Multi-Housing News - September 2009 - (Page 22)

market report The Global Forecast A look at multifamily hotspots—and stormy regions to avoid—in the United States and beyond By Jeffrey Steele, Contributing Editor If MHN’s global market report was a weather forecast, it might begin with gloomy clouds settling in over most of the multifamily world, with the possible exception of Washington, D.C. and Houston in the United States. The forecast would then call for steadily brightening skies, especially over a number of coastal California cities and high-growth regions in the American South. Sun might also be expected to peek through clouds earlier than later in France, while in China, a downpour of easy credit has forsale residential prices already on the rise. Longer-term projections would trumpet the imminent arrival of cheerful, sunny days in more of the multifamily world. But forecasters would advise continuing to carry an umbrella in the American Midwest, as well as in India, Spain and the Emerald Isle. American hotspots Real estate experts identify a number of hotspots in the United States for multifamily growth now and in the near future. One of them is the Washington, D.C. metro market, says Mark T. Alfieri, chief operating officer for Dallas-based Behringer Harvard. From the perspectives of both operations and value, the metro area surrounding the nation’s capital has not been impacted as much as others, he believes. “It has held its property value remarkably well, relative to other markets,” Alfieri says. “I attribute that mostly to the fact the job market is heavily influenced by government and other industries, and not so much by the economy.” Also surprisingly strong is Houston. Even with an enormous amount of new supply, Texas’ largest city continues to absorb units. That’s likely due to positive job growth over the past few years, resulting in the overall economic downturn having little impact on property operations, he says. “I was concerned with all the new supply, but we have one major project there that has just been completed, and has leased up at our pro forma rents—the rents we originally projected back in 2006,” he reports. In its studies, Property & Portfolio Research (PPR), an independent global research and advisory firm, has confirmed employment growth will be no less a factor in apartment demand than it has been in the past. That suggests an upbeat story line for the U.S. about 24 months out, says Michael Cohen, global strategist for PPR. Leading the way back will be California, which is expected to score five of the top 10 in value growth through 2013, reports PPR real estate economist Katie Schnidman. California will not necessarily witness the most cumulative demand growth in the United States, but is expected to recover sooner, based on movement PPR analysts are spotting in the housing market, which impacts demand for apartments, Schnidman observes. One of the most important factors influencing the forecast of phenomenal growth in a number of California markets is the value decline there, according to Schnidman. “That means two things,” she says. “One is there is lots of value to be made up. And two, it makes California apartment communities very affordable, relative to where they were for investors. That said, rents are dropping steeply in these markets, making them more affordable for renters as well.” That’s a crucial part of the demand story, Schnidman adds. As rents decline in places that in recent years have been comparatively unaffordable, such as 22 September 2009 | Multi-Housing News

Table of Contents for the Digital Edition of Multi-Housing News - September 2009

Multi-Housing News - September 2009
Contents
From the Editor
Letters to the Editor
Executive Insight: Jack Kern
Market Pulse
Conversation with Shaun Donovan
Property Management
Global Market Report
Development & Design: Low-Rise
Directory: Top Architects
Kitchen & Bath: Cabinets
Products: Leasing Tools
Technology: Lead Management
NMHC Notebook

Multi-Housing News - September 2009