News & Press

Below are press releases announcing; acquisitions, divestitures and industry news.

How Mixed-Use Design Is Stealing the Show

As more renters seek communities with that live-work-play feel, mixed-use is offering investors and developers a chance to showcase their new apartments while adding to the economic growth of the neighborhood. Founded in 2004, The Domain Cos. has been a major player in the mixed-use sector, amassing more than $1 billion in development and providing sustainable units for mixed-income residents across markets from New York City to Louisiana. Multi-Housing News spoke with principal Matthew Schwartz about the firm’s expanding geographic portfolio, the appeal of mixed-use and what the future holds for the company.

What is your approach to development?

Schwartz: The first step is identifying communities where we see opportunity to invest and grow over time. We are looking to identify indicators of growth potential that may have been overlooked by the market. With each individual project, we look to develop a best-in-class asset, whether that’s in special-needs housing or high-end hospitality. Further, we want to know that we can operate that asset to maintain that position. As a result, we are constantly looking to innovate and identify opportunities to create a meaningful leap in value with our products and operations. Our projects typically include elements like brownfields, historic structures, complex entitlements or other opportunities to add or unlock additional value. Finally, we are looking to create communities that are sustainable and grow in value over time. This means finding the right mix of housing, retail and services to make a community thrive. These elements often require complex financing strategies or multi-layered public-private partnerships that create opportunities for added value.

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    Florida’s population growth in 2017 was second largest in US

    If it seems to you like more and more people are moving to Florida, you would be correct — the state saw the second-biggest increase in population in the country last year, according to the U.S. Census Bureau’s national and state population estimates.

    Between July 2016 and July 2017, the U.S. population increased by 2.3 million, or 0.72 percent, bringing the nation’s total population to 325.7 million. In this 12-month span, Florida gained 327,811 residents, second only to Texas, which saw a growth of 399,734.

    The national population grew 0.72 percent overall in 2017. Florida saw a 1.6 percent growth and remains the third-most populous state with a population of 20,984,400.

    International migration remains a critical factor in U.S. population growth, despite the first drop since 2012-13. Between 2016 and 2017, net international migration fell 1.8 percent. Still, in the last year, over 1.1 million people migrated to the United States.

    The population of voting-age residents 18 and older increased from 2016’s 249.5 million people to 252.1 million in 2017. This 0.93 percent boost makes 77.4 percent of 2017’s total population residents of voting age.

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      Economy Watch: Inflation Heats Up in May

      The Consumer Price Index increased 0.2 percent in May after rising 0.2 percent in April, the Bureau of Labor Statistics reported on Tuesday. Over the last 12 months, the all items index rose 2.8 percent, which is the fastest pace for inflation in about six years.

      The price of gasoline and shelter were the largest factors in the increase in the May all items index, as they were in April, the BLS said. The price of gas increased 1.7 percent for the month more than offsetting declines in some of the other forms of energy. Overall, the cost of energy was up 0.9 percent during May.

      Other sometimes drivers of inflation were more subdued. The cost of medical care rose 0.2 percent in May, while the cost of food was unchanged month-over-month. Without energy or food, the core rate of inflation was also 0.2 percent for the month, but rose 2.2 since the same month of last year.

      If that rate of inflation stays, it will eat up all of the already meager gains that workers have been making recently, which could have an impact on consumer spending. In May, the BLS reported separately, average hourly earnings for all workers rose by 8 cents to $26.92 per hour. Over the year, average hourly earnings have increased by 71 cents, or 2.7 percent.

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        Lord & Taylor’s Fifth Avenue Store to Close After 104 Years

        (Bloomberg)—Hudson’s Bay Co., the owner of Saks Fifth Avenue, said it will close as many as 10 Lord & Taylor stores — including the flagship Manhattan location — in an attempt to revive its struggling units.

        The closures will occur through 2019, the company said Tuesday. Hudson’s Bay had originally planned to keep a Lord & Taylor presence in the Italian Renaissance building on Fifth Avenue, which it agreed to sell for $850 million in October. The store opened there in 1914.

        “An increased focus on driving Lord & Taylor’s digital business, combined with new leadership and an optimized store footprint, is expected to reduce costs and improve the overall performance of this business,” Hudson’s Bay said in a statement Tuesday.

        The Canadian department-store company, which agreed to sell flash-sale website Gilt on Monday, reported a normalized loss of C$1.22 a share that was wider than analysts’ estimates of 76 cents. Comparable store sales fell 0.7 percent in the quarter ended May 5. The results sent the shares plunging as much as 13 percent in Toronto, the most since December. The stock was down 3.6 percent to C$10.24 at 10:58 a.m.

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          Keeping Rents Affordable After Upgrading

          Historically, multifamily investors would purchase an older property and completely renovate it — bringing it up to Class A standards. And, of course, realize the return on their investments by charging Class A rents. But there’s another trend we’re seeing — investors upgrading properties a bit more modestly — and keeping rents affordable. Why?

          When the renovation budget is more reasonable, owners don’t need to raise the rents dramatically. Properties that are affordable to those making less than the area median income (AMI) generally remain fully occupied with lower tenant turnover. This presents a more consistent net operating income for the investor.

          For example, Chairman and founder of BH Equities LLC Harry Bookey discovered Vicino on the Lake, a 1967-vintage property sitting amid more affluent rental properties in St. Louis. He knew upgrading the property would bring it more in line with the market. Yet, he was aware of the many benefits of keeping rents affordable.

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            Multifamily Investors Face a Cutback in Loan Size

            Rising interest rates are already making a difference for apartment properties. Borrowers can no longer secure the large permanent loans that have become used to.

            “Delivering full-leverage loans has become a challenge,” says Dustin Dulin, managing director in the capital markets platform of real estate services firm JLL. “It is not as easy to underwrite the deals… Back in 2015, almost every deal underwrote cleanly.”

            The change is carving a hole in the budgets of borrowers who need to buy or refinance apartment properties. To fill the gap, borrowers have to come up with more equity, often either from their own balance sheets or from new equity partners. Eventually, higher interest rates are expected to get in the way of transactions—though that hasn’t happened yet.

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              Multifamily Rent Growth Stalls in Top Markets

              While apartment rents are still growing nationally, in a few cities and submarkets rents are growing more slowly or even beginning to shrink.

              “The only spots where you might find effective rents dropping are in locations affected by a large number of new developments leasing up,” says Ron Witten, founder of data firm Witten Advisors, based in Dallas. “The concessions which these projects offer during initial lease-up sometimes spread to nearby properties.”

              The number of new apartments scheduled to open in the U.S. totals 274,700 units, up from 235,300 units added in 2017 and 220,800 units added in 2016, according to research firm Reis Inc. Strong demand for apartments is likely to absorb most of these new units, keeping rents growing overall. However, rent growth is seriously slowing down in a handful of markets.

              “We expect total completions by year-end to reach a new cyclical high. Markets such as Nashville and Charlotte, leaders in new apartment construction, will face more pressure at the top end of the market,” notes an analysis by CoStar Portfolio Strategies.

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                One-Time Emerging Apartment Markets Are Becoming Emerging Office Markets

                As multifamily rents in core markets have continued to climb, investors, office tenants and residents alike have turned their attention to secondary markets. According to JLL’s Investment Outlook report, secondary markets accounted for 50 percent of all U.S. office transactions last year, due to slowing demand and oversupply of product in core markets.

                Renters

                The San Francisco Bay Area, home to many of the top performing tech companies in the U.S., boasts some of the highest rents in the country. Several cities throughout the Bay Area were ranked in the top 10 for rent increases in 2017. San Francisco continues to lead the nation with an estimated median rent of $4,000 per month.

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                  Commercial Real Estate Deal Volume Up, But Headwinds Are Blowing

                  (Bloomberg)—The value of U.S. commercial-property deals rose 6.7 percent in the first quarter from a year earlier, but higher interest rates and softer demand for office and retail real estate will weigh on the market in quarters to come, Ten-X Commercial said.

                  “Heavy supply is looming in the apartment, hotel and industrial sectors, while technological innovation is crimping demand for both office and retail space,” the real estate transaction platform said in a report that looks at data going back more than a decade. Volume for the quarter, which reached $107 billion, was down 14 percent from the previous three months — though companies often rush to close deals before year-end, making for a big fourth period.

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                    Florida forecast to reach $1 trillion economy in 2018

                    Florida is forecast to reach a $1 trillion economy in 2018, but job creation is expected to slow, according to economists gathered Tuesday in Tallahassee for the 2018 Economic Outlook Summit.

                    Led by the state’s chamber of commerce, summit data showed Florida with a booming market, many incoming residents bringing new income, and a high gross domestic product. A recession is not likely, economists said.

                    The forecast GDP, or value of all products and services, “is bigger than Saudi Arabia,” said Mark Wilson, president and CEO of the Florida chamber.

                    If Florida were a country, it would rank 16th in the world, according to the chamber.

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