Multifamily News: Vacancy Rate Stabilizes

by Compass Commercialon 23 October 2018in Central Oregon Multifamily News

The following content is taken directly from the Central Oregon Multifamily News, Fall 2018 issue.

New apartment construction is making headway in the region-wide housing shortage and affordability problems.

The market is healthy and working.

There is more housing availability, and rent growth has slowed dramatically from the recent years of double digit increases.
New apartment construction in Bend has been modest but steady. Some West Coast markets, have seen an oversupply of new construction, driving up vacancies with long periods of lease up times for new buildings. Rent growth has declined in a few markets. So far, Bend has not experienced that, as new construction has been somewhat restrained by high costs, shortage of land, and regulatory burdens and costs.

Sales activity is modest. Buyer demand remains strong but is tempered by higher
interest rates and price resistance. Many owners are still reluctant to sell, largely due to tax considerations.

It is still a great seller’s market. We are always happy to provide free Broker Opinion of Values for your multifamily properties. We are well-versed in 1031 exchanging and can answer many of your questions regarding the 1031 exchange. We also provide consulting on preparing properties for sale. Ideally, this process should begin well before actually putting a property on the market.
Contact us early if you are thinking of selling!

The Central Oregon Multifamily News is published quarterly by brokers Ron Ross, CCIM and Terry O’Neil, CCIM.

To receive the email or mailer, contact Ron at 541-322-1230 | rross@compasscommercial.com or Terry 541-848-4060 | toneil@compasscommercial.com.

To find out about new multifamily listings, sign up for new listing alerts by going to: compasscommercial.com/mfnews.

Multifamily News: Interest rates and cap rates

by Compass Commercialon 10 May 2018in Central Oregon Multifamily News

The following content is taken directly from the Central Oregon Multifamily News, Spring 2018 issue.

Many have prematurely predicted rising interest rates for the last several years. It does appear that rising rates are finally a reality. The question now is “how far and how fast?”

Rising rates could hamper performance and returns for investment real estate. Cap rates will go up as financing costs rise. When investors can get a better return on “risk off” investments, like US treasuries, they will demand a higher return on investments like real estate. The answer to the “how far and how fast” question is critical to how rising rates will impact multifamily real estate values going forward.

A moderate and measured rise could have little negative impact. However, it will put further pressure on the bottom line. There is legitimate concern about how much further rents can rise locally, after the explosive increases over the last few years. The twin trends of rising rates and plateauing rents pose significant headwinds to valuation increases. A sharp and prolonged rate increase would be more significant perhaps resulting in some backing up on values.

“The twin trends of rising rates and plateauing rents pose significant headwinds to valuation increases.”

The above chart illustrates apartment sales metrics for the last two years including cap rates. It is likely that we witnessed the low water mark for Bend cap rates in 2017 with the rates in the mid 4’s.

The Central Oregon Multifamily News is published quarterly by brokers Ron Ross, CCIM and Terry O’Neil, CCIM.

To receive the email or mailer, contact Ron at 541-322-1230 | rross@compasscommercial.com or Terry 541-848-4060 | toneil@compasscommercial.com.

To find out about new multifamily listings, sign up for new listing alerts by going to: compasscommercial.com/mfnews.

Apartment Vacancy Rates - Multifamily Outlook

Multifamily Outlook: Learning from national trends

by Compass Commercialon 20 December 2017in Central Oregon Multifamily News

Recently, Ron Ross, CCIM was published in the Cascade Business News for an article on what we can learn locally in Central Oregon about the multifamily industry from national trends. Below is an excerpt of the article as published by CBN. Read the full article as published in the CBN here.

“Real estate markets are no doubt independently local in nature. Central Oregon seems to be as wildly independent as anywhere in the country. As a sub-tertiary market, we have always been more volatile both on the way up and the way down. In the good times, we command surprisingly low cap rates driven by limited supply and strong investor demand. During the most recent recession we crashed harder than most places, but recovered strongly and rapidly.

However, we should still observe and learn from national trends. We are not an island, nor are we immune from national market forces. It has long been observed that Central Oregon has a strong correlation with both California and Portland markets, and to a lesser degree, Seattle.

In the November/December issue of the Commercial Investment Real Estate magazine from the CCIM Institute an insightful article by Beth Mattson-Teig entitled Sailing Ahead: Will the renter pool keep up with the robust development pipeline? points out the following national trends:

1. Continuing strong, but slowing demand for apartment rentals.
2. Record levels of new construction.
3. …”

Read the full article as published in the CBN here.

*Graphic reprinted with permissions from Commercial Investment Real Estate, the magazine of the CCIM Institute, November 1, 2017, Vol. XXXVI, No. 6.
Learn more at www.ccim.com/cire-magazine
If you wish to read the article referenced in Ron’s article from Commercial Investment Real Estate in full, click here.

Multifamily News: Vacancies up, rent growth slowing

by Compass Commercialon 30 November 2017in Central Oregon Multifamily News

The following content is taken directly from the Central Oregon Multifamily News, Fall 2017 issue.

The Central Oregon multifamily market continues to be a healthy landlord market. It is still a great time to own residential rental properties.

Data collection is challenging in our market. In past years a local appraiser surveyed the market and was the statistical market expert for many years. They have long since ceased doing those surveys. In more recent years the Central Oregon Rental Owners Association surveyed its members and released a report annually. However, it seemed to generate controversy as critics disputed their data and accused them of being self-serving, thus they ceased surveying and reporting.

Currently, the best source of this data is CoStar, a very expensive subscription service. Compass Commercial is one of the few member organizations in Central Oregon. CoStar data is showing a Bend vacancy rate of approximately 3.9% and Redmond at approximately 5%. Those rates are up from the reported 1-2% vacancies during the last several years.

They are reporting modest rent increases during the last year of about 3% in Redmond and 4% in Bend. This is a substantial slowdown from the double-digit increases experienced over the last few years.

What does this mean for multifamily property owners? The market is reaching a plateau. Rent increases have outpaced incomes substantially, so continued upward pressure is not sustainable. An increasing supply of new construction is slowly impacting the vacancy rate and absorption has been slowing. All in all, a normal and healthy market cycle. And still is a great time to sell, as there is limited inventory for sale and strong buyer demand.

The Central Oregon Multifamily News is published quarterly by brokers Ron Ross, CCIM and Terry O’Neil, CCIM.

To receive the email or mailer, contact Ron at 541-322-1230 / rross@compasscommercial.com or Terry 541-848-4060 / toneil@compasscommercial.com.

To find out about new multifamily listings, sign up for new listing alerts by going to: compasscommercial.com/mfnews.

Category : Central Oregon Multifamily News