Reclamation Of R-22 Weakens In 2017, Resulting In Concern
by Michelle N. on 4/17/2018 3:36:00 PM
Recovery efforts may not be enough to meet future needs
According to the U.S. Environmental Protection Agency (EPA), more than 9 million pounds of R-22 were reported as being reclaimed in 2016. That is up from 2014 and 2015, during which time a little less than 8 million pounds were reclaimed each year, but still significantly below the more
than 10 million pounds of R-22 that were reclaimed in 2008.
While 2016 showed a bump in the amount of R-22 being reclaimed, 2017 showed distinct signs of
softening. As a result, refrigerant reclamation companies are concerned that recovery and reclamation efforts will not be enough to meet the HVACR industry’s needs once the production of R-22 ends in 2019.
Without a doubt, 2016 was a very good year for reclamation, said Carl Grolle, president, Golden Refrigerant, but 2017 was a different story.
“The first half of the year was very robust, but in the second half, R-22 sales declined dramatically,” he said. “I do not have a prediction for 2018, as it hinges on too many factors that we cannot foresee, including weather, pricing and availability of import gases, and government regulatory changes. On the surface, the reduction of new R-22 should tighten the market. Whether the existing surplus will be enough to meet the demand is anybody’s guess.”
According to Taylor Ferranti, vice president, refrigerant, A-GAS, the R-22 market slowed down in 2017 for a variety of reasons, including a lot of product in the respective channels; a cooler season; price increases driving contractors to use more replacement refrigerants; the absence of “dry” R-22 units; and a good economy, which led to more equipment being replaced rather than repaired.
“Even with these market challenges, we had a strong year of growth in 2017,” he said. “We expect 2018 to be even better, given that we have expanded our mixed gas separation capacity and incoming reclaim gas stream.”
Jay Kestenbaum, senior vice president of sales and purchasing, Aspen Refrigerants Inc., feels that the total amount of recovery and reclamation business over the past few years should have been greater, and the industry, as a whole, should be recovering much more than it has been.
“The market has not yet reached the level of overall recovery, reclamation, and reuse of refrigerants that will be necessary to service existing equipment following the 2019 end of production of R-22, based upon EPA’s estimates of continuing needs after that date,” he said.
The reason for that, according to Kestenbaum, may be linked to past EPA actions, through which production allowance caps were often restricted and then expanded.
“This may have given many a false sense of security in believing that there would be ample supply to cover future years,” he said. “The only true source for the long-term continuing supply of R-22 is recovery and reclamation, which needs to increase drastically.”
There is no question that the overall growth in reclamation of R-22 for the industry has been weak, said Kevin Zugibe, chief executive officer, Hudson Technologies Inc.
“Based upon EPA’s supply and demand estimates for R-22, it is evident that the reclamation market will need to grow significantly to fill the impending void,” he said. Zugibe expects greater growth in 2018, as the impending shortage of R-22 becomes more evident.
“We feel confident that the best refrigerant for existing R-22 systems is reclaimed R-22 and that the reclamation industry can provide the necessary R-22 supply for the future, as it has done for CFC [chlorofluorocarbons] needs for over two decades,” he said.
Zugibe added that he has concerns over some R-22 substitutes, which he believes are not necessarily better than R-22 from a global warming potential (GWP) perspective and can lead to system failures if the change-out is not performed properly.
CHALLENGES AND OPPORTUNITIES
Kestenbaum also predicts stronger growth in 2018, thanks to the expanded and new regulations, the anticipated future phasedown of HFCs following the Kigali Amendment to the Montreal Protocol, and rising prices due to some industry anti-dumping actions.
“These should result in increased recovery and reclamation of many more products in greater quantities in 2018,” he said. “While the reclamation of R-22 continues to be a primary component of our industry, the reclamation of HFCs presents a longer term opportunity, particularly in light of the anticipated phasedown of HFCs.”
There will, of course, be challenges, said Kestenbaum, including the continued higher rates of mixed refrigerants coming back to reclamation facilities.
“The expanded array of refrigerant products, and the unfortunate continued trade practice by some to top off systems without using the same refrigerant, has resulted in higher mixed return rates, and will likely lead to premature failure of systems,” he continued. “Mixed refrigerant returns require extra cost in reclamation and obviously inflate the cost of future supply.”
Zugibe agreed, noting the use of many drop-in substitute blends has resulted in more crosscontamination every year.
“Although Hudson is a leader in fractional distillation, poor practices in the use of these substitutes result in more energy and cost to reclaim these refrigerants,” he said. “However, we are optimistic that with the ultimate phaseout of R-22 less than two years away, we are now entering a time in which the supply shortage will be obvious to the industry, which should energize the growth in reclamation.”
Grolle is also optimistic about 2018 and said his company is focused on gaining market share this year. Still, he noted that reclaimers have a very limited ability to select which refrigerants they receive in their collection programs, and that makes it difficult to adapt to changing market prices. “We also face fixed costs associated with the reclamation and packaging of refrigerants,” he said.
“When prices drop, it usually ends up as losses to the reclaimer; conversely, when prices rise, it can result in a better bottom line for the company.”
Looking ahead, Grolle expects the reclamation business to become even more technical, requiring sophisticated equipment and procedures to collect and process the newer blended refrigerants.
“The HFOs [hydrofluroolefins], along with R-32, are mildly flammable gases, which will require another round of investment in order to safely process and handle them,” he said.
This continuing evolution of refrigerants — and their accompanying regulations — means there will always be a need for reclaimers.
“Old habits die hard, but venting of refrigerants is illegal,” said Ferranti. “And reuse of refrigerants is only allowed if the product remains with the existing owner. As a result, we are optimistic that contractors and wholesalers want to do the right thing for the environment and will continue to utilize companies, such as ourselves, and increase their reclamation activities.”
Resource: BNP Media
Report: These Trends Are Radically Disrupting Multifamily Housing
by Michelle N. on 3/19/2018 11:43:00 PM
Renters' desire for personalization and less stress, integration of AI and IoT into apartment infrastructure, concentration of 35+ age groups will drive multifamily in next 12 years. By Lauren Shanesy
The multifamily industry is on the brink of a design revolution, and it’s disrupt or be disrupted.
“If you look at other industries in real estate, [such as] office, hospitality, retail—and you’re starting to see restaurants—they’ve all been disrupted,” says National Multifamily Housing Council (NMHC) vice president of industry technology initiatives Rick Haughey, in the report. “Why should we think we’re exempt from this disruption? If you’re not thinking about it and talking about it, you’re at risk of being displaced.”
The NMHC's Disruption Report, released earlier this year, examines the ways demographic shifts and technological advances are affecting housing and what it will mean for apartments of the future.
A number of trends stand out as game changers that designers, developers, and managers should pay attention to if they want to stay ahead of the curve. Here are some of the report’s key takeaways:
Advances in the smart-home space will cause technology to become part of the core infrastructure of apartment communities.
By 2020, technology research firm Gartner predicts, 26 billion devices will be connected through the cloud-based Internet of Things (IoT).
Donald Davidoff, president of D2 Demand Solutions, a multifamily sales consultancy, calls artificial intelligence (AI) “the single biggest change that will affect us” and likens the impact on white-collar workers to what happened to blue-collar workers during the Industrial Revolution. Read more about that here. A full 65% of U.S. adults say that within the next 20 years, most deliveries in cities definitely will (12%) or probably will (53%) be made by robots or drones instead of humans.
Consumers are now accustomed to on-demand delivery of goods and services, placing a greater emphasis on the importance of lifestyle in communities.
Nearly two-thirds (63%) of respondents to the NMHC 2018 Consumer Housing Insights Survey said their lives are so hectic that they look for ways to make things easier.
Ninety percent of the U.S. population will connect to the grid via smartphones by 2023, according to experts. Seventy-two percent of consumers and 89% of business buyers expect companies to understand their unique needs and expectations, according to the 2017 State of the Connected Customer survey by Salesforce.com.
As demographics shift, developers will have to serve a greater variety of households and housing needs.
The U.S. population is getting older and more diverse, and the apartment industry should be studying the expanding bubble of aging Americans—65% will be 35 or older in 2030—and immigration trends instead of millennials. The 73 million baby boomers in the United States accounted for 58.6% of the net increase in renter households between 2006 and 2016, according to NMHC tabulations of U.S. Census data. By 2024, immigration will surpass internal population growth for the first time, according to Hoyt Advisory Services research. Immigrant families are more likely to rent than native-born Americans, and their household sizes tend to include four or more people.
Mobile technology and wireless Internet are changing where and how people work, with more employees teleworking than ever.
Forty-three percent of workers in America do some telecommuting, according to Gallup—and more would if they could. Read more about how to design for teleworking residents here. In the past decade, there’s been a 50% jump in offline alternative work (independent contractors, on-call workers, temps, and the like). Forty percent of respondents to the 2018 Consumer Housing Insights Survey say they plan to telecommute more in the future. Small Business Labs found that more than 1 million people sought an enhanced social experience, networking opportunities, community support, and learning opportunities in coworking spaces in 2017.
A migration back to urban, walkable areas, along with services like Uber, are changing the way residents commute. They now rely on personal vehicles less and less, leaving apartment communities to figure out how to adapt to a fluctuation in parking needs going forward.
America has far more parking spaces than it needs—three to eight per vehicle, according to the University of California.The ride-share industry is booming; Goldman Sachs predicts it will balloon to $285 billion by 2030. As the unpaving of paradise accelerates, as much as 75 billion square feet of parking space stands to be eliminated, leaving open the question of what will happen to that space in the future.
Residents are focusing more on physical and mental health and are looking for apartments with spaces that promote wellness.
Ninety-two percent of renters in the NMHC 2018 Consumer Housing Insights Survey said they wish they had an environment that would promote better sleep. In a 2017 survey by the American Psychological Association, nearly nine out of 10 people (86 percent) who say they constantly or often check their email, texts, and social media accounts report higher stress levels. Providing a retreat starts with sound attenuation, as 91% of renters say soundproof walls are important to them.
The Mass Appeal Amenities That Gen-Z, Millennials, & Baby Boomers Crave
by Michelle N. on 3/6/2018 2:23:00 PM
The multifamily housing industry has seen many changes over the past decade, but one of the biggest developments has been the unprecedented growth of renters entering the market. Statistics show that homeownership rates reached a national 50-year low last year with the number of Americans renting apartment homes rising across every age demographic.
While this trend can offer new opportunities, it’s important to recognize the challenges that a spectrum-wide increase in renters can pose for your business. The market is growing more and more multi-generational, and your ability to meet the needs of a variety of renters can make a huge difference in gaining (and retaining) residents. It’s all about finding the point of convergence between three generations of renters - Baby Boomers, Millennials, and Gen-Z - and while there are dozens of ways that they all differ, there are some key amenities and services that you can offer that appeal to each demographic.
Get Smart with Security
For many Baby Boomers, their main focus is finding security and comfort at home. This generation values a supportive living space, considering the fact that they may be caring for parents, children, or grandchildren. In fact, statistics show that Baby Boomers currently play the role of caregiver more than any other demographic.
Standard safety amenities such as gated entrances and on-site security hold major appeal for the Baby Boomer demographic, but there are also productive ways to provide security features that appeal to younger renters. Incorporating smart home automation into your property with devices such as smoke detectors, alarm systems, and thermostats give safety a hip, 21st century glow, allowing older and younger residents alike to stay connected to the most vital of emergency services—all while keeping their apartment safe and secure from any looming threat. Smart home automation also provides residents with the option to personally monitor and configure their apartment home, providing a cutting-edge functionality that Gen-Z and Millennials will both appreciate.
Stay Connected and Green
As the first generation to grow up in the Digital Age, Millennials often equate convenience with speediness, valuing amenities that keep them constantly connected. Gen-Z is similar, and maybe even more inclined to do this, considering they grew up completely immersed in the convenience of technology. And while you might think having an Internet connection is a unique concern for younger renters, studies and surveys have consistently shown that the rise of smart phones has brought older generations into the mix as well. Today, over three-quarters of Americans own a smartphone, and while a large portion of those users come from the 29-and-under age bracket, 74 percent of Americans ages 50-64 are smartphone owners, and nearly half of those 65-and-older use smartphone.
Aside from bare bones basics such as charging stations and high-speed Wi-Fi, you might also consider providing residents with USB port access, electric vehicle charging stations, and the latest technological amenities, which again, includes smart home automation. Smart-home automation allows the renter to be in control of their apartment’s environment even when they are not at home, which for Millennials and Gen-Z is quite often. Renters can seamlessly control temperature, lighting, security, and more from a single device.
In the age of global warming, conservation is now on the forefront of everyone’s mind. Many have become supportive of stricter environment laws and favor environmentally-friendly policies such as green energy development. As we all well know, beliefs translate into lifestyle, and it’s clear that renters value environmentally-friendly amenities in their living space. Features can be as complex as adding solar panels to your rooftop or as simple as introducing a recycling and/or composting program into your community’s practices. Even energy-efficient appliances, low-flow toilets, and LED lighting can be a major selling point.
Offer Digital Resources
Aside from establishing an amiable and modern environment for your residents, what is the most vital tool for gaining leads and increasing retention rates in your apartment community? Surveys show that the newer generation of renters aren’t just looking at your location, price, or in-person tours. For today’s consumer, your website is one of the most critical aspects of your marketing campaign.
Obviously, websites allow prospective residents to find important information they may need about your property. However, as technology continues to advance, you need to go beyond a one-dimensional marketing website to attract leads and keep pace with the demands of today’s renters. Using in-depth and engaging online services such as a resident portal, you can offer residents the ability to communicate with your property instantaneously.
Resident portals allow renters to create service requests, make payments, and renew leases, providing them with everything they need in a simple and comprehensive web platform. Digital tools such as these have been become essential as more and more people access the Internet from their mobile devices.
While it’s vital to set up a marketing website with a functional resident portal, it’s also important to offer several methods of communication to your prospects and residents. In the age of social media, residents across multiple demographics expect to connect with your instantaneously. When it comes to social media, your Facebook profile has the power to bridge the gap between all three generations. While it isn’t a surprise to find the younger demographics engaging online, Baby Boomers are just as reachable through social media. According to a 2017 survey, over 80 percent of Baby Boomers belong to at least one social media site with the overwhelming majority using Facebook.
Social media gives you a space where you can connect with your residents in an amiable and sociable way. While it’s important to maintain as a customer service tool, you can also utilize your profile to highlight your best features and bring your community closer together. Sharing posts with helpful information, showcasing community activities, and inviting residents to organized neighborhood events will create a welcoming and supportive atmosphere throughout your property— one that Baby Boomers will appreciate as much as their Gen-Z neighbors and the Millennials next door.
As the rental market grows, your business can meet the diverse demands of renters by providing amenities that serve their common needs. With features and services that cater to a range of renters, your community will attract more prospects, which will increase rental capacity and ROI.
Resource: Multifamily Tech Trends; MultifamilyBiz.com
Buyers Access Hires New Sales Director
by Michelle N. on 3/1/2018 3:49:00 PM
Denver, Colo., March 1, 2018 – We are pleased to announce that Carol Hand has joined the Buyers Access sales team in the role of Sales Director. Carol brings over 20 years of multifamily industry experience in various positions growing, building and developing client relationships, which will be instrumental in the continued growth of Buyers Access.
Prior to joining Buyers Access, Carol served as a Regional Account Manager with CallMaX, where she successfully acquired large and mid-sized property management portfolios, while consistently exceeding sales goals. Previous to her experience with CallMaX, Carol worked with Network Multifamily (Protection One/ADT) for 13 years where she held various positions, including Regional/National Accounts Manager and Director of Sales Support.
“We are excited to have Carol join our expert team at Buyers Access. With her extensive experience in multifamily enterprise sales, it was easy to see that Carol would be a great fit for our company” said Kelly Scott, Vice President of Sales, Buyers Access.
“I am thrilled to become a part of Buyers Access, and am very excited to bring my extensive multifamily background and client relationships to the company. I look forward to helping us grow the business and exceed our sales goals.” said Carol Hand, Director of Sales, Buyers Access.
Carol earned Sales Person of the Year for CallMax in 2015, and MSR Representative of the Year - Network Multifamily in 2004, 1998 and 1995 respectively.
About Buyers Access
As the nation's leading Purchasing and Cost Control specialist for the multifamily housing industry, Buyers Access provides real estate owners and operators with full service purchasing solutions to help maximize the value of their real estate assets. Since 1986, Buyers Access has helped thousands of properties and hundreds of companies to reduce operating costs and drive improved cash flow, while leveraging substantial personnel time savings. Through the use of data driven decision making and operational expertise, Buyers Access has created millions of dollars in real estate value. For more information, contact Buyers Access at www.buyersaccess.com or call 1.800.445.9169
Director of Marketing
Planning for Preventive Maintenance
by Michelle N. on 2/22/2018 4:53:38 PM
Preventive maintenance plans are crucial to successfully managing a rental housing community. In the early stages of the year, take a look at the current program and make updates to gear up for spring. Precautionary maintenance plans are the most effective to address issues while they are quick and cheap to fix before they become major undertakings.
Implementing a regular program of inspection and upkeep can help maintain a safe environment and avoid unnecessary accidents. For instance, the average cost to fix a plumbing leak is about $200 for multi-unit properties. If the leak is left unchecked, it can lead to water damage and mold, which may cost thousands of dollars to repair.
When creating the new plan, consider systems and aspects of your community where maintenance is most needed. Then, build in a process and schedule that decreases risk for each of those areas. Here are four key areas to consider when creating the plan.
Water damage threats
Check door and window seals for openings, as well as roofs for signs of water damage. Installing Wi-Fi connected water-sensing devices in leak-prone areas such as kitchens and bathrooms is a great way to track issues in real time. Make sure that the gutters and landscaping irrigation systems are draining properly. Schedule maintenance services to check washing machines and sinks frequently because these areas are most common for indoor leaks.
HVAC and water heaters
Two of the most expensive repairs are HVAC systems and water heaters. It is crucial to schedule visual inspections at least once a year. Also consider implementing inspections during the spring and winter to detect any unexpected issues that may appear as the seasons change. Generally, HVAC systems have a lifespan of 10 to 15 years and water heaters last about 8 to 12 years. Keep this in mind when determining whether to repair or replace systems that are having issues.
An easy to overlook solution, installing long-lasting LED lightbulbs will allow maintenance to cut down on simple bulb switches and focus on more important tasks. This change can result in long-term savings over a long period of time. Not only do LED bulbs use approximately 84 percent less energy, but LED technology has been integrated into a variety of bulbs and fixtures both indoors and out.
Every manager knows that changing air filters on a regular schedule helps the efficiency of the system and keeps resident power bills lower. Air filters that are not replaced in a timely manner result in mildew growth and decreased air flow. Create a staggered schedule that will allow maintenance staff to change filters throughout the community at a realistic pace.
Even when things appear to be running smoothly, it’s important to be thorough about preventive maintenance. A good plan will enable managers to spend efficiently on proactive upkeep and avoid unexpected, costly repairs that upset residents and hurt budgets.
Resource: Kimberly DeJesso, National PRO Manager The Home Depot
Buyers Access and American Site Management partner to offer Rooftop Ancillary Revenue opportunities to multifamily property owners
by Michelle N. on 2/20/2018 11:42:00 AM
For Immediate Release
February 20, 2018
Buyers Access and American Site Management partner to offer Rooftop Ancillary Revenue opportunities to multifamily property owners
BA’s members can generate new revenue streams by leasing their underutilized rooftop space
Denver – February 20, 2018 – Buyers Access (BA), one of the country’s largest providers of customized purchasing solutions, and American Site Management, a premier national rooftop revenue management provider, today announced a unique partnership to offer American Site’s rooftop telecom leasing solutions, which will generate recurring ancillary revenue opportunities for Buyers Access members.
“We are pleased to add American Site as a supplier partner, and to offer new services that will generate additional operating income to our members. We are constantly searching for ways to increase value for our members, and American Site’s services offer our members the opportunity to generate a new revenue stream, while creating significant personnel time savings in the process – a win on multiple fronts. AT&T plans to launch mobile 5G this year in 12 U.S. cities, and 5G services will rely on small cells deployed closer to the ground and closer together than the traditional tower top radios that support LTE, creating an opportunity for more owners and operators to realize previously unrealized income,” said Dan Haefner, President and CEO of Buyers Access.
“American Site is the bridge between wireless carriers like AT&T, Verizon, T-Mobile and others who are looking to deploy their equipment to enhance network coverage, and property owners/operators seeking to generate rent from their property locations. Leveraging contacts and technology that we have developed over 20 years across hundreds of transactions allows us to more effectively represent our client’s buildings, resulting in greater opportunities, improved lease terms and significant time savings for owners and management companies. A single missed wireless provider leasing opportunity could be a missed $500,000 in value over time. In addition, American Site offers services to audit existing cellular leases for accuracy and revenue opportunities, helps design systems to improve in-building cell phone reception and offers regulatory compliance services to identify where building owners are not in regulatory compliance with lease provisions or governmental regulations, which could result in significant fines and other liabilities,” said Michael D. Bickford, CEO of American Site Management.
“Our partnership with American Site recognizes the value proposition in generating new long-term recurring revenue streams, and realized by their specialization in this unique niche at the intersection of wireless technology and multi-family real estate,” said Dan Haefner, President and CEO of Buyers Access.
“We focus on asset performance and the value creation opportunities for our clients. We identified that many of our members have underutilized locations that may be highly desired by wireless carriers, which are an untapped source for producing higher revenues for our members. American Site’s services are a next step in the industry’s evolution of operational efficiency and a specialty and we intend to take full advantage of for our members,” stated Johnathan Hovanec, Vice President of Account Management and Member Services for Buyers Access.
About Buyers Access
Buyers Access (BA) is the country’s leading provider of customized purchasing solutions, serving more than half a million member units in the multifamily space. For more information, visit www.buyersaccess.com or contact Dan Haefner at 303-991-5577, email@example.com
About American Site Management
American Site Management, LLC is a national premier rooftop revenue marketing and management solution provider in the multifamily industry. For more information, visit www.AmericanSiteManagement.com or contact Michael Bickford at 864.689.1108, mbickford@AmericanSiteManagement.com
Disruption - How Demographics, Psychographics and Technology are Bringing Multifamily to the Brink of a Design Revolution - NMHC
by Michelle N. on 2/16/2018 12:26:00 PM
As part of the supporting data for the NMHC report “Disruption - How Demographics, Psychographics
and Technology are Bringing Multifamily to the Brink of a Design Revolution” NMHC commissioned
market research conducted by Beck Research.
The National Survey questioned 1,000 adults with emphasis on renters and millennials. Key findings
• Americans have difficulty describing the apartment of the future and describing a space beyond the status quo. Instead Americans advocate for improvements to current services and amenities.
• Technology, in the form of strong cell service or fast internet access, is a requirement for
modern apartments or any housing arrangement.
• Americans want more amenities at their fingertips. They are interested in features in
apartments, such as better appliances and washer/dryers, as well as community features, such
as outdoor spaces and gyms.
• The core benefits of rental apartments remain convenience, flexibility and the ability to move.
Rental apartments are “a space that evolves with different stages of your life” (83% say
• Millennials are more likely than older Americans to see rental apartments as “innovative,” see a
broader community role for apartments, and agree that “my community is stronger when there
is a mix of rental apartments and single-family homes.”
• Millennials are more social and more attached to the urban centers. They are more likely to
listen to live music, but also value face-to-face communication.
• Suburban Americans “underperform,” meaning Suburban Americans favor the Democrats by a
wide 16-point margin, but act similar to Fringe areas, which favor Republicans by 12-points.
Both are very skeptical of apartments
Consumer Housing Insights Survey highlighted in the Disruption report include:
• Nine out of 10 survey respondents (92 percent) said convenience was important to them;
• Nearly two-thirds (63 percent) agreed that their lives were so hectic that they look for ways to
make things easier;
o “My life is so hectic that I look for ways to make it easier for me”
• Ninety-four percent of respondents said that being able to personalize their space was
• Eighty-three percent stressed the importance of having space that evolves with different stages
of their lives.
• More than three-quarters (78 percent) said they valued having a convertible space that could
transform to meet different needs
• 40 percent of respondents said they plan to telecommute more in the future; and
• 60 percent said their home was a reflection of their identity.
Click here to read more
Come See Buyers Access at the Chicagoland Business Exchange
by Michelle N. on 2/12/2018 9:04:00 PM
Buyers Access is coming to see you at the Chicagoland Business Exchange!
Look out for our very own Jenny Hidalgo at this week's CAA and find out how seven minutes of your time can save you thousands of dollars a year.
Want to connect with Jenny prior to the show? Feel free to contact her below.
Director of Sales
CAA Business Exchange
February 15, 2018
JW Marriott Chicago
151 W. Adams Street
Chicago, IL 60603
1:30 - 2:00 Attendee Registration
2:00 - 4:30 Business Exchange
4:30 - 5:30 Networking Reception
2017 Absorption, Occupancy, and Year in Review
by Michelle N. on 1/23/2018 3:37:00 PM
January 23, 2018 by Theron Patrick
Nationally in 2017, the multifamily sector added more than a quarter of a million conventional units to the market. Fortunately, absorption outpaced the growth by nearly 30,000 units and national average occupancy rose 0.4% to 91.7%. Occupancy, however, did get up to 92% by the end of the Q3. The influx of units at the end of the year outpaced the absorption in the final quarter.
The story is much the same for rents in 2017: almost all the growth was in the first three quarters. While effective rents grew in the 7% range nationally through the first nine months of the year, the last quarter saw flattening or decreasing rents. Currently the average apartment unit in a conventional property effectively rents for $1,247 per unit and $1.39 per square foot.
View the full monthly Markets Stats PDF
For most of the country, the first 3 quarters of 2017 were mostly positive across the board. Q4, however, brought a regression and both rents and occupancy flattened or declined. The high plains states saw the opposite with Q4 bringing welcome relief to lackluster performance in the first three quarters. Florida stands out in a good way from the trend with almost universal solid performances across the board.
Seattle found itself among the strong performers nationwide and saw rents rise in the 10% range in 2017 to an average of $1,640 per unit. However, like the national trend, nearly all of the growth occurred in the first half of the year. Portland, currently at $1,303 per unit, had more modest gains for the year.
Effective rents rose only 2.6% over the last 12 months in the northwestern Oregon market. Spokane actually had negative rent growth for the year and average effective monthly rent is down $24 per unit from the beginning of the year to $936. Despite a lackluster 4th quarter with a gain of less than 500 net rented units, Seattle absorbed more than 8,000 conventional units in 2017; an increase of more than 50% from the prior year.
Relatively speaking, in terms of occupancy, Portland fared much better over the last 12 months. The market absorbed more than 5,000 net rented units in 2017 and the 4th quarter of the year accounted for nearly half of those rentals. Consequently, occupancy in the Portland area rose 0.7% in Q4 2017 to a healthy 92.8%.
The California markets managed to absorb more than 22,000 net conventional units in 2017. The vast majority of the units were absorbed within two markets: The Bay Area and the greater Los Angeles area. The Bay area absorbed more than 8,000 units in the last 12 months and 4,000 of those units were absorbed in the 4th quarter alone. However, new construction continued unabated throughout the year. While occupancy is up 1.2% for the year in the Bay Area, average occupancy only grew 0.1% in the 4th quarter.
Los Angeles experienced much the same situation. The market absorbed over 11,000 units in 2017 with just under 4,000 of those units absorbed in Q4 2017. However, average occupancy, while up 0.8% from a year ago, grew only 0.1% in Q4. The two large California markets lagged a bit behind the other California markets in rent gains for 2017. Both Los Angeles and the Bay Area had effective rent gains in the 4% range while the other markets like Sacramento, San Bernardino and the San Joaquin Valley saw gains in the 6-8% range.
The desert region markets mostly kept pace with the national average for effective rent growth in 2017. Las Vegas, Tucson and Phoenix all realized gains of about 7% for the year, and saw slowing – but positive – growth through the 4th quarter. The other smaller markets in this region, however, all gave back effective rent gains in the 4th quarter. Losses ranged from 0.8% in Flagstaff to 1.4% in Reno.
New construction is still producing slight pressure on average occupancy for these markets. Phoenix absorbed over 6,000 units in 2017, and Las Vegas clocked in at just above 2,000 units. Both markets did fairly well by absorbing nearly all of the new units brought online without slashing prices.
The smaller markets such as Albuquerque and Reno, though, experienced negative absorption for 2017. Average occupancy gains were modest at best, with Tucson outpacing the other markets in this region at about 1% annual growth. The good news for all these markets is that average occupancy is still healthy in the 92-94% range.
Read full report here!