Apartment Construction: New apartment projects continue to be the darling of the development world. Based on the latest permit numbers, we expect there will be a total of 10,000 to 14,000 new units in 2014 and 2015, with half of the construction activity in Multnomah County. The first wave of completed projects were typically smaller infill properties. The coming wave of projects are significantly larger. One developer stated “Those opportunities don’t exist in Southern California” when elaborating on the availability of prime developable Portland real estate. Only limited apartment construction will have public sponsorship. Clackamas County and East Multnomah County show little construction activity.
Apartment Vacancies and Rental Income: While around 4,000 units hit the market in 2013, vacancies remained low. With increased apartment construction and an improving single family market, apart- ment vacancies are expected to gradually increase in 2014, and be at 5.0% to 5.5% by late 2015. In 2014, apartment income will be up by 1% to 3%. Rents on many units have shown double digit increases since 2011. The spread on rents between new and older units is substantial, which may allow some additional increases on older, well maintained and well located properties. We expect there will be a shift to a market in balance by late 2015.
HEARD ON THE STREET
“The smart money is saying if you’re not out of the ground now, or very close to getting out of the ground, you might have missed the boat.” Craig McConachie C and R Real Estate Services
“Fully supplied, not oversupplied in 2014. The apartment sector may flirt with overbuilding, but this industry can lay off the gas pedal fairly quickly.” Real Estate Analyst—2014 ULI Emerging Trends
“Retail is a fine idea, but as a planning tool, I think it’s been applied too liberally. It’s oversupplying the retail market essentially,” Spencer Welton, Simpson Housing, regarding ground floor retail at many of the new apartment buildings.
“We’re at a price point that no one else is delivering. It’s not for everyone, but it’s a choice, and we like offering choices,” says Jim Potter, founder of Footprint Investments regarding their 56 unit NW Thurman Street micro shared kitchen apartments.
“Half the apartment for 60-80% of the cost seems ridiculous to me. This sounds like bodies stacked in shoe boxes.” “This project seems like a glorified flophouse.” OregonLive commenter on micro apartments.
“No one worked more fiercely than he did to push dense development on Portland’s east side, and to pass no parking space requirements. His love of streetcars won him the name ‘Choo-Choo Charlie’ but he could just as rightly been called ‘High-Density Hales.’” Willamette Week
“I have before me Multifamily NW’s most recent report on the Portland rental market, and its digital pages are practically stuck together with excitement over all the money to be made off chumps like us.” OregonLive commenter.
“If you want a snapshot of what Portland chic has become, just drive—well, maybe you’d better bicycle down Division Street between SE 31st and SE 44th Avenues.” Willamette Week
“I rented about eight apartments last year sight unseen.” Nina Lyski, Manager of Jeanne Manor Apartments on the SW Park Blocks.
“Setting bare minimum standards and then offering developers a thousand ways to dodge them is a short sighted calculation masquerading as big city thinking,” Oregonian editorial
“The smart money is saying if you’re not out of the ground now, or very close to getting out of the ground, you might have missed the boat.” Craig McConachie C and R Real Estate Services
“Fully supplied, not oversupplied in 2014. The apartment sector may flirt with overbuilding, but this industry can lay off the gas pedal fairly quickly.” Real Estate Analyst—2014 ULI Emerging Trends
“Retail is a fine idea, but as a planning tool, I think it’s been applied too liberally. It’s oversupplying the retail market essentially,” Spencer Welton, Simpson Housing, regarding ground floor retail at many of the new apartment buildings.
“We’re at a price point that no one else is delivering. It’s not for everyone, but it’s a choice, and we like offering choices,” says Jim Potter, founder of Footprint Investments regarding their 56 unit NW Thurman Street micro shared kitchen apartments.
“Half the apartment for 60-80% of the cost seems ridiculous to me. This sounds like bodies stacked in shoe boxes.” “This project seems like a glorified flophouse.” OregonLive commenter on micro apartments.
“No one worked more fiercely than he did to push dense development on Portland’s east side, and to pass no parking space requirements. His love of streetcars won him the name ‘Choo-Choo Charlie’ but he could just as rightly been called ‘High-Density Hales.’” Willamette Week
“I have before me Multifamily NW’s most recent report on the Portland rental market, and its digital pages are practically stuck together with excitement over all the money to be made off chumps like us.” OregonLive commenter.
“If you want a snapshot of what Portland chic has become, just drive—well, maybe you’d better bicycle down Division Street between SE 31st and SE 44th Avenues.” Willamette Week
“I rented about eight apartments last year sight unseen.” Nina Lyski, Manager of Jeanne Manor Apartments on the SW Park Blocks.
“Setting bare minimum standards and then offering developers a thousand ways to dodge them is a short sighted calculation masquerading as big city thinking,” Oregonian editorial
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