NAA Digital Studio

Do you want to emerge from 2021 with a more efficient, agile and profitable organization? Discover insights to help you reach your goals during the National Apartment Association (NAA) Digital Studio Series! Stronger NOI in 2021 The April NAA Digital Studio, presented by Yardi, is a half-day event including deep dive and interactive sessions, industry panels, networking and more. This month’s theme is “Stronger NOI in 2021: Where do we grow from here?” Experts from leading multifamily companies across the country will discuss the many ways in which COVID-19 has impacted the real estate industry and, more specifically, apartment management. Each session features unique programming that tackles common industry challenges. Through the sessions, you can: Explore market changes and projected financial impacts to help you plan smarter in 2021 and beyond. Gain insights from multifamily leaders who will share new performance metrics they’re using to change the way they do business. Discover ways to improve net operating income beyond rent increases. Featured speakers include guests from Luma Residential, Bell Partners, BH Management Services, Cirrus and more. Industry professionals focused on operations, marketing, technology and related roles will walk away with practical, actionable items to strengthen your organization. Work + play The event kicks off with keynote speaker Jeff Adler, vice president of Yardi Matrix, offering an engaging look at the latest multifamily data. Examine changes in rent growth, occupancy, retention and renter preferences over the last 12 months. Learn how new demographic patterns have affected top and bottom markets. Attendees will also see rent and occupancy forecasts for a variety of property groups. Then, stick around for additional sessions that connect the market update to real-life experiences and plans to protect NOI going forward. End the day with a relaxing musical interlude. Leslie and...

Smooth Sailing for Self Storage Mar26

Smooth Sailing for Self Storage

As Americans continue to move about the country in the aftermath of the COVID-19 pandemic, they’re often downsizing, temporarily relocating, or electing not to take all of their possessions along with them. The exodus of renters from high priced gateway cities has been beneficial for the self storage market, and Yardi Matrix vice president Jeff Adler is carefully confident that strong demand for storage units will continue for the next 18 to 24 months. “I’m cautiously optimistic, but wouldn’t say wildly optimistic, about the sector near term,” Adler said during a Self Storage National Outlook webinar presented on March 24. The webinar also included an overview of the national economy, potential for inflation, employment trends and other factors. It’s available to view online. For the next few months, renters may be moving back to cities that they left a year ago to resume in-office employment or making final decisions about whether to stay in a new city they tried out while escaping an urban lifestyle in 2020. Those moves will likely impact storage positively. Self storage demand could be further bolstered if there is a second wave of moves out of higher-cost real estate markets, Adler shared. Such moves will be contingent on employment trends as the country recovers from the year-long pandemic. So far, migration is flowing from California to states like Colorado, Texas and Arizona, and out of New York to states like Florida and North Carolina. Utah and Idaho are also experiencing a high volume of new residents. “As long as there is movement of people, storage tends to do quite well. Continuing moves would keep the demand for storage high,” Adler said. But at some point, pandemic-influenced demand is expected to subside. National street rates for 10×10 non-climate-controlled (NON-CC) units increased by 2.6% compared to February 2020, and rates for 10×10 climate-controlled (CC) units grew by 3.1% over last year. While street rates nationwide saw substantial growth year-over-year, rates for both unit types remained flat month-over-month. Along with the industrial sector, self storage is a bright spot for real estate investors. Focused on short-term returns, however, they are mainly electing to purchase existing properties rather than sink time into ground-up development. Deal velocity picked up at the end of 2020 and 2021 is expected to be a record year for self storage transactions. “Relative to industrial, which is very pricey, and other asset classes, self storage as an investment class is very attractive and that’s driving a lot of institutional investor interest,” Adler said. Consistent street rate performance and ease of management are both positives for investors. The only downside for some markets is large supply pipelines, which could push down prices as they come online. Nationwide, Yardi Matrix tracks a total of 2,237 self storage properties in various stages of development: 597 under construction, 1,201 planned and 439 prospective properties. The national new-supply pipeline as a percent of existing stock increased 0.1% month-over-month in February, and the share of existing projects in planning or under construction stages accounted for 8.4% of existing inventory. Matrix also maintains operational profiles for 26,534 completed self storage facilities across the United States, bringing the total data set to...

Project Destined Mar10

Project Destined

Project Destined is an organization focused on providing education and access to the commercial real estate industry for minority students. Programs are targeted towards high school and college students, with the goal of introducing real estate ownership to people who may not have previously studied or worked in the commercial real estate industry. Yardi Matrix has provided 10 complimentary education licenses to Project Destined for use in their curriculum and internship programs. Students will have full access to Yardi Matrix’ industry-leading data and analysis to use when researching, underwriting and presenting potential deals to their teachers, industry mentors and competition judges. Chris Nebenzahl, editorial director for Yardi Matrix, has been actively involved with Project Destined. “I have been volunteering to teach the market research segment of the curriculum and offer guidance for how students can use Yardi Matrix with the projects they are working on,” said Nebenzahl. “I focus on our data at the property, submarket and market level. The students are tasked with creating an investor presentation and pitching their deal to a panel of industry judges. Through the process, they need to provide valuation models, market research, forecasts, and cash flow models, all of which can be developed and leveraged by using Yardi Matrix data.” Nebenzahl began working with Project Destined in early 2020 and has lectured virtually at each session held by the organization since then. Project Destined was started by entrepreneur Cedric Bobo to expand opportunities for minority students within the commercial real estate field and to encourage his students to become owners and community stakeholders in the cities where they live. Project Destined started 5 years ago and has grown significantly to include students in many major markets around the country. Bobo, who grew up in Memphis, was fascinated...

Student Housing Slows Down Mar03

Student Housing Slows Down

Yardi Matrix vice president Jeff Adler presented a look both forward and back for the student housing sector in a webinar held Wednesday, March 3. (Find the presentation materials and recording here.) Despite the challenges of the pandemic over the last year, the sector has held up relatively well. Rents are still increasing – but just slightly. Year-over-year rent growth was 1.3%, with Class B assets taking a larger hit than Class A or C housing. Adler remains very positive on the student housing space, even though preleasing is currently behind its usual pace for Fall 2021. “We do expect the 2021 term to have a surge in enrollment and preleasing activity, but it will probably come late, in April and May, as the vaccine situation clarifies,” he said. That was just one of many insightful takeaways from the presentation. Yardi Matrix produces a quarterly student housing report that summarizes leasing, rent rate, transactions and other trends. The student housing data set includes over 2,000 universities and colleges nationwide, including the top 200 investment grade universities across all major collegiate conferences. Known as the “Yardi 200,” it includes all Power 5 conferences as well as Carnegie R1 and R2 universities. Schools that have fared best with housing over the last year have been those that are not urban or in states with strict COVID restrictions in place, Adler said. Overall, national university enrollment is down 2.5% this year from a year ago. Currently, preleasing of student housing for Fall 2021 is trending four percent below where it was last year at this time. Preleasing for Fall 2020 ended up five percent behind 2019 numbers. “Large, first tier institutions have done the best, and the top performers are those that have been in states and localities that were open for business (throughout COVID),” said Adler. Universities that have preleasing off to a good start for the upcoming fall term were major public universities in remote areas and some universities near smaller downtowns. That includes schools like Case Western University, the University of New Hampshire-Main Campus and University of Pittsburgh-Pittsburgh campus, which are leading the way as top preleasing performers for Fall 2021. Schools that are falling behind on preleasing include the University of Illinois at Chicago, Brigham Young University and the University of California at Santa Barbara, which are all lagging far from their normal preleasing numbers. As a result of the pandemic, housing providers are seeing higher demand for studios, single bedrooms and bedrooms with their own personal bathroom, Adler said. “Those without bedroom/bathroom parity are struggling (to lease). This may be an issue that continues, where you would have to have very significant discounts to overcome people’s desire not to share a bathroom.” The desire for personal space will also impact on-campus student dorms, which may have to rethink double and triple occupancy situations due to parent and student concerns. “I’m bullish about the whole sector, because dorm capacity just doesn’t work,” Adler said. It also doesn’t seem to matter whether schools are offering fully in-person learning, a hybrid model or all virtual classes. The school simply needs to be open for business in order for student housing demand to remain strong. “Our data showed that they wanted to get out of the house (in 2020) and they did.” Development trends in student housing reflect what life will look like post-pandemic. High performance Wi-Fi, always a must, has become even more important. Apps that allow students to submit maintenance or service requests are trending, as are outdoor/open spaces where students can gather in person. And touchless features, like keycards for building entry or elevator operation, will be more prevalent. Development of new student housing stock is primarily focused in the south and southwestern U.S. and has not been deterred by the pandemic. Investment opportunity in the sector remains strong. Highlights include: Global Student Accommodation Group (GSA) made its...

Multifamily Outlook Jan26

Multifamily Outlook

After a year ravaged by disease, division, job losses and economic hardship, expectations for the multifamily industry in 2021 are the subject of a new Yardi Matrix outlook. “While there does appear to be light at the end of the tunnel, it will take some months to get most of the country vaccinated and get businesses operating as normal,” states the report. Job growth has been mostly positive since the summer, but the economy remains nearly 10 million jobs off its peak. Millions of renters continue to struggle to make monthly payments. The $900 billion stimulus package passed at the end of 2020 provided some relief, especially the $25 billion renter assistance, $25 billion for Housing and Urban Development (HUD) programs and $300 per week supplemental unemployment. “However, another package is likely to be needed in 2021 to keep many families and property owners afloat,” the report’s authors opine. Nationally, rent growth fell only slightly in 2020, but there was a huge variation among metros. Rents and occupancy levels fell sharply in high-cost gateway markets, as renters left crowded and expensive coastal centers. More affordable markets in the Sun Belt, Southwest, Midwest and Mid-Atlantic saw modest rent growth. In 2021, the expectation is that gateway markets will continue to struggle, and the industry will have to deal with weak rent collections, eviction bans, forbearance requests, lobbying for renter aid and new federal mortgage oversight protocols. Despite the challenges, capital flow remains strong. Sales activity dropped about 35% in 2020, but investors are still looking to buy apartments. Agency lenders have had their allocations clipped slightly, but debt availability is also strong. Construction has slowed, with less than 300,000 deliveries in 2020. With more than 750,000 units under construction now, new supply should stay in...

2021 Outlook Jan12

2021 Outlook

For more than 40 years, PwC and the Urban Land Institute have produced a trends and forecast publication. The 2021 edition of Emerging Trends in Real Estate summarizes views gathered in interviews and surveys of more than 2,950 property owners, investors, fund managers, brokers and others in the U.S. and Canada. COVID-19 dominates virtually every examination of real estate, and Emerging Trends is no exception. Yardi Matrix reported, for example, that multifamily property sales through the third quarter were down more than 41% from the same period the previous year. Meanwhile, 33% of office-space decision-makers participating in a study sponsored by BOMA International, Yardi and Brightline Strategies reported experiencing at least a 25% revenue decline since the pandemic’s onset. Here are some highlights from the 111-page PwC/Urban Land Institute report: “COVID-19 has kicked real estate certainty to the ground,” the publication says, with confidence in future demand for many property types having dropped precipitously in 2020. But technology has eased adaptation to the drastic measures prompted by the pandemic. Millions of office workers successfully transferred to remote environments, for example. The report notes, “The WFH experiment has gone better than most managers and employees had expected, since new teleconference tools and advanced information technology systems have allowed for effective communication and collaboration.” Many who contributed to the report predict that measures adopted during the pandemic will continue when workers return to the office, including flexible hours, reduced shared spaces, ongoing enhancement of building environmental systems, and physical barriers. The report also speculates that some companies might consider abandoning the consolidated model of leasing and using office space in favor of a hub-and-spoke system with satellite offices. And, the report notes, “Significant opportunities to operate and manage buildings more efficiently are ahead as well,” as property management technology providers deliver solutions that “gather, organize, and use data to reduce costs, identify risks, and more proactively operate buildings; identify appropriate investment strategies; and better serve tenants.” Property owners are also likely to continue making investments in technologies that strengthen cybersecurity, ensure business continuity and assess a building’s compliance with heightened health standards. With companies increasingly focused on controlling costs, those investment will most likely target immediate critical necessities. Tech is also driving profound changes in the multifamily sector. The report quotes an unidentified major apartment landlord: “The pandemic changed how people lease apartments. Online tours and processes are now preferable, and while some reversion to in-person tours may occur, we believe that online interaction will be acceptable in most cases. Reluctance to adopt technology is a key challenge, and COVID has been an opportunity to change that.” Demand for smart-home technology such as touchless controls on sinks, motion sensor lights and voice commands also figures to increase, the report says. Yardi continues to dedicate special resources to help clients, employees and communities weather the COVID-19...

Status of Storage Dec21

Status of Storage

Confidence in self storage remains high as the sector demonstrates ongoing strong street rate performance despite COVID-19’s continued impact across the U.S., reports the latest Yardi Matrix National Self Storage Monthly report. National street rates for standard 10×10 non-climate-controlled (NON CC) units increased 1.7% last month compared to November 2019. While year-over-year street rates nationwide for 10×10 climate-controlled (CC) units did not increase, the flat performance reflects an improvement over the first nine months of 2020. From October to November, national street rates for 10×10 NON CC units also saw an increase of 0.9%, while nationwide rates for similar-size CC units remained unchanged. Annual street rate performance was negative in only about 19% of the top markets tracked by Yardi Matrix for 10×10 NON CC units in November. Rates for this unit type were hit the hardest in Minneapolis, which saw a 3.5% decrease year-over-year. Experts caution that despite several months of rosy reports, there still could be challenges ahead. “While self storage has established itself as a strong performer in difficult market conditions, it could face a tough slog ahead as another round of COVID-related lockdowns and restrictions emerges this winter,” states the report. Nationwide, Yardi Matrix tracks a total of 2,136 self storage properties in various stages of development—comprising 590 under construction, 1,134 planned and 412 prospective properties. The national new-supply pipeline as a percent of existing inventory increased by a minor 0.1% month-over-month in November, and the share of existing properties in various stages of development accounts for 8.3% of existing inventory.  Yardi Matrix also maintains operational profiles for 26,351 completed self storage facilities across the United States, bringing the total data set to 28,487. Read all the highlights for self storage in the latest National Self Storage Monthly...

Employment Impacts Dec03

Employment Impacts

The COVID-19 pandemic has been inconsistent in the way it has affected the U.S. employment market, creating a wide disparity between metro and job segments. This is the main conclusion of the latest special employment report from Yardi Matrix. Leisure and hospitality was by far the biggest employment sector loser, with 3.8 million jobs lost. In contrast, only 1.8% of the jobs in financial services have been lost since the start of the pandemic. However, the overall impact varied greatly depending on the city. Metros with the best job performance include those with relatively small leisure and hospitality industries and those that have lost relatively few jobs in the segment (Indianapolis, for example, lost only 6.5%). One outlier, Austin, has added 8,200 professional and business services jobs and 7,300 financial services jobs since February. While the size of a metro’s leisure and hospitality segment is a key in the extent of job losses, a more significant factor is how thoroughly the metro shut down to stop the spread of COVID. Few of the top 10 metros in the percentage of jobs lost since February are among the leaders in leisure and hospitality jobs, but all are at or above the average proportion of jobs lost in the segment. New York City, for example, has a relatively small leisure and hospitality segment (9.8% of all jobs), but a whopping 42.3% of those jobs disappeared. “The data does show hope for the future for the gateway metros that have been hard hit, because the core industries in those metros, such as finance and professional services, remain viable,” states the report. “Once a vaccine is available and people feel safe going back to entertainment venues, restaurants and the like, gateway cities (like New York, San Francisco, Boston...

Opposite Outlooks Nov12

Opposite Outlooks

It’s a tale of two outlooks for the industrial and office real estate sectors, reported the experts from Yardi Matrix and CommercialEdge in a commercial real estate webinar presented on Nov. 11. As the end of 2020 nears, each market has a different trajectory. For owners and investors in the office sector, the full impact of the pandemic and its impact on the way employees work, especially in the knowledge and technology sectors, has yet to be unveiled. Major office properties tend to operate on long leases, so while rent remittance has been generally solid this year, as leases come to term in 2021 things could change. The big question, said Yardi Matrix vice president Jeff Adler, is what use of office space looks like in the future. One thing 2020 has taught us is that it likely doesn’t look like the old model of spending five days a week in a cubicle. “There is a re-evaluation of ‘what is the purpose of space?’ Was the purpose of that space that people got things done there? Or was it a culture purpose? If it was simply to do a task, it’s become clear that task can likely be done at home. How space is used, why space exists and why you need it in the first place is going to be reimagined,” Adler said.  “What kind of office footprint do you actually need to achieve the business goals that you have?” The answers to those questions will determine the floorplans and lease terms of offices post-pandemic. Also at play: where they’re located (public transit use is still dramatically decreased) and how many workers will come to the office on any given day. Right now, going back to a 5-day office work week seems highly...

Multifamily Movement Nov05

Multifamily Movement

The number of Americans who have moved since February 2020 wasn’t unusual compared to typical U.S. mobility trends, but there has been a distinct shift in where they are relocating, according to the latest Yardi Matrix multifamily webinar. In brief, big urban cities like New York, Chicago, San Francisco and Miami are out, while second tier markets and tech hubs like Austin, Kansas City, Sacramento and Boise are in. “What we really have seen is a movement of people that is different from what we have seen in the past,” said Jeff Adler, vice president of Yardi Matrix, who delivered the analysis. A webinar on the commercial real estate market with valuable insight for that sector will take place on Wednesday, Nov. 11. You can register here. The Nov. 4 multifamily session, which is now available to view on demand, summarized the trendlines for the apartment market nationwide. It has been relatively resilient despite the economic fallout caused by the COVID-19 pandemic. For example, in the month of October, 94.6 percent of apartment households had paid rent as of Oct. 17, according to NMHC’s Rent Payment Tracker. However, small owners and managers of less than 50 units are suffering. These owners typically hold small balance loans, or SBLs. “Because SBLs are typically used to finance apartments with less than 100 units, each resident that has trouble paying rent has a more significant impact on the property’s cash flow,” stated the Matrix summary. The bulk of the 16 million Americans who have moved since February, though, are working from home and seeking a relocation situation that will be advantageous during the remaining months of the pandemic. They’re seeking out apartments or single-family homes where they have more space and eschewing the walkable urban lifestyle that...

Student Housing’s Strength Oct15

Student Housing’s Strength

Despite massive disruption to in-person learning protocols, demand for off-campus, purpose-built student housing remains strong, according to a webinar and a new bulletin from Yardi Matrix. “College students don’t want to live at home. And their parents seem quite amenable, if financial circumstances allow it, for them not to live at home,” said Jeff Adler, vice president of Yardi Matrix, during the webinar. “There’s been a tremendous amount of noise around the sector, but as it relates to the financial performance of off-campus student housing, it is largely unaffected.” The one key factor is that college or university the students are attending must be offering classes in some capacity, even if they are all online. Need for greater social distance between students in on-campus dormitories have been another helpful nudge. “As long as the school is open somehow, for the dedicated off-campus student housing inventory, (the education format) doesn’t matter,” Adler said. “The off-campus student housing industry has shown itself to be really resilient.” Development pipelines also remain strong, with only two planned projects nationwide falling off the radar in the last quarter. Enrollment trends have favored public universities rather than private schools, indicating that students may be looking for more affordable education alternatives given current economic uncertainty. And off-campus housing options provide a more continuous housing option than on-campus dorms, which are more likely to be subject to closures or status changes. Though college enrollment from international students is down due to travel restrictions, those spots in off-campus housing seem to thus far have been backfilled by American students. One caveat is that these are students whose parents’ economic fortunes have likely not been disrupted by the pandemic. And even if no vaccine is available in spring 2021 as expected, purpose-built student housing is expected to continue to do well. “Even if everything goes horribly wrong (with vaccine development), the fact that this year was as good as it was indicates that as long as the school is open in some fashion, it’s a non-event for the off-campus student housing sector,” Adler said. For the 200 colleges and universities the Matrix team analyzed, preleasing of purpose-built student housing was just 3 percent behind that of 2019. “While demand has been volatile on a university-by-university basis, the willingness and desire for people to congregate near their school will likely help the student housing sector steer through these uncertain times,” states the analysis. Preview new technology for student housing providers at the NMHC/InterFace Student Housing Conference, a virtual event taking place Oct. 19-22. Visit the virtual booth to see how RENTCafé Student and Yardi Matrix Student will graduate your leasing and management...

Surviving + Thriving Sep18

Surviving + Thriving

During every Yardi Matrix webinar, vice president and presenter Jeff Adler shares the big picture of current economic conditions and conundrums – also known as the Yardi Matrix House View. Here’s how the view is looking from the Matrix vantage point these days: “We had a deep recession. We’re in the middle of a recovery. That recovery is likely to be choppy,” summarized Adler to close out Thursday’s Matrix update on the self storage sector. A recording of the presentation is now available, and you can view that here. But for those invested or interested in the self storage market, the seas are not looking quite so rough. Of all commercial real estate sectors, storage had a brief negative impact from COVID-19’s rise in the U.S., and then quickly recovered. “Storage is actually doing quite well,” said Chris Nebenzahl, editorial director for Yardi Matrix. “The demand for storage has been consistent and is stronger than some of the other asset classes in commercial real estate.” Key factors for the sector’s resiliency include: Relocations and population migration. Americans are leaving congested big cities like New York and Los Angeles for second-tier markets where they have more space. Residential volatility. For example, college students have faced ever-changing mandates about whether they would resume classes in person and online, prompting quick moves that often involve a need for storage. Economic hardship. Job losses for millions of Americans are contributing to relocations and downsizing. According to a Pew Research Center Survey, roughly one in five U.S. adults say they have either changed their residence due to the pandemic or know someone who did. The proof of sustained demand for storage is in the street rates, particularly for the non-climate-controlled category. Month-over-month rates reported for August showed that national...

End of Urbanization? Sep04

End of Urbanization?

For years, 24-hour and 18-hour cities, and the live-work-play concept, have been mantras in commercial real estate. Suddenly, however, cities are facing a pandemic-driven exodus. Is this a temporary blip or the start of a long-term trend? COVID-19’s impact has been particularly deep in major metropolitan areas such as New York City, Los Angeles, San Francisco and Chicago, which have seen sharp drops in apartment occupancy rates and rents as the city centers are largely shut down and residents shelter elsewhere. In Manhattan, for example, office buildings that were closed for months remain mostly empty upon re-opening, as employers avoid putting workers at risk and people avoid public spaces. Midtown streets that are typically teeming with tourists are nearly empty as Broadway and other entertainment venues remain shut. New York City’s story is being played out in city centers across the country. Not only do urban areas temporarily lack the jobs and cultural institutions that drew people there, but the crowds and closeness are suddenly an element to be feared rather than fascinate. Few if any saw this coming, as growth has coalesced in cities in recent years. The United Nations has forecast that 75 percent of the global population would live in cities by 2050, doubling their size, and the U.S. seemed to be headed in that direction. A recent study of the largest 30 U.S. metros by the George Washington University School of Business and Smart Growth America in conjunction with Yardi Matrix found that walkable neighborhoods encompassing office, housing, retail and entertainment grew faster and produced higher absorption and rent growth over the last decade than counterparts without that combination. During that time, 70 percent of the jobs created were in the top 50 U.S. metros. Corporations have been following the preferences...

NY Law’s Impact Aug17

NY Law’s Impact

Last year, New York state implemented new protections for residents of rent-stabilized and market-rate housing, including the conditions under which rent hikes and evictions are allowed. Affordable housing advocates saw the landmark Housing Stability and Tenant Protection Act of 2019 as vital to helping low-income people avoid homelessness in expensive markets such as New York City. Skeptics predicted it would backfire and reduce incentives to develop, invest in and manage rental housing. The law has been under siege in the courts from landlord interests who claim it violates the Constitution’s taking and due process provisions. One year into the new era, has either side been proven right? Obviously, a lot has changed in the New York rental market since the law was signed in June 2019. But in December of that year, before the COVID-19 pandemic took hold, the New York Times reported that evictions in the state dropped by 20% in the preceding six months. State and federal provisions put in place during COVID have further strengthened eviction protections for more than 1.5 million state residents not able to pay rent due to the pandemic. In April and May, rents in New York City actually went up year over year. The Times reported in June that “those looking to sign or renew leases in the last few months say that while some landlords are grudgingly offering short-term concessions, like a free month of rent, most are unwilling to budge on pre-pandemic pricing and, in some cases, are even increasing rents.” And how about rent payments? Yardi Matrix data collected in July revealed rent declines ranging from 0.8% to 1.6% in Brooklyn, Manhattan and Queens that month, while occupancy levels in the metro have been flat for several months. “With the vacancy rate where...

Matrix Studies Up Jul20

Matrix Studies Up

As colleges and universities announce varied plans to cope with coronavirus this fall, what will be the impact on student housing owners and operators? Some definitive answers were delivered in a July 15 webinar from Yardi Matrix, which also marked the launch of the Yardi Matrix Student data service. Market coverage includes over 2,000 universities and colleges nationwide, including the top 200 investment grade universities across all major collegiate conferences. Reports will also include data into shadow markets, defined as campus-proximate housing that often is rented by college students, though it may not be labeled as dedicated student housing. “The college experience is going to change, and has to change until there is a vaccine in place. This is a fall semester issue and probably into the middle of the spring semester,” Jeff Adler, vice president of Yardi Matrix, told the over 400 attendees at the outset of the online presentation. But that’s not all bad news for student housing, especially for providers with shadow market properties. Of the 200 universities Matrix researchers surveyed for the first study, many have announced plans to reduce dorm capacity levels to accommodate social distancing protocols. This means that more than 60 percent of students attending schools in the Yardi 200 will be living in such shadow market housing – and the total national percentage is higher. “Reduced dorm capacity requirements are a tailwind for off-campus housing,” Adler said. “Is student housing pandemic proof? I would say that it’s pandemic resistant. There is some choppiness expected, but I think overall the sector is going to hang in there.” Long term, the U.S. is expected to see an overall decline in its population of college-age adults, but with more Americans than ever earning four year degrees, attendee figures should...

Relocations + Rent Drops Jul15

Relocations + Rent Drops

Already apparent in the U.S., COVID-19 has resulted in a migration from major cities and falling rents. As the housing industry braces itself against continued impacts from the virus, will both trends continue into the third quarter? Market analysts, real estate agents and renter surveys give us clues about what to expect. Are people really moving away from cities as a result of COVID-19? Yes. People are leaving cities to avoid COVID-19 risks and disturbances. Though it is a misconception that population density equates to higher risk, perception matters. The perceived increase in risk has made city residents feel less safe. That fear, coupled with other disruptions, motivates relocation for those who can afford it. Pew Research Center reports that 3% of U.S. adults moved due to the pandemic and about 6% had a member of their household relocate. Of those surveyed, 28% moved to reduce their risk of contracting the virus and 8% moved due to job loss. About 20% moved to be closer to family. Younger people make up a unique portion of those who relocated. Roughly 9% of adults ages 18-29 relocated due to the virus. This includes 23% of respondents who were university students forced to vacate their campuses. Even New York– the market trendsetter that has captured hearts for generations– is seeing mass movements to the nearby suburbs. Real estate agents Susan Horowitz and Monica Schwerberg explored the details in an interview with NPR. “We are seeing 20 offers on houses. We are seeing things going 30% over the asking price. It’s kind of insane,” Horowitz said. “It is a blood sport.” She adds, “Every last bit of it is COVID-related.” Schwerberg agrees, “In the month of April, where we typically would get maybe 75 inquiries in a month, we had over 400 inquiries.” People who once loved the city atmosphere are seeking locations with less population density, which is falsely assumed to correlate with increased infection risks. Additionally, many breadwinners are now working from home. Remote work opportunities have made commute times less of a factor in housing decisions. Since March 2020, about 10,000 New Yorkers filed for address changes to the state of Connecticut alone, reports Hearst Connecticut Media. Nationwide, U.S. Postal Service data indicates that southern Florida and southern California are popular relocation destinations. Who is moving during COVID-19? While some people are relocating due to job loss and financial difficulty, there is a correlation between job security, higher incomes and relocation. In short, households with higher incomes can afford to sell their current home (potentially at a loss) or terminate a lease early in favor of getting a new home in the suburbs. Higher income households are also more likely to have remote work. The ability to maintain income while working from anywhere permits the flexibility needed to relocate during the pandemic. Additionally, higher income households represent the demographic most likely to own a vacation home. About 13% of those who relocated moved into their second home or vacation home, reports the Pew survey. How does COVID-19 relocation impact the rental market? Yardi Matrix analyzed asset performance data from 107 major metropolitan areas between April and May 2020. During that time, multifamily rents declined by .4% nationwide. Overall, twice as many markets witnessed rents decline than rents rise. “Multifamily’s nearly decade long run of healthy performance increases came to an abrupt and unexpected end this year,” said Jeff Adler, vice president of Yardi Matrix. “Job losses have been particularly high among apartment renters, and simply collecting rents and maintaining occupancy is a new area of focus for owners and managers.” The report suggests that the pandemic’s influence on work conditions, public health metrics and social trends will continue to impact the housing marketing for the next several years. “If renters decide to eschew urban apartments for a more distanced standard of life in the suburbs or smaller cities, multifamily could...

Student Housing Jul07

Student Housing

Already well known in the industry for its dependable, up-to-date and prescient market data, Yardi Matrix will take those skills to school as it begins reporting on the student housing sector. The new research area from Yardi Matrix comes at a particularly opportune time, as student housing owners and investors are navigating an uncertain environment caused by the COVID-19 pandemic. With many colleges and universities still making final decisions about what campus life and enrollment will look like in fall 2020, housing providers are anxious to see how this unprecedented situation will impact revenue streams and investment health. Quarterly Matrix reports focused on the student housing market will be available beginning this summer. Market coverage will include over 2,000 universities and colleges nationwide, including the top 200 investment grade universities across all major collegiate conferences. Reports will also include shadow markets, meaning campus-proximate housing that often is rented by college students, though it may not be categorized as traditional student housing. “We’re looking forward to offering the same comprehensive and future-thinking reporting that we do for the rest of the real estate industry to the student housing sector,” said Jeff Adler, vice president of Yardi Matrix. “We’ve done a deep dive into student housing fundamentals and look forward to sharing our insight with all who are interested.” To that end, the Yardi Matrix team will host a July 15 webinar focused entirely on the student housing market. Attendees can expect to gain insight on the short and long-term impact of COVID-19, best and worst-case scenarios, key indicators for operators and potential areas of opportunity. You can secure your spot in the online session by signing up here. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property...

Long Term Impacts Jul06

Long Term Impacts

With the U.S. economy in a recession, unemployment numbers sky high and COVID-19 cases surging in the south and west, multifamily owners and operators face challenging times ahead. And things may get worse before they get better, according to a new special report from Yardi Matrix. The report is based on a study of 107 major metros, with data reflecting April and May 2020 asset performance. Over that period, multifamily asking rents dropped .4% nationally, and twice as many markets saw rents decline as opposed to increase. Renters are looking for less expensive units, with the biggest impacts in the sector felt by Class A+ properties. Rents for “luxury lifestyle” properties dropped by -1.2% over the last two months, compared to a decline of .5% for “renter by necessity” properties. “Multifamily’s nearly decade long run of healthy performance increases came to an abrupt and unexpected end this year,” said Jeff Adler, vice president of Yardi Matrix. “Job losses have been particularly high among apartment renters, and simply collecting rents and maintaining occupancy is a new area of focus for owners and managers.” Multifamily had a long run of strong performance – asking rents grew by 26% nationally between January 2015 and 1Q20. But going forward, the future looks cloudy at best. “The shape of the recovery remains unclear. More importantly, the pandemic is spurring changes in working conditions and social trends that will impact housing demand for years to come,” states the report. What’s ahead will be determined by a complicated combination of economic factors, public health metrics and renters’ feelings about the future. If renters decide to eschew urban apartments for a more distanced standard of life in the suburbs or smaller cities, multifamily could be in for a prolonged pain period. Gain...

Rents Drop, Prompting Concern Jun18

Rents Drop, Prompting Concern

When you think about a 0.3 percent drop in anything it hardly seems like a big deal. It’s just 3 pennies on every 10 dollars. If you are an apartment operator and that reflects the national average on rents for May compared to April, some would figure it’s something not too difficult to make up. But what if it isn’t? The three-tenths of a percent is the drop for one month, and 12x that comes to 3.6 percent annually. Quickly, that could become serious. During what would typically be the middle of prime leasing season, rents declined nationally by 0.3% on a month-over-month basis, reports Jeff Adler, vice president of Yardi Matrix. He describes that drop in rents as startling. “Is it a harbinger of things to come? A warning sign?” Adler says. “When rents being offered to new residents drop like that month-over-month, year-over-year you have to ask yourself.” Adler says current national multifamily occupancy rates are mostly steady (a good thing). And there’s no deterioration in demand as measured by apartment search activity, which is also positive. “But this is peak leasing season,” he adds. “Falling like this would be at a rather significant clip. If we see it again next month, then demand will not have stabilized. And data show this is happening to high-end apartment communities.” The steepest declines in rents on a MoM basis were seen in major gateway markets that were among the first to impose strict lockdowns. Smaller markets are not immune and have seen substantial MoM rent declines as well. For this “general rolldown” in rents, Yardi Matrix has observed year-over-year rent decreases of -0.6 percent to -1 percent in major metropolitan areas across the country, including San Jose, Houston, Orlando, Denver, Los Angeles, San Francisco and Chicago. Unprecedented Swiftness Many long-standing observers and employees of the multifamily industry can point to real estate’s cycles, and to the Great Depression, back around 2008-09, when rent declines were similar. “But the swiftness of what we’re seeing now is unprecedented,” Adler says. “Back then, job formations were slowing and you could almost read between the lines to know something bad was coming up. There were signals. This time, it’s sudden. This time it’s being caused by a health issue. We are counting on a vaccine or treatment to COVID-19 to turn the tide.” Job creation, of course, is helpful. Job losses, however, equate to income losses and ability to pay the rent, and inability for owners to stabilize (if not raise) rents. “For the sake of the industry, let’s hope that six months down the road things are different,” Adler says. “Wouldn’t it be great to go back to how it was in February, or even in 2019?” Some can speculate that the “busy season” for leasing could move to fall this year. Look at These Numbers Yardi Matrix also reports that national average rents decreased $5 to $1,460. Kansas City (0.4 percent), San Antonio and Baltimore (both 0.1 percent) were the only markets to show increases from April to May; 23 markets remain negative on a month-over-month basis. the last two months overall, rents have declined by $13. “If rents continue this rapid downward trend, we could be looking at alarming numbers by the end of the summer,” Adler says. The markets with the most severe MoM declines include Houston and San Jose (both -0.9 percent) and Nashville, Orange County and Seattle (all -0.8 percent). Houston tends to be among the most volatile markets in a normal month, and given the rapid decline in oil prices the road to recovery in Houston could be extended. San Jose, Orange County and Seattle were among the first markets to impose stringent lockdowns. Seattle only entered Phase 1 of reopening on June 5. Social Unrest Could Affect Urban Rents Apartment operators also must consider the social unrest that is going on in many urban centers....

Durable Employment May28

Durable Employment

Each week’s news seems to bring a new wave of devastation for the U.S. employment market, as unemployment claims continue to climb due to the COVID-19 pandemic. The national unemployment toll was 36.5 million jobs lost when this was written – by the time you read it, that figure will likely be higher. Yardi Matrix® dove into the unemployment data to find out which sectors and geographic regions are hardest hit, which will hold up and where the unemployed may want to look for their next opportunity. Unlike past recessions, job losses have not been spread across the economy. Layoffs and furloughs have been concentrated in segments most affected by shelter-in-place orders: retail, leisure, travel and entertainment, and jobs in which social distancing is difficult. Between February and April, leisure and hospitality jobs contracted by a jaw-dropping 48.1%, or 8.1 million workers. Other hard-hit segments include other services (-21.9%), a category that includes personal services and repairs, retail trade (-13.7%) and construction (-12.7%). The number of lost jobs has been higher among hourly, service-based workers than for career workers who more easily can work from home. On a proportional basis, job categories that shed the fewest jobs over the last three months are financial activities (-2.8%), government (-4.3%) and wholesale trade (-6.2%). Another segment that lost relatively few jobs was professional and technical services (-5.3%), which includes computer systems design services (-3.8%). “This report provides in-depth insight to the most durable employment sectors, both professionally and geographically,” said Jeff Adler, vice president of Yardi Matrix.  Find the full Durable Employment Sectors report from Yardi...