GRAND RAPIDS, MI The market for new apartments came roaring back in 2014 as builders met a resurgent demand for rental housing in Grand Rapids and its suburbs.

More than 668 apartment units were under construction in Kent County during 2014, a 267 percent increase over 2013, when 182 units were started, according to statistics collected by Builder Track Reports.

Home building activity was up across the board in Kent County last year, according to Builder Track, which compiles building permits throughout West Michigan.

Condominium starts were up 59 percent and duplexes were up 187 percent. Single family home starts also were strong, growing 7.7 percent over 2013. In total, 2,006 housing units were started last year, a 50 percent increase over 2013.

Were looking at 2015 bringing the same level of growth as 2014, said Emily Lubbers, executive officer for the Home Builders Association of Greater Grand Rapids.

Lubbers said the surge in apartment construction may begin to slow as the recovery matures and renters evolve into home buyers.

The report marks a dramatic turnaround for the multi-family housing market from 2011, when no apartment units were started in Kent County and 2010, when only 20 units were under construction.

While most of the rental units 512 -- were under construction in Grand Rapids last year, the trends also emerged in the suburbs. In Cascade Township, 126 rental units were started last year, according to the statistics.

Grand Rapids has been one of the nations hottest markets for apartments and condominiums for the past two years as millennials and empty-nesters clamor for convenient housing in the downtown area and surrounding neighborhoods.

RELATED: Grand Rapids ranked as the nation's best place to own rental property

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New apartment construction soared in 2014 as renters clamored for housing near downtown

Construction activity is likely to soar this year after the number of building consents issued reached their highest level for seven years in November.

Westpac senior economist Satish Ranchhod said consent issuing had ''retraced'' all the fall which occurredbefore last year's election, when there was increased uncertainty about the tax treatment of property.

Total residential consent numbers rose 10% in November.

The November figures were boosted by a strong increase in the volatile apartments category.

However, even excluding apartments, consent numbers were up 2.1%, Statistics New Zealand figures showed.

Mr Ranchhod said combined with ongoing reconstruction in Canterbury, conditions were lining up for a year of strong construction spending - particularly in Auckland.

''Today's data comes on top of other favourable indicators for the housing market, including increases in house sales and mortgage approvals, as well as strong population growth.''

There were also signs house price inflation was increasing, he said.

The strong construction outlook was not limited to residential property, with the value of non-residential building consents rising 22% in the year to November.

Strengthening domestic economic conditions were encouraging increases in business investment spending.

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House-building likely to take off

The woes of Kaisa Group Holdings Ltd. show investors will demand yields of at least 10 percent to buy Chinese real-estate junk bonds amid growing wariness of state interference in the property market.

Rates on dollar-denominated debt sold by the nations developers rose to 13.03 percent on average yesterday, a Bank of America Merrill Lynch index shows. That compares with 8.94 percent six months ago. Some 41 builders paid an average 8.48 percent to raise $18 billion of dollar bonds in 2014, Bloomberg-compiled data shows.

Kaisa declined to say today whether it has made a $25.625 million coupon payment, due yesterday, on $500 million of 10.25 percent 2020 notes. The semi-annual coupon falls on Jan. 8 and July 8 every year, according to data compiled by Bloomberg. The builder defaulted on a bank loan on Dec. 31, after its chairman quit and projects in its home city of Shenzhen were blocked by authorities without explanation.

As long as the uncertainty is there, the market will find it hard to price bonds according to their intrinsic value, Peter Jeggli, a money manager and head of credit research at Fisch Asset Management AG in Zurich, said in an interview yesterday. If things get worse, better quality names probably need to see 10 percent yields before investors step in. Fisch Asset manages $8.5 billion of notes.

Kaisas $500 million of 2020 securities were sold to investors at par, or 100 cents on the dollar, in January 2013. They touched a record-low 29.901 cents on Jan. 7 and are rising in trade today.

I got very scared of corporate governance in the property sector, said Jeggli, citing the hidden hands behind recent management upheavals in cases like Kaisa and Agile Property Holding Ltd. Jeggli sold his Kaisa notes last quarter.

Recent events have underscored the need to price in a higher risk premium for Asian, particularly Chinese, high-yield bonds, according to Brigitte Posch, the London-based head of emerging market corporate debt at Babson Capital Management LLC. Political risk factors should no longer be relegated to background noise, she said.

The restrictions on Kaisas Shenzhen assets by the local government without official notification of a reason would be illegal in most developed markets, Posch said by e-mail today. The market has now had two developers affected by investigations, which suggests that perhaps the risk premium being priced into that specific sector was previously too low.

Speculative-grade Chinese notes are off to their worst start to a year on record and more developers may be at risk. Logan Property Holdings Co.s 11.25 percent notes due 2019 tumbled 23.7 cents in the five days through yesterday to a record-low 75 cents. Some of its projects were also blocked.

Regardless of whether the Kaisa coupon gets paid or not, the damage is already done, said Michel Lowy, chief executive officer at Hong Kong-based SC Lowy Financial (HK) Ltd., an independent bond and loan trading firm. Clearly, external factors that cant be analyzed may interfere with recoveries or value of Chinese bonds, and this will need to be priced in.

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Kaisa Hidden Hands Means 10% Threshold for Junk-Rated Builders

The last time PlanPhilly heard about a project proposed byCross PropertiesandBarton Partners at 2100 Hamilton Street in the Logan Square neighborhood,the Philadelphia Art Commission, after the applicants' presentation, quickly identified potential project-killing problems associated with cost and quality of construction and proximity to the Rodin Museum and the Benjamin Franklin Parkway.

As initially described in November by Barton principal Thomas C. Barton III, the $24 million endeavor would include 120 apartments targeted at millennials and empty nesters, starting at around $2,000 a month, and would feature a restaurant. It would also sit 60 feet from the revered Rodin Museum, on top of a defunct rail line that could have a future as an inner-city trail.

On Wednesday, the team was back in front of the commission with a much revised plan. The meeting followed two meetings between the developers and a subcommittee of the Art Commission to discuss feedback and suggestions related toaesthetics, construction costs, preservation, the appropriateness of the architecture, the way the development would frame the Rodin Museum, and the interaction the developer has had with the Logan Square Neighborhood Association and the Philadelphia Art Museum.

The project's footprint was shrunk in order to set it farther back from the Rodin Museum and the height was increased to 11 stories. The gash where the SEPTA tunnel right-of-way now exists is a covered "seamless" transition from Rodin to the new complex.

And the commissioners, after pointing out some issues with the identity of the building projects that are related to the facade, unanimously granted the team conceptual approval given changes that were made to the structure's volume and massing, orientation on the property and relationship to the Rodin Museum and parking, which will be completely underground.

Before final approval will be considered, the commissioners made it clear there would be much detail work to be tackled (another meeting with the subcommittee was suggested). The commissioners also want to see material samples of the project at their next meeting, Feb. 4. The commissioners also urged the developers to reach out again to near neighbors, including the Philadelphia Art Museum and the Logan Square Neighborhood Association.

PlanPhilly.com is dedicated to covering design, planning and development issues in Philadelphia. The news website is a project of PennPraxis, the clinical arm of the School of Design of the University of Pennsylvania. It is funded by the Wyncote Foundation.

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Art Commission gives conceptual OK to apartments at 21st and Hamilton

A Dane County judge this week dismissed a lawsuit filed by owners of condominiums in a Downtown building trying to block construction of a 14-story apartment building next door.

Circuit Judge John Albert on Monday denied a request by residents of the Marina condominium building, 137 E. Wilson St ., to reverse a decision by the City Council approving a conditional-use permit to build an apartment building on property at 149 E. Wilson St .

Residents who filed the lawsuit said the 121-apartment project being developed by McGrath Property Group would not have an adequate fire lane and off-street parking for loading and unloading, and would have a noisy ventilation system.

In his ruling, Albert wrote that the City Council proceeded correctly in approving the conditional-use permit for the apartment building. He said the council had substantial evidence to support its decision, and that the decision could only be reversed if there was a lack of substantial evidence.

The building is to be located on the site of a vacant building, slated for demolition, that was last used by the state Department of Corrections.

Ron Trachtenberg, who represents the condo owners in the lawsuit, said he believes an appeal is likely.

He said there is a related lawsuit filed by Marina condo owners alleging that the project violates a fire lane easement that owners of the Marina property have on land that McGrath intends to develop. That case is still pending.

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Judge dismisses lawsuit against downtown apartment development

As construction machinery rumbled at the site of a planned nine-story apartment building on East Palmetto Park Road, renovation has begun directly across the street on an artifact of the city's 1920s boom-time.

The roof has recently been replaced at what's known as the Luff House, at 390 E. Palmetto Park Road, which was built in the 1920s. A dumpster behind the house, filled with construction-related debris, attests to some interior work that has just begun.

And a sign staked in the front shows that the city's largest commercial property owner, Investments Limited, is looking for a tenant for the bungalow-style residence, whose front faade and chimney are made of coral rock.

It has been vacant for three years, raising the city preservation board's concerns that a wrecking ball would soon be in its future.

Skip Sheffield, a longtime Boca resident, said the new investment in the Luff House may be "a stay of execution" for it.

The renovation and the prospect of a new tenant prompted the the Boca Raton Historical Society & Museum to take it off Boca's "endangered" list of historical structures. Luff House's proximity to Boca's current apartment boom has been cause for concern on the city's Historic Preservation Board for a number of years.

The property sold for $857,000 in 2006, and then was sold for $10 by one company, Pios Grande LLC, to a company of the same name, according to records from the Palm Beach County Property Appraiser's Office.

Investments Limited and Pios Grande LLC couldn't be reached for details about the Luff House despite phone calls.

Across the street, 378 apartment units are being built to become "Palmetto Promenade." Within downtown, more than 500 other apartment units are under construction.

"Those of us who care about the property are holding our breath," said Arlene Owens, who serves on the preservation board. "We are hoping someone falls in love with it and leases it."

Excerpt from:
Downtown Boca house from 1920s undergoes renovations

HOUSTON -

A construction worker was shot Wednesdayduring a robbery at a job site in northeast Harris County.

Two men, one armed with a gun and one armed with a knife, robbed four of the construction workers at around 7:45 a.m., according to the Harris County Sheriff's Office.

The gunman fired and hit one of the workers in the arm.

Superintendent Derek Peake, who has been in construction for 32 years, said this is the first time he's ever heard of robbers targeting construction workers.

"I was inside the trailer and I heard four small pops and thought, 'That sounds odd,'" Peake said. "My foreman came in and said, 'Call the police, call the ambulance quick.'"

"(The workers) said one guy had a small pistol and one had a knife, and (the robbers) came up and started hollering and cursing, 'Give us all your money.' Before (the workers) had a chance to do anything, (the robbers) grabbed the cellphone -- I guess from one of the guys. They shot four times and only hit the one guy in the arm. One of the guys hollered, 'Police' and that scared (the robbers) and they took off," said Peake.

The suspects fled with a cellphone and some cash and jumped over a fence into a nearby apartment complex.

The man who was shot was taken to the hospital. He is expected to be OK.

The first suspect is described as a black man about 5 feet, 9 inches tall and weighing around 150 pounds. He was wearing a black sweatshirt and black pants with a beanie cap and black glasses.

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Construction worker shot during robbery

MIDDLETOWN The common council has postponed action on an incentive plan that city officials want to offer a developer with plans to build a new downtown residential building beside the MiddleOak office tower.

A Massachusetts developer, Hajjar Management Co., is proposing an upscale 89-unit apartment building at the corner of College and Broad streets adjacent to the MiddleOak office tower. Hajjar owns the property.

The $20 million project would include 3,400 square feet of retail space on the first floor with studios, one bedroom and two bedroom apartments on the second, third and fourth floors.

Council members said they needed more time and more information about the deal, which calls for a seven-year tax freeze and a cap on building permits at $142,600. The council voted Monday night 9-2 to postpone a decision until the Feb. 2 council meeting.

Democratic Majority Leader Thomas Serra said he hopes the city can reopen negotiations to get a deal that is more beneficial to taxpayers. He said there are also remaining questions about the 1987 deal the city offered when Middlesex Mutual built the office tower at Broad and Court streets, and about the impact the new building might have on the school district.

"I support this in the context of what's happening," Serra said. "However it's about fairness to the citizens of Middletown. My intention [in postponing a vote] is to have input and to have answers to all the questions my colleagues asked."

Planning Director Michiel Wackers said the city in 1987 made an $11 million investment into the construction of the office tower, but there wasn't much of a return.

The new offer to Hajjar is an investment of just $18,000, and the city stands to gain hundreds of thousands of dollars in new tax revenue after the project is complete, he said.

"This is revenue that will ultimately reduce the tax burden and we need to keep that in mind," Wackers told the council. "We've struck a deal that's in the interest of taxpayers, as well as in the interest of the developer, to bring new development into Middletown."

Council Republican David Bauer cautioned against rushing an approval for the project, and said more scrutiny is needed to make sure the plan is beneficial to taxpayers.

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Middletown Council Unsure About Tax Abatement Plan For Apartment Building

WASHINGTON (MarketWatch) Home builders and investors have poured money into so many new rental units that tenants may see rent growth slow in the near future, one economist said.

While there will likely be robust demand in 2015 from renters and young adults, in particular builders have already started and plan to start enough new apartment projects that the days of excess demand may soon be over, said Ryan Severino, senior economist at Reis, a New York-based research firm focused on commercial real estate.

Demand will struggle to keep pace with the significant amounts of new construction that should come online over the next few years, Severino said.

Growth in rents over coming years should remain positive, according to Reis, but it will likely slow from 2014s heady pace of about 3.5%, which far outpaced overall consumer inflation.

Although an improving labor market with more jobs and faster wage growth should provide landlords with more leverage to increase rents, over time this will be stymied by the sheer number of new units that are going to come online, increasing competition in the market, Severino said.

The frenzy for apartments has been fed by a choppy jobs market that made it tough for workers to set aside enough cash for a down payment. Also, persistently high credit standards have kept singles and families from obtaining a mortgage, a key financial ingredient for many would-be homeowners, particularly first-time buyers.

Seeing an opportunity, developers ramped up apartment building. The rate of private construction spending on new multi-family residences was up 27% in November from the year-earlier pace, more than double a 13% gain for new single-family homes, according to government data. Meanwhile, outstanding multifamily-mortgage debt swelled in the third quarter, rising the most since the end of 2007, the Mortgage Bankers Association said Tuesday.

Rental vacancy rates are the lowest in 20 years, which gives landlords power to raise rents. Government data show that landlords recently ramped up rents by the fastest pace in six years. But that power may taper as the supply of rental units rises.

With a veritable deluge of new supply set to come online over the next few years, vacancy is headed higher. The supply pipeline swells larger and larger on a weekly basis and presents the greatest risk to the apartment markets health, Severino said.

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Capitol Report: Apartment glut may tame rising rents

After all, last year saw the most apartment construction since 2001, with 161,518 new units delivered, according to Reis. Cities like Houston, Austin and Washington, D.C., are seeing an apartment boom, which could start to ease rising rents.

"We work in an industry that has a huge propensity to overbuild." Severino said. "I don't think it's going to be a massive overbuilding, but I do think even with demographics so favorable it's going to be difficult if not impossible for demand to keep pace with supply."

Read MoreOffice sector works its way back

Still, landlords are able to collect higher rents, which rose 3.5 percent in 2014, the best performance since 2007. Rents are setting new records, and the improving labor market, including faster wage growth, will give landlords at least in the short term more leverage to raise rents.

"It is surprising, and an outlier, to have a strengthening fourth quarter when everyone is going home for the holidays," said Alexander Goldfarb, an analyst with Sandler O'Neill. "Rent (price) growth in 2014 surprised everyone."

But as developers start to see too many cranes in major urban markets, they are now setting their sights, too, on the suburbs, where there has not been a building boom and where potential returns are far higher.

Both Avalon Bay and Essex Property Trust are starting to focus their investment dollars on the suburban markets. Essex, which is concentrated on the West Coast, is especially well-positioned.

"Housing is unaffordable in San Francisco, so Essex has been capitalizing on the fact that rent growth has been tremendous," Goldfarb said. "In their development projects, the yields have been way above what they expected."

On the flip side, multifamily real estate developers who also invest on the East Coast, like Equity Residential, are finding the competition from condominium developers in New York City fierce. Both land and labor are now so expensive that the numbers don't work.

Read MoreManhattan apartment prices hit record high

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Will too many apartments pinch the rental market?