The Portland multifamily real estate investment community has had a lot to smile about thus far this year:
- Maximus Advisors, a multifamily research firm states that we are entering into four years of improving conditions for multifamily real estate investment.
- Portland’s 4% occupancy rate was cited recently as being the second lowest in the nation’s 75 largest MSAs.
- We were also cited as having the second highest rate of rent increase at 10.43% on an annualized basis.
- Please note that is the average for the quad counties…Beaverton had an even higher average increase at 13% annualized.
- Larger rent increases ahead? As we get closer to 2% vacancy we will see even faster and larger rent increases. Remember that it takes a week or two to turn a unit.
Much less reported, but much more important to net profitability is the virtual disappearance of
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leasing incentives. I worked the Vegas market in property management during its decline from superstar status to cellar dweller. On several institutional size properties we were giving away 2 months for a 12 month lease. That’s 1/6 of the total gross revenue…16.66 almost 17%. Other companies were giving away a flat screen TV as an incentive.
That’s a hell of a swing, moving from having to give away 17% of your gross rent to maintain 12% vacancy…into having 4% vacancy and adding 10% to your revenue.
Financing from traditional sources is returning to the market, as is conduit debt, GSE agency and insurance lending. With rents rising, affordable financing becoming readily available and record low building levels, the national multifamily investment market looks solid for some time to come. And Portland appears poised to be one of the nation’s leaders!