’ll get tomorrow.”

For property management company Riverstone Residential Group, now is the time to compete in the Portland market. Steve Davis, vice president for Riverstone, said that though Portland multifamily properties remain attractive to buyers, there are not many loans expiring this year. He believes owners may wait to sell their buildings.

“It’s going to be a long and bumpy ride,” Davis said. “The amount of multifamily sales we’ll see this year depends on what banks end up doing with their loans as de-leveraging occurs.”

In the meantime, Riverstone’s more upscale properties, such as The Louisa and The Asa in the Pearl District, are competing fiercely for a diminishing group of tenants who can afford to pay $2,000 per month in rent. Property owners like Riverstone are refocusing on customer service in lieu of lowering rents even more.

“Now, property management, customer service and marketing in the right locations are starting to matter again,” Davis said. “There is a new consumer consciousness that is influencing higher caliber communities. We’re seeing owners scrambling and fighting for the same core group of renters.”

To keep tenants, Riverstone has begun holding resident appreciation parties in the common areas of its downtown apartment buildings. By spending a little extra cash on food and drink for its residents, Davis said he hopes tenants will view their apartment complex as more of a community, and that retention rates will improve.

Winkler said that multifamily owners will continue to offer incentives to renters, but that the rents themselves will hold steady. Because of this, owners will see their property value stay lower than before the recession.

“If you’re a person who thought about selling next year, the short-term outlook for that sale is probably not one that will yield the results you want,” Winkler said. “We won’t see values increase until unemployment turns around.”

However, some owners may not have a choice. According to the Colliers report, deferred maintenance and other financial issues, such as nonpayment of property taxes, may start to appear soon. As a result, a property owner could become more inclined to sell.

“Owners could be paying property taxes only when absolutely necessary, not when they are due,” Winkler said. “When it comes time to pay, will they be able to, based on concessions they are offering to their tenants? That will be a pretty big bill, and it could lead to more sales.”

djcoregon.com

A letter to the NAA regarding an email they deleted without reading – please retract your amicus in the Abad case in Arizona – it is fraud by a political action committee, the National Apartment Association, that is furthering another fraud by another political action committee, the US Chamber of Commerce

Political Action Committee – NAA – files Amicus Brief in mold case (two infant deaths in mold filled apt – Wasatch Prop Mgmt) citing US Chamber/ACOEM ‘litigation defense report’ to disclaim health effects of indoor mold & limit financial risk for industry

“Changes in construction methods have caused US buildings to become perfect petri dishes for mold and bacteria to flourish when water is added. Instead of warning the public and teaching physicians that the buildings were causing illness; in 2003 the US Chamber of Commerce Institute for Legal Reform, a think-tank, and a workers comp physician trade organization mass marketed an unscientific nonsequitor to the courts to disclaim the adverse health effects to stave off liability for financial stakeholders of moldy buildings. Although publicly exposed many times over the years, the deceit lingers in US courts to this very day.” Sharon Noonan Kramer

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