18A — January 17 - 30, 2014 — Mid Atlantic Real Estate Journal
By Mark Duszak, Director, Rittenhouse Realty Advisors Multi-family price increases will continue in 2014 2014 F orecast
he Tri-State region experienced strong sales velocity in 2013.
Examples of our closedMulti- Family sales are Note Sales (Forest Manor – 60 units in West Chester, PA), Broken Condo Sales (Willowbrook – 121 condo’s in Boothwyn, PA at 4.5% T-12 Capitaliza- tion Rate), Student Housing (Temple University Area Portfolio - $199,000 price per unit), and REO (Whitehall Commons in Whitehall, PA). Record breaking price per unit sales were seen in the Center City, Philadelphia, North Philadelphia, Subur- ban Philadelphia, Lehigh County, New Jersey and
Delaware markets. Why will the Multi-Family market be stronger in 2014 vs 2013? The profile of the typical renter has changed signifi- cantly in the last few years. For the generation of “Mil- lennials” who grew up during the housing crisis, owning a home is not the priority it has historically been for other generations. According to a report released recently by the Joint Center for Housing Studies entitled “America’s Rental Housing: Evolving Markets and Needs,” the
share of U.S. households turning to the rental market to meet their housing needs rose over the last decade, bringing the total number of renters to 43 million by early last year. In addition, a staggering 50% of renters pay more than 30% of their income for housing. With more than 30% of their in- come going towards rent, it will be very challenging for these serial renters to save for a down payment toward home ownership. “Baby Boomers” also have entered the rental pool as
they continue to sell their large houses and downsize. This growing segment has started favoring renting due to a “zero maintenance” ap- proach compared to home ownership. This segment is willing to pay higher rents for higher quality. There are many communities that now target the 55 plus rental pool. One of the effects of this robust tenant pool is a signifi- cant increase in construction, especially inmajor metropoli- tan areas. The Philadelphia skyline is full of construction cranes building to accommo- date renters who are seeking a live-work-play lifestyle. Current renters are paying a premium of close to $3/SF to live in the City of Phila- delphia. Adowntown location allows Millennial renters to take advantage of the city lifestyle and to spend on rent what they save by forgoing car ownership in favor of city living. Although low interest rates have fueled Multi-Family pricing, the consensus is that low interest rates will continue in 2014. And with the 10 year Treasury hover- ing around the 3% mark, the aggressive Multi-Family lenders are back. Mark Duszak is the Director of Rittenhouse Realty Advisors. n statistically representative sample, the study indicates that 54% of gen Yers rented their primary residence in 2013, compared with 32% of all adults in the United States. Of those gen Yers who are very likely to move within five years, 69% expect to rent, com- pared with 25% of all adults. Meanwhile, baby boomers are also selling their homes to rent apartments within walking distance of downtown areas or moving into centers for active seniors. With real estate fundamen- tals improving following a tumultuous fall over the past several years and interest rates forecast to rise, now is the time to invest and lock in low rates. Mark Scott is Principal of Commercial Mortgage Capital, based in Livings- ton, NJ. n Mark Scott, CMC . . . Continued from page 16A
The high de- ma n d f o r Multi-Fam- ily product in 2013 re- sulted in re- cord per-unit pricing for the region.
Since opening in February 2013, Rittenhouse Realty Advisors has closed or placed under agreement north of $120,000,000 in Multi-Fam- ily sales in the Tri-State area.
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