Optimism Remains High
For Multifamily’s Future
Several weeks after the event, the experts who spoke at the RealShare
Apartments 2010 conference are even more hopeful about the sector’s prospects
By Sule Aygoren Carranza and Alyson Grala
The positive vibe of the RealShare Apartments 2010 Conference is apparently long-lasting. Two months after the conference and with the elections behind us, professionals from all facets of the apartment industry seem to feel even better about the sector’s mid- and
long-term prospects. Attended by more than 1200 industry professionals, Apartments 2010 was held Oct. 21 at the Westin Bonaventure Hotel in Los Angeles.
Take the event’s opening session, “A Bird’s Eye View: Is Multifam-
ily Tenancy Out of the Woods?” Panelist Greg Willett, vice president
of research and analysis for MPF Research, was bullish then and says
little has changed in his view of the market since October. “Demand
this year has been much stronger than you would expect given the
sluggish job growth,” he relates. “Apartments are picking up renters
who are either coming out of shadow-market product or foreclosed
homes as the economy gets better. There are good numbers on the
demand side.”
While those numbers anticipate slightly
lower occupancy than initially reported, Wil-
lett says demand will be strong as the new
year begins. In October, he revealed that
effective rents for new leases were up 2.6%
from late 2009. More recently, Willett said
the calendar year 2010 annual rent change
number will be between 2.5% and 3%.
And with minimal new deliveries to the
market, occupancy is making progress in
most areas, he adds. “Rents are spottier,”
Willett says. “In some places, they’ve gone
up significantly, and stabilized in others.”
The next year will be a big one for rent
growth, according to Willett: “Few people
will be leaving to buy single-family homes,
and operators have done a good job of
establishing relationships with residents.
Unless you give people a really strong rea-
son to move, the tendency will be to stay
put. We’re expecting rent growth to be 5%
or a bit higher in 2011.”
That ties into tenant retention, which Willett noted was one of the
biggest factors in the industry’s “impressive performance” in 2010.
For most companies MPF tracks, he said the retention numbers have
gone up anywhere from 10% to 20% relative to where they were
prior to the recession. “A lot of renters are remaining in place when
leases come up for renewal,” he says. “That will get tougher as you
start to raise rents, but the number will still be higher than it was.”
Most markets across the board have seen at least some recovery,
but the degree varies. Willett believes the San Francisco Bay Area and
San Jose, CA will probably show the strongest performance, while
other, traditionally strong markets, such as the Washington, DC/
Baltimore area; Boston; and Denver, will continue to prosper. Mean-
while, South Florida; Austin, TX; and Raleigh, NC will be among the
mid-tier markets that will experience significant growth.
Doug Bibby of the National Multi Housing Council moderates the Industry Leaders panel,
featuring (from left) Tom Booher, PNC Real Estate; Ric Campo, Camden Property Trust;
Stan Harrelson, Pinnacle Family of Cos.; and Al Brooks, Chase.
