Wave of New Construction Expected to Peak Next Year, Pushing Up Vacancy and Increasing Competition for Renters Even as Conditions Continue To Favor Strong Demand for Apts.

CoStar Group economists are forecasting that apartment vacancy rates will rise in 46 of the 54 top U.S. metros over the next four quarters due to the massive wave of current apartment deliveries and new apartment projects starting almost daily.

According to their most recent analysis, the U.S. apartment vacancy rate will rise from the current 4.1% to over 5% by the end of 2015. Although a significant trend shift, apartment vacancies are still expected to remain near 10-year lows across most of the nation, even with the addition of hundreds of thousands of new units.

"At this point in the cycle, weve seen supply take hold almost everywhere," Yuen said. "Some late-recovery markets like Las Vegas arent yet seeing vacancy increases yet, but even there, developers are beginning to find opportunities."

Dallas, Washington, D.C. and Houston have each seen more than 10,000 units delivered over past four quarters, while apartment inventories in smaller markets like Charlotte and Raleigh have increased by nearly 5% as apartment construction fans out. Denver and Houston, each with upwards of 20,000 units under construction, will see record deliveries over the next two years, Yuen added. Despite the expected impact on rents from all the new construction, because most of the new building is expensive luxury properties, analysts noted a widening affordability gap. In the Oakland/East Bay Area, for example, the average income has risen by about 15% to over $75,000 in the strengthening economy. However, rents have grown by a staggering 30% over the same period and now require more than 25% of annual income, Yuen said.

"Lack of affordability is certainly something we are beginning to see capping rent growth, especially at the high end of the market," Yuen said.

Year-over-year growth in effective rents, which has gradually decelerated since 2013, is expected to drift below 2% in tertiary and secondary as well as the top U.S. markets during 2015 and 2016.

"We've been surprised by the low levels of concessions we're seeing today, given the large amount of new supply," said CoStar director of U.S. research, multifamily Luis Mejia, a co-presenter along with quantitative analyst Mark Hickey.

But with rent growth slowing further and more supply on the way, property income growth is also expected to finally slow down heading into 2015, which may prompt investors to buy more office buildings rather than apartments in search of higher yields, the analysts noted.

Net operating income (NOI) for apartments, which peaked at about 6% in mid-2012 and was the only major property type to show growth from 2010 to 2013, is now the only sector to show year-over-year income deceleration.

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Apartment Construction Boom Slowing Rent Increases as Market Shifts Into Expansion Phase

Wave of New Construction Expected to Peak Next Year, Pushing Up Vacancy and Increasing Competition for Renters Even as Conditions Continue To Favor Strong Demand for Apts.

CoStar Group economists are forecasting that apartment vacancy rates will rise in 46 of the 54 top U.S. metros over the next four quarters due to the massive wave of current apartment deliveries and new apartment projects starting almost daily.

According to their most recent analysis, the U.S. apartment vacancy rate will rise from the current 4.1% to over 5% by the end of 2015. Although a significant trend shift, apartment vacancies are still expected to remain near 10-year lows across most of the nation, even with the addition of hundreds of thousands of new units.

"At this point in the cycle, weve seen supply take hold almost everywhere," Yuen said. "Some late-recovery markets like Las Vegas arent yet seeing vacancy increases yet, but even there, developers are beginning to find opportunities."

Dallas, Washington, D.C. and Houston have each seen more than 10,000 units delivered over past four quarters, while apartment inventories in smaller markets like Charlotte and Raleigh have increased by nearly 5% as apartment construction fans out. Denver and Houston, each with upwards of 20,000 units under construction, will see record deliveries over the next two years, Yuen added. Despite the expected impact on rents from all the new construction, because most of the new building is expensive luxury properties, analysts noted a widening affordability gap. In the Oakland/East Bay Area, for example, the average income has risen by about 15% to over $75,000 in the strengthening economy. However, rents have grown by a staggering 30% over the same period and now require more than 25% of annual income, Yuen said.

"Lack of affordability is certainly something we are beginning to see capping rent growth, especially at the high end of the market," Yuen said.

Year-over-year growth in effective rents, which has gradually decelerated since 2013, is expected to drift below 2% in tertiary and secondary as well as the top U.S. markets during 2015 and 2016.

"We've been surprised by the low levels of concessions we're seeing today, given the large amount of new supply," said CoStar director of U.S. research, multifamily Luis Mejia, a co-presenter along with quantitative analyst Mark Hickey.

But with rent growth slowing further and more supply on the way, property income growth is also expected to finally slow down heading into 2015, which may prompt investors to buy more office buildings rather than apartments in search of higher yields, the analysts noted.

Net operating income (NOI) for apartments, which peaked at about 6% in mid-2012 and was the only major property type to show growth from 2010 to 2013, is now the only sector to show year-over-year income deceleration.

Read more:
Apartment Construction Boom Finally Slowing Rent Increases as Market Shifts Into Expansion Phase

Construction activity took a tumble in November, sparking concerns about the health of the economy.

Construction activity took a tumble in November, sparking further concerns about the health of the economy.

The construction industry contracted for the first time since May, according to figures from the Australian Industry Group and Housing Industry Association on Friday.

The Performance of Construction Index dropped eight points to 45.4 in November - below the 50 level that separates expansion from contraction.

A slowdown in public building activity and demand for housing were also weighing on the industry, with the reduced workload forcing job losses, the report said.

The disappointing report comes after official figures on Wednesday showed a shock slowdown in the Australian economy in the September quarter, sparking debate about whether the cash rate should be slashed to a new record low.

Growth in house and apartment building decelerated in November, amid a decline in new orders, the report said.

But home building will need to re-accelerate in coming months, if it's going to help offset the slowdown in mining construction.

"Perceptions regarding Australia's short-term economic outlook have dampened recently and today's result will hardly buoy the prevailing mood," HIA chief economist Harley Dale said.

"The rate of expansion in detached house and apartment building activity slowed in November.

Continued here:
Concern grows as construction tumbles

BARBARAELLEN KOCH | The Long Island Science Center would move if apartments get built.

A five-story apartment building planned for the Long Island Science Center site went from market-rate luxury apartments to workforce housing affordable apartments earlier this year.

The plans have now seen another change.

The latest breaking news is that we intend for this to be housing for the artist community, said Marianne Garvin, the president and chief executive officer of the non-profit Community Development Corporation of Long Island.

She was speaking to members of the Riverhead Industrial Development Agency Monday night, during a public hearing on proposed tax incentives for the project, which is a joint venture between the CDC and Rochester-based, for-profit developer Conifer Realty.

The project is being called Peconic Crossing.

The building would still contain 48 affordable rental units. In order to win a lease, proposed tenants would have to meet income guidelines based on the area median income for Suffolk County, which is $73,600, according to the CDC.

However, it will give a preference to prospective tenants who are artists and can document that, Ms. Garvin said.

The project would have a common area for arts and a balcony overlooking the Peconic River that could be used for art events, she said.

The project would be modeled after the 45-unit Artspace apartment complex in Patchogue, according to Allen Handelman, Conifers vice president of development.

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Affordable housing for artists planned for downtown Riverhead

Bryan Mitchell | Bloomberg | Getty Images

A SkyTrak telehandler holds building materials aloft at a residential housing construction site on Scotten Avenue in Southwest Detroit, Tuesday, Nov. 18, 2014.

September's construction outlays were revised up to show only a 0.1 percent drop instead of the previously reported 0.4 percent fall. Economists polled by Reuters had forecast construction spending rising 0.6 percent in October.

The upbeat construction data suggests some momentum in the economy early in the fourth quarter. Weak durable goods orders data has raised concerns of a sharp moderation in the pace of growth in the final three months of the year.

The economy grew at a 3.9 percent annual pace in the third quarter.

Read More Big investors pull back on housing

In October, private construction spending increased 0.6 percent, with outlays on residential projects recording their biggest rise since December of last year. Residential spending was boosted by increases in both single and multi-family homes as well as renovations.

Spending on public construction projects increased 2.3 percent in October, buoyed by a 19.3 percent surge in federal government outlays, the largest such increase since October of 2006.

State and local government investment increased 0.9 percent after two straight months of declines.

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Construction spending logs biggest gain in 5 months

$1.8 million TIF for apartments, height bonus for 15-story tower

By Mitchell Schmidt, The Gazette

December 3, 2014 | 8:06 am

IOWA CITY The Iowa City Council has given the green light to provide financial aid to a local developers plans for a Riverside Drive apartment complex and has approved the requested height bonus for a proposed 15-story tower.

The council approved Tuesday $1.8 million in tax increment financing rebates to Emrico Properties to help fund a $16.1 million apartment building on the former site of Hartwig Motors, 629 S. Riverside Drive, in the citys Riverfront Crossings district.

While the vote was unanimous in favor of the nine-year rebate, Mayor Matt Hayek said he was initially hesitant of the resolution.

"I will be a very reluctant supporter of this," Hayek said. "The thing that gets me over the boundary, the ledge, to be able to support this is the catalyst factor."

The four-story, U-shaped building would include a mix of studio, one- and two-bedroom apartments and eight three-bedroom apartments. Twelve of the 96 units in the building will be geared toward workforce housing and 71 parking stalls will be included beneath the building with parking for another 105 vehicles behind the complex.

Stressing sustainability, the building proposes solar panels on the roof and recycling centers on each floor.

City staff estimate the sites property value to increase from about $50,000 per year to about $320,000 annually with the building.

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Iowa City Council approves requests from two developments

Attorneys for the River Gate apartment building being planned near Ohio University's South Green have asked to be joined to an administrative appeal of a variance granted to the development by the Athens Board of Zoning Appeals.

Attorneys for the Summit at Coates Run apartment complex, which is located off of Richland Avenue, have appealed the variance in Athens County Common Pleas Court.

If granted, joining the case as an appellee will allow River Gate attorneys to defend the development and the variance it was granted. In the original filing, Summit attorneys only listed River Gate LLC as an "interested party" while the appellees listed included the Board of Zoning Appeals, Code Director John Paszke and the city of Athens.

In early October, Coates Run LLC attorney B. Lafe Metz requested the court reverse a variance granted in September for construction of the River Gate apartment complex.

The proposed $15 million, 3.5-story apartment building is slated to replace the building that now contains the New Life Assembly of God church at 10 S. Green Drive. The proposed development is currently undergoing Title 41 city site planning review.

Homestead U, LLC, of Columbus, which owns River Gate LLC, originally requested a variance allowing a 4.5-story building, with 82 percent lot coverage, which refers to the footprint a building makes on its property site. Maximum lot coverage allowed by city code is 60 percent.

That variance was rejected. After redrawing plans, Homestead U brought the proposed building down to 3.5-stories, matching code requirements, and requested a variance for 77.5 percent lot coverage. That variance was granted by the Board of Zoning Appeals.

Metz, Coates Run's attorney, argued in the appeal of the zoning board's decision, that the board erred by inexplicably reversing course on standards it had set by rejecting the first request for variance.

In asking to be joined to the appeal, River Gate LLC attorneys David W. Fisher and Richard C. Brahm cited Ohio Supreme Court rulings holding that an applicant who appears before an administrative board such as the Board of Zoning Appeals is a necessary party to an appeal of a decision granting relief.

They cited several examples of the state's high court ruling that property owners are mandatory parties to any such case.

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Developer of proposed River Gate apartments wants to join variance fight

CLIFFSIDE PARK A four-alarm fire that ripped through an apartment building under construction earlier this month has been ruled accidental, The Record reported.

Fire Chief Brian Martone told the newspaper the boroughs investigation revealed that unspecified construction work sparked the massive blaze Nov. 18 on Walker Street, the former location of a Marburn Curtains warehouse.

The Walker Street fire was stated by exploding propane tanks, however, officials arent sure what caused the explosions, according to the report. High winds allowed the fire to quickly spread to a nearby rowhouse on Palisade Avenue.

Residents in about a dozen nearby buildings were forced to evacuate as fire crews battled the flames. About 100 firefighters from departments around the area responded to the scene.

Noah Cohen may be reached at ncohen@njadvancemedia.com. Follow him on Twitter @noahyc. Find NJ.com on Facebook.

Originally posted here:
Four-alarm apartment blaze in Cliffside Park ruled accidental, report says

Throughout the traditionally working class suburb of Brunswick in Melbourne's inner north, apartment developments are popping up everywhere as urbanites scramble for their own slice of inner-city living. These buildings are modern and comfortable, though many are cut from the same commercially oriented architectural cloth. But among them stands a beacon of green and thoughtful design. The Commons by local firm Breathe Architecture is a beautiful five-story apartment block with sustainability emanating from every square foot, from the bicycle rack to the communal veggie garden on its roof.

Around seven years ago, Jeremy McLeod, who started Breathe Architecture in 2001, had grand plans of creating Australia's flagship sustainable apartment building. But the onset of the global financial crisis didn't exactly make things easy, as he had trouble securing a loan and finding a developer with whom his priorities aligned.

"It started with a big dream," McLeod tells Gizmag, resting against the wall outside apartment 101, the home he shares with his partner. "As is usually the case with such a big plan, parts of this was stripped away over time, but I still think we came away with something epic."

McLeod isn't the only one who would describe The Commons as such. Since the completion of building late last year, awards have rained down on him and his team. The Commons was recognized at the Victorian Architecture Awards as the year's "exemplar of apartment living." It then took out the Multi-Density Residential and Best of the Best Categories at the 2014 Sustainability Awards and went on to receive both the Award for Residential Architecture and Sustainable Architecture at the 2014 National Architecture Awards earlier this month.

The Commons is located just off Sydney Road, Brunswick's bustling thoroughfare lined with everything from bakeries to dressmakers to beer-soaked bars frequented by patrons from all over the city. Nestled in hard up against a train line, the building houses 24 two-bedroom apartments, whose residents enjoy a ten-step wander to bike path connected to the city's network, 20 steps to the train platform and a block to trams bound for the city center.

"One of our main design approaches was this exercise in reduction, we took out everything that wasn't necessary, starting with the car park in the basement," says McLeod, gesturing toward the buffet of transport options. "We built a storage room for 72 bikes instead."

Further to discouraging residents from engaging in the gas-guzzling exercise of inner-city driving, this also saved around A$750,000 (US$638,000) in construction costs. As much of the soil in the area is contaminated, making way for a basement car park wouldn't have been your standard excavation job. Leaving it be meant that money that could be directed toward the other sustainable elements of the design.

A 360 mm (13.8 in) thick, acoustically insulated wall on the western side shields the building from the rattle of trains that run well past midnight. Its outer skin is made from corrugated opaque fiberglass with a corrosive-resistant gel coating. Built into the wall is 75 mm (2.95 in) ventilated cavity, drawing air through perforated copper panels to flush hot air out of the top. On the north, balcony side, dangling chains host climbing wisteria vines that sprout healthy green leaves to shade the apartments in the summer, before shedding them in the winter to let in warmth from the sun.

None of the apartments feature air conditioning, instead relying on the building's thermal efficiency and simple ceiling fans to keep cool in the summer. Heating is provided by way of two gas hydronic boilers, and each apartment is fitted with a "kill switch" at its front door enabling residents to cut power to all outlets and appliances (bar the refrigerator) when leaving home.

McLeod's exercise in reduction is evident all throughout the building, enhancing the raw, minimalist aesthetic. Recycled bricks make up the foyer walls on the ground floor, while untouched concrete complete with pencil scrawled during the two years of construction lines the staircase up to the second floor.

Link:
The Commons: Inside Australia's most sustainable apartment building

A plan to tear down an aging Main Street plaza in Williamsville and replace it with a three-story retail and apartment building has been given the endorsement it needs after nearly two years in the pipeline.

The Williamsville Planning Board approved site plans last week for the mixed-use project at Main and Hirschfield Drive, which will include retail on the first floor and upscale apartments on the second and third floors.

Architectural designs still need to be approved by the Village Planning Board. But the go-ahead given last week coupled with site plan approval from the Amherst Planning Board in August paved the way for demolition and construction to begin by next spring or summer.

This is exactly the type of project were looking for in the village, said Williamsville Trustee Christopher J. Duquin. Its mixed-use, set to the street, commercial under residential, and parking in the back.

Since the project was proposed in March 2013, it has generated some opposition. That includes the owners of two nearby businesses Main Street News & Tobacco and Alterations by Lena who area concerned that the new development will squeeze them out of their already limited street parking.

Im worried about the overflow from them, said Ben Galletti of Main Street Tobacco and News. If you dont have somewhere to park, people arent going to come in.

Duquin and Williamsville Mayor Brian J. Kulpa have invited opponents of the project to the Village Board meeting Tuesday to discuss the project. However, the project doesnt need approval from the board, and the discussion will be more of an opportunity for officials to explain how this venture fits into the broader picture for Main.

At the end of the day, we think we filled the planning objective of both the Village of Williamsville and the Town of Amherst for the redevelopment of properties in this section of Main, said Sean W. Hopkins, the attorney representing the developer.

The redevelopment project is proposed by Dr. Lawrence N. Teruel, an Arizona physician whose father for years had owned this property located directly across from Williamsville South High School.

The proposed L-shaped brick building would come up to the sidewalk and anchor the corner of Main and Hirschfield with 18,600 square feet of retail space on the first floor and parking in the back for 98 vehicles.

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After two years in the pipeline, Williamsville plaza plan is approved