Transcript 2008 ccim forecast - Signature Landscapes

“Stability & Strength”
Tight lines and a fairly strong header for a closet
The Economic Indicators
 2014 U.S. GDP estimated to end at 5% (A Huge Recovery)
 2015 Projections for U.S. GDP range from 3.0% to 3.3%
 2015 Projections for Global GDP Growth at 2.9%
 U.S. GDP GrowthAveraged 3.24% (1947 to 2013)
 U.S. Unemployment decreased from 7.0% (end 2013) to 5.8%
(end 2014) , which was a 17% decrease
 Washoe County Unemployment decreased from 8.2% (end 2013) to 6.4%
(end 2014), which was a decrease of 22%
 Remember when…Washoe County ended 2010 at 13.2% unemployment and
the current unemployment rate is 6.4% , a 52% decrease in four short years
Sources: U.S. Bureau of Labor Statistics, St. Louis Fed.
The World Bank
The Economist
Historical Unemployment Rates
Washoe County (1994 to 2014)
14%
13.2%
12%
10%
8.6%
8%
6.4%
6%
4.7%
4.2%
4.4%
4%
2%
8.2%
2.7%
0%
(November 1st of each year)
Source: U.S. Dept. of Labor-Bureau of Labor Statistics
 Washoe County home prices increased 9% from
Nov. 2013 to Nov. 2014
 Home prices are expected to rise in 2015
 No major apartment projects came on line
 The factors above bolster improvements and
strength in the apartment market (i.e. rising rents
and continued declining vacancy rates)
Source: Reno-Sparks Association of Realtors*
Reno-Sparks Apartments Historic Data
Year Ending Vacancy Rate & Average Rent
10%
9%
$900
9.63%
$887
$885
8.54%
$880
$875
8%
$865
7.16%
$860
7%
6.56%
6.50%
$850
$848
6%
$840
5.60%
$834
5.10%
$824
5%
$822
$820
4.35%
4%
$800
3%
2.13%
2%
$780
2007
2008
2007-2012 = End of 4th Q
2013 = Forecast End of 4th Q
2014 = Forecast End of 3rd Q
2009
2010
2011
2012
2013
2014
2015
2007-2012 Source: Johnson-Perkins & Associates, Inc
Apparently the Incas had a slight soil compaction problem in this one area
Apartment Sales 2014
Project Name
City
Mountain View Apartments
Reno
Sale Price Units Price/Unit Cap Rate
25
$38,000
-
5/8/2014
Sparks $5,300,000
128
$41,406
6.37%
11/20/2014
Moran Apartments
Reno
$1,402,500
28
$50,089
-
7/29/2014
Green Leaf Pines
Reno
$5,925,000
116
$51,078
6.60%
1/28/2014
Carlin Apartments
Reno
$1,125,000
22
$51,136
7.25%
8/15/2014
Woodside Village
Reno $14,900,000
250
$59,600
6.82%
1/23/2014
Talus Point Condominiums
Reno
$9,000,000
125
$72,000
5.75%
7/2/2014
310 Maine Street
Reno
$1,029,000
13
$79,154
-
5/7/2014
Eastland Hills
Sparks $27,500,000
296
$92,905
6.01%
8/19/2014
The Alexander @ S. Virginia
Reno $55,300,000
350
$158,000
5.65%
4/23/2014
Banbridge
$950,000
Closing
Date
 Continued Improving Employment Rates
 Continued Improving Consumer Confidence
 Leveling, but Stable Increases in U.S. GDP
 Modest increases in Apartment Supply (should be
easily absorbed, no negative effect on vacancy
rates or average rents)
 Housing Prices Rise (8%-12%) Similar to 2014
 Mortgage Rates Remain Low (3.25% to 4%)
 Regional Population & Job Growth = New Housing
Formation = Demand for Apartments and SFR





#1 San Francisco, #3 San Jose, #4 Oakland, #6
San Diego, #8 Los Angeles (5 of the top 10
strongest apartment markets in the U.S. are in
California = Nevada apartments benefit)
National vacancy rates dipped as low as 4.2% in
2014 and ended the year at 4.7%
Homeownership dropped to a 19-year low of
64.4% nationally (more renters by choice)
238,000 apartment units were completed in the
U.S. in 2014 and all absorbed easily
210,000 units estimated for completion in 2015
Nationally, 2014 apartment values were 13%
above 2007 peak values (caused by cheap
capital and soaring investor sentiment)
 Existing Class A assets often priced at a
premium to replacement cost (opportunity for
new development or renovation of old assets)
 Apartments are the most favored asset class
due to the direct and immediate benefit that
job growth and new housing formation provide

Probably not OSHA approved ladder & scaffolding
Multi Family 2015 Forecast
Vacancy Rate Ends 3Q 2015 at 3.2%
Slight uptick, but at the low end of our
long term healthy range of 3% to 5%
Average Rents Rise By 2.0% to End 3Q
2015 at $900
$900 Average Rent will be a first for the
Reno-Sparks area, a new benchmark