Michael Cunningham's Blog

Small shifts in data tend to quickly make headlines and dominate conversations. Most recently, it’s the uptick in single-family home sales creating some news about apartment renters leaving to buy homes. But it’s not a big spike – and even if it was, that wouldn’t necessarily be a bad thing for the U.S. apartment industry. Greg Willett and Jay Parsons from MPF Research explain why in this video edition of Apartment Market Dynamics.

Yet, few may realize that the Fair Housing Act (FHA) fought an uphill battle before being passed and that the early days of the Department of Housing and Urban Development (HUD) were not without controversy. Both overcame numerous hurdles in the civil rights era of the 1960s to form the groundwork for today’s critically important multifamily housing policies that prohibit discrimination.

A day in the life of a property manager is never boring. Between answering phone calls, showing units, following up on emails, managing service requests, and dealing with move-outs and renewals, there is never a dull moment. Smart property managers are always on the lookout for new ways to improve efficiency and free up time for important tasks.

Converting paper checks to electronic ACH payments is a great way to boost productivity by eliminating daily trips to the bank. Over the last decade, more and more property management companies have recognized this opportunity and deployed electronic payment solutions at their sites. By scanning paper checks to process as electronic ACH debits, on-site staff finds more time to serve residents, fill vacant units, and increase revenue.

Last month in the article “The Top Secret Apartment Marketing Weapon: Your Maintenance Team,” I shared my positive experience with a hotel housekeeper and how it made me wonder about the effect a maintenance staff can have on marketing an apartment property.

Curious to learn what others thought, I posted some questions in a couple of multifamily LinkedIn groups and Multifamily Insiders:

Hidden on each of your apartment properties is a secret marketing weapon that can help in your never ending battle to improve resident retention: your maintenance staff.

I’m sure you’re thinking, “Well, duh Michael. Quality and timeliness of maintenance service is a key factor in resident renewals. Don’t you keep up with SatisFacts Research’s data?”

Well, Duh:

More and more apartment owners and property managers are turning to document management systems to control the paper flow and streamline and improve their business processes. These systems not only manage electronic bills, contracts, and invoices, but also create an electronic library of documents once they’ve been scanned into the system.

But after you’ve made the move to an electronic document management system, how do you properly dispose of all the information that has occupied file folders, filled storage boxes, packed file cabinets, and otherwise cluttered up your desk?

One of the most encouraging results seen in the country's apartment market during 2010's first half was a notable upturn in demand for middle-tier product. Previously, almost all the absorption occurring across the country was being captured at the very top end of the market, reflecting new completions moving through initial lease-up as well as high-end units attracting move-up renters via price cuts.

Looking specifically at 1980s-generation developments, the middle of the product spectrum in most metros, occupancy across the nation as a whole climbed 2 percentage points during 2010's initial six months, improving from 91.7 percent to 93.7 percent. At least a little bit of growth occurred virtually everywhere, and the jump was more than 3 percentage points in select areas like Upstate South Carolina's Greenville area, San Antonio, Kansas City and Nashville.

An especially interesting shift in 1980s-era apartment occupancy registered during recent months in metro Atlanta. While those units were just 91.3 percent occupied as of mid-2010, the performance in the sector improved by 2.9 percentage points from the late 2009 result. Making the change especially intriguing, almost all the upturn occurred in just a few neighborhoods, specifically the arc stretching from Gwinnett County across the Roswell/Alpharetta area and into eastern Cobb County. That's a cluster of product that on the surface would seem to face a particularly difficult road to recovery, since it lies amid a huge selection of now really, really cheap single-family homes offered both for sale and for lease in very large numbers.

While metro Washington, DC seems to rank at the top of the list of just about everyone's favorite apartment markets, current performance stats actually are a little stronger in adjacent Baltimore.

June's occupancy rate in Baltimore's base of about 190,000 apartments stood at an even 96 percent, up 2.1 percentage points from the late 2009 figure and 0.7 points ahead of occupancy in Washington, DC. Neighborhood-level occupancy was right around the 95 percent mark in even the weakest of Baltimore's individual submarkets, and the rate was 97 percent or better in Ellicott City/Columbia and the Towson area.

Just like pretty much every other metro across the country, Jacksonville has seen its apartment market generate some performance momentum so far during 2010. However, this locale took one of the nation's worst beatings during the down portion of the market cycle, so it remains far from reaching healthy status once again.

Apartment absorption in Jacksonville registered at some 2,900 units during 2010's initial six months, far surpassing completions limited to around 500 apartments. Occupancy, then, has made big strides, rising 3 full percentage points since late 2009. Even with that upturn, however, the June occupancy figure was only 89.3 percent. That's the third worst reading across the 64 metros that form the core of MPF Research's national apartment analysis, coming in just ahead of the rates in Houston and Fort Myers.

With overall occupancy so low, it's not surprising that even the top-performing neighborhoods and product niches are struggling. The metro's best neighborhood-level result in submarkets with sizable apartment inventories is the 92.8 percent occupancy in the Mandarin area. Across the various product categories, 1990s-era properties are doing the best with occupancy at 92.5 percent.

Yesterday, there was lots of media coverage highlighting results of a survey that indicates quite a few of today's renters don't expect to ever become home buyers. Specifically, a Harris Interactive poll of about 2,000 folks conducted for real estate search site Trulia.com found that 27 percent of current renters don't anticipate that they'll eventually make the leap to home purchase.

Looking a little more closely at the survey info provided on Trulia's website, only 663 of the 2,000 people surveyed actually are renters, and there's no info provided on what type of housing (apartments, single-family homes, or something else) the renters are leasing. That seems like a pretty small sample to use when making broad-brush statements about a large and diverse group of renters, but let's go ahead and assume that the survey results are accurate. Do they, in fact, mean anything?