Real Estate News, Views & Schmooze!
Commercial Real Estate
U of Minnesota’s Dinkytown To Get Some New Digs
Sep 16th
New Dinkytown Apartment Complex Deal Finalized
By Paul Groessel Twin Cities Business
The Dinkydome is getting hitched. Property sales to Doran Development were finalized, and renovations of the 90-year-old building, along with construction of a new 12-story apartment complex, named Sydney Hall, will begin immediately.
The renovation of the University of Minnesota landmark will take two years, in time with the intended occupancy date of July 2010 for the complex’s 198 apartment units and ground-floor retail units. Twenty-three surface parking spaces and 192 underground spaces will also be constructed.
From its connection to the iconic Dinkydome, the new Sydney Hall will extend to the northeast corner of Fifteenth Avenue and Fourth Street Southeast, and the former university parking lot on Fourth Street.
With a range of floor plans, from studio apartments to four-bedroom units, the new complex “will be the premier student housing project in the Midwest,” said founder and chief manager of Doran Development, Kelly Doran, in a press release.
The coordination between Doran Companies, Dinkydome tenants, the university and the City of Minneapolis, “took a little longer to put together,” Doran said, “but it was worth it.”
Happy Days For Apartment Owners!
Jun 30th
As I sat in the last row (so I could sneak out early) of The 2008 Minnesota Real Estate Journal’s Apartment & Condominium Summit at Golden Valley Country Club last week, I realized that in this room full of brilliant and established real estate investors, there was just one question we all needed answered; What is the future going to look like for the Minneapolis/St. Paul Multifamily industry?
Below are some of the highlights of the Summit as well as interesting tidbits to chew on:
First off, the state of our current National economic conditions:
- National Vacancy Rate is between 6-8% respectively
- 5-6% Cap Rates Nationally
- Ages 18-36 make up the majority of the renter core
- 25% of total renters are immigrants
- Office employees make up the majority of renters for apartment buildings
- People who are being foreclosed upon are moving into Single Family Rentals
- Rental Rates will continue to be flat for at least 18 months
- Any Rental Rate increases will be based on the Consumer Price Index
Current and Future Outlook of the Twin-Cities Metro:
- Sub 5% Vacancy Rates Metro Wide
- Great Investment fundamentals in place
- Lots of buyers with Few properties on the sales block
- Investors Looking for Value-Add Opportunities
- Cash on Cash returns 8-10%
- Tenant Retention is Key
- Lenders are still a little tight and their Debt Coverage Ratios are 1.20-1.25 and 80% LTV’s are the absolute max
- Utilities are now starting to be passed on to renters in some complexes
- Senior Housing Rentals is now stable and ready for New Construction to peak it’s head out
- Green Design is Very Hot
- Lumber Construction Prices are falling but other costs are still on the rise
One other large thing to consider is the Twin-Cities Market was named a “Market to Watch” as Institutional Investors are starting to pour their money into current and future multifamily projects here.
As for the Condominium portion of the Summit, I walked out early and went to focus on growing my apartment portfolio along with the other 95% of the crowd. Enough said on the outlook for The Condo Market.
More Good News For Apartment Investors!
Apr 17th
The reasoning seems simple enough. “People still need a place to live,” said Richard Anderson, a senior real estate analyst at BMO Capital Markets, adding that “a bad homeowner could be a very good renter.”
Indeed, occupancy rates for apartments have remained stable, averaging in the mid-90 percent range, and rising in some cities, industry reports show. Homeownership, meanwhile, has fallen steadily nationwide. The ownership rate slipped to 67.8 percent at the end of 2007 from a peak of 69.2 percent in 2004, according to the Census Bureau.
Some would-be buyers are now waiting for home prices to bottom out, while others are finding it harder to get a mortgage after the shake-up in the subprime market.
All these factors seem favorable for landlords, but only lately have shares of apartment operators and, in particular, the real estate investment trusts that own and manage these multifamily developments, begun to reflect the trend. Many apartment REITs traded near their 52-week lows not too long ago, though they have been moving higher recently.
“People had been painting residential with a broad brush, and that’s what held back the stocks in 2007,” Mr. Anderson said. Many skittish investors seem to have eschewed all companies in the housing market, even those involved in rentals. “Now they may be looking for ways to play the residential market,” he said, “and one way to do that is to take a look at the rental business, which is once removed from the broader housing turmoil going on.”
Apartment REITs, which had average losses of around 25 percent last year, are up 15.6 percent, on average, this year through Thursday. (All property-holding equity REITs are up 3.2 percent, on average, according to the National Association of Real Estate Investment Trusts, while the Standard & Poor’s 500-stock index has lost 9.4 percent.)
So should investors be giving these REITs a closer look? More >
It’s The Best Time In 30 Years To Be Investing In Apartments!
Mar 16th
From Barron’s Edited by Robin Goldwyn Blumenthal:
The carnage in housing hasn’t spared any sector of the real-estate market. But favorable fundamentals could turn apartments into lucrative investments again. “The demographics are very supportive for apartments, with a lot of young people graduating from college,”says Sam Chandan, chief economist of real-estate research firm Reis. An estimated 82 million echo-boomers (baby boomers’ progeny) will be striking out on their own over the next seven years. While some surely will move back to the parents’ pad, many will join the ranks of the renters. So will an in-flux of immigrants and displaced home owners.
During the single-family housing boom, multifamily-market supply was very restrained: Site completions as a percentage of existing stock averaged 1% in the past five years, half the previous five year average. “It’s the best time in 30 years to be investing in apartments,” says Christopher Finlay, managing principal of Mission Residential, which does private syndications of apartments in growing middle markets like Salt Lake City-where’07 rent growth out paced the 4.4% average increase nationwide.
Shares of apartment real-estate-investment trusts fell 25% last year, more than the total REIT universe of 16% according to the FTSE Nareit index. But apartment REITs are only one of two sectors to be up year-to-date. Middle-
market apartment REITs possibly poised for turn around: Mid-America Apartment (ticker: MAA) and United Dominion (UDR), which don’t have big exposures to boom-and-bust markets.
Investing in Apartments…Now’s A Great Time To Start!
Apr 27th
Thinking about what to invest in next? Apartment Buildings might just be your best-bet investment in the Twin Cites area. Very promising economic signs are pointing towards the Twin Cites Apartment Investment industry as investors flock to buy-up buildings (even the rundown ones). With vacancies low, increases in rents and owners virtually eliminating concessions, there might not be a better time than now to start increasing your portfolio size.
Rehabbers are swallowing up a large portion of the market with their eyes and hands-on abilities to repair outdated properties. You can read more about it here at the Minnesota Real Estate Journal.
When you’re ready to increase your net worth and gain a piece of the Twin Cites Apartment Market let Ladin Ventures help guide you down the right street…
…Easy Street!
Property Of The Week: South Minneapolis Commercial Retail Listing
Apr 13th
3801 Nicollet Ave. S
Minneapolis, MN
Available Now For Lease!
Great Opportunity For Retail/Office Users That Want The Perfect Storefront On Prestigious Nicollet Ave. S. Minneapolis!
Rates Start at $10.00 a SF!
Does Your Office Look Like This???
Apr 12th
If so, I think it’s time to move or expand your office. A smart business owner knows when it’s time to trade up and move somewhere with more breathing room (and I don’t mean just by opening the bathroom door)!
Here are 10 signs that it’s time to move or expand your office:
From allbusiness.com
- People are sitting on top of one another. Face it: your employees need their space, especially if being on the telephone all day is part of their job. Nobody wants to listen to every conversation his or her neighbor makes, which can be very distracting while trying to do other work.
- The break room is “standing room only.” If your on-site lunchroom or break room is always full, employees may start going elsewhere for their breaks, which can mean extended lunch hours. Remember that happy employees are productive employees, so don’t scrimp when it comes to providing them with adequate space in which to recharge.