View
1
Download
0
Category
Preview:
Citation preview
Reviving Multifamily Housing Development: Hurdles and Opportunities
Benjamin Reznik, Jeffer, Mangels, Butler & Marmaro LLP (Moderator)
Jane Blumenfeld, City of Los Angeles, Department of City PlanningRobert J. Gardner, RCLCO
Renata Simril, Forest City Development – West Coast
Multifamily Housing Development: Trends and Opportunities
Robert J. Gardner, Managing Director, RCLCO
2000 – 2009: THE REGIONAL RECAP
Population• Los Angeles County: 10.2 million in 2009, up 9% over 2000 pop. of 9.3 million• Region : 21.7 million, up 13% over the 2000 pop. of 19.2 million
Employment -- December 2009 versus January 2000• Los Angeles County: 3.9 million jobs; now below January 2000 totals• Region: 8.2 million jobs; slightly above January 2000
Per Capita Personal Income (adjusted for inflation)• Los Angeles County: virtually no change since 2000• Region:• Region:
– 2008 per capita income ranged from a high of $49,000 in OC to a low of $28,000 in IE
– 2008 per capita income in Inland Empire now below 2000 levels
March 23, 2010 3
2000 – 2009: THE REGIONAL RECAP
LA CountyRegion
Residential Permits Total Residential Permits: 194,000 735,000, ,Total multifamily permits: 112,000 265,000
58% of total 36% of total
F S l R id ti l P i ( t t h dj t d f i fl ti )For-Sale Residential Prices (net percentage change, adjusted for inflation)All Housing (New and Existing): 27% 4%Condominiums (Existing): 58% 25%
Apartment Rents (net percentage change, adjusted for inflation)12% 8%
March 23, 2010 4
Note: Figures shown for 2000 thru Q3 2009
APARTMENT MARKETS WEAKENED FURTHERRENTAL RATE DECLINES ACCOMPANY RISING VACANCY
10% Downtown
Apartment Vacancy RateSouthern California (by market)
7%
8%
9%
10% Downtown
Westside
San Fernando Valley
South Bay/Long Beach
Inland Empire
%
4%
5%
6% Orange County
0%
1%
2%
3%
March 23, 2010 5
0%2004 2005 2006 2007 2008 2009
FUELING RECOVERY – SOCAL POP EXPANSIONCURRENT POP. OF 19 MILLION TO GROW BY 2+ MILLION
Projected Total Population Growth Rate by Age Southern California, 2010-2020
42,000
442 000
20 - 24
25 29 442,000
376,000
63,000
(211,000)
25 - 29
30 - 34
35 - 39
40 - 44
Single/Roommate Rental Apartments Entry-Level and First Move-Up Condos
(169,000)
28,000
249,000
318,000
45 - 49
50 - 54
55 - 59
60 - 64
`
Move-Down ProductLifestyle Product 318,000
335,000
283,000
132,000
60 64
65 - 69
70 - 74
75 - 79
Lifestyle ProductAge-Targeted/Restricted Product
Senior Living
March 23, 2010 6
38,000
64,000
80 - 84
85+
DEMOGRAPHIC TRENDSGENERATION Y – DEEP DEMAND WITH URBAN TASTES
Generation Born 2010 Age PercentNation U.S. Pop.
Eisenhowers Before 1946 64+ 17% 51M
Baby Boomers 1946 – 1964 46 – 64 27% 78M
Gen X 1965 – 1980 30 – 45 18% 52M
Gen Y (Echo/Millennials) 1981 – 1999 11 – 29 27% 80M
G Z (?) 2000 d Aft 0 10 10% 30M
March 23, 2010 7
Gen Z (?) 2000 and After 0 – 10 10% 30M
DEMOGRAPHIC TRENDS GEN Y AND BOOMERS INFLUENCE ON MULTIFAMILY DEVELOPMENT
Gen Y will be the key demographic to focus on for multifamily over the next 10 years
• Large number entering the rental market starting in Large number entering the rental market starting in 2009 and thereafter
• Becoming first-time homebuyers in 2012 and thereafter
Baby Boomers are larger in numbers than Gen Ys but Baby Boomers are larger in numbers than Gen Ys but reduced turnover with age diminishes demand; major force for upscale condo living
• Have more options (in terms of product, location, and setting) than Gen Y; Multifamily is only one of their setting) than Gen Y; Multifamily is only one of their many options
• Demonstrated interest in condo living – product has to have a marketing hook to heighten interest
March 23, 2010 8
DEMOGRAPHIC TRENDS – URBAN RESHAPINGFAVORABLE IMPLICATIONS FOR MULTIFAMILY
Intown areas and inner suburbs will remain on an upward trajectory
• Diversity, walkability and proximity to 24/7 places will be y, y p y / pkeys to site selection and premiums
• Renters will represent a steady stream of demand
• Gen Y will shift toward homeownership in 2018p
• Product types -- smaller and affordable and should have focus on design over size
Suburbs will need to evolve to remain attractive to Gen Y
• More walkable areas, including new and existing town centers – urbanizing suburban commercial nodes
• Master-planned communities with greater variety of
March 23, 2010 9
product and higher connectivity
NEW APARTMENTS - IN PLACE BEGINNING 2011/12CONSTANT 5% MARKET VACANCY
7 000
8,000
9,000 Los Angeles CountyOrange CountyInland Empire
5,000
6,000
7,000 Ventura County
2,000
3,000
4,000
0
1,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
March 23, 2010 10
SOURCE: Marcus & Millichap (builds on projected 2009 vacancy) ; modified SCAG population projections
PRODUCT OPPORTUNITIESCAPITALIZING ON THE MULTIFAMILY TRENDS
Urban Place-Driven Rental Housing
• Reduced unit sizes, amenity rich
• Higher rent per sq ft ; lower absolute rents• Higher rent per sq. ft.; lower absolute rents
• Broader market appeal
Ultra-Luxury Apartments and Condos
• High-finish, high-service product with views
• Only for 100%, A+ locations, offering 24/7 living
Family-Targeted Condos and Apartments
• Gen X having kids, nearly as urban as Gen Y
• Balance need for more living area with desire to maintain urban lifestyle
• Need improved urban school districts to enable big challenge but big market!
March 23, 2010 11
• Need improved urban school districts to enable – big challenge but big market!
CONTACT US WWW.RCLCO.COM
R b t J G dRobert J. GardnerManaging DirectorLos Angeles, CA310-203-3029bgardner@rclco.com
ATLANTA999 Peachtree Street, Suite 2690Atlanta, GA 30309(404) 365 9501
ORLANDO100 East Pine Street, Suite 302Orlando, FL 32801(407) 515-6592
(404) 365-9501
LOS ANGELES1880 Century Park East, Suite 250Los Angeles, CA 90067
WASHINGTON, DC7200 Wisconsin Avenue, 7th FloorBethesda, MD 20814(301) 907-6600
(310) 914-1800
AUSTIN106 E. Sixth StreetSuite 900
March 23, 2010 12
Suite 900Austin, TX 78701(512) 215-3156 Phone
Multifamily Housing Development: Trends and Opportunities
Jane Blumenfeld, Acting Deputy DirectorLos Angeles Department of City Planning
Annual Immigration Declining in Traditional Major Gateways350
250
300 FLPercentage increase in FLOW of annual arrivals
d t 1980
Source: Dowell Myers, USC
150
200TX
compared to 1980
50
100
150
Miami-DadeU.S.
NY
0
50CA
Los Angeles County
-501980 1985 1990 1995 2000 2005 2010
Percent Change in Senior Ratio to 2030Percentage Increase from 2000
-25 0 25 50 75 100 125 150 175
California
F Change toFresnoSan Joaquin
KernSacramento
Change to2020
Change2020-30
San FranciscoContra Costa
San MateoAlameda
Santa Clara
RiversideSan Bernardino
San DiegoLos Angeles
Source:Dowell MyersUSCVentura
Orange
USC
Ratio of Seniors per 100Working Age (25-64) Residents in the U.S.
Seniors (65+)Per 100Working Age
+67%after2010
SSource:Dowell MyersUSC
Age Profile of Tenants in Recently Built Apartments
Source:Dowell MyersDowell MyersUSC
Transit Oriented Districts
March 23, 2010 18
Density Bonus
Small Lot OrdinanceSmall Lot Ordinance
March 23, 2010 20
New Community Plans
March 23, 2010 21
Development Reformp
• NEW COMMUNITY PLANS REDUCE CASESNEW COMMUNITY PLANS REDUCE CASES
• CODE REFORM STREAMLINE; SIMPLIFY
• EFFICIENT DEPARTMENT EXPEDITE ENTITLEMENTS
• 12 TO 2 REDUCE NUMBER OF DEPARTMENTS
March 23, 2010 22
Cornfield/Arroyo Seco Specific PlanSpecific Plan
March 23, 2010 24
Multifamily Housing Development Trends and Opportunities: A Developer's PerspectiveA Developer s PerspectiveRenata Simril, Senior Vice President
Forest City Development - West CoastForest City Development West Coast
CHALLENGES
Multi‐family Rental rates
March 23, 2010 26
OPPORTUNITIES
March 23, 2010 27
CONTACT US www.forestcity.net
R t Si il S i Vi P id tRenata Simril, Senior Vice PresidentForest City West949 S. Hope StreetLos Angeles, CA 90015213-16-2200renatasimril@forestcity.net
March 23, 2010 28
Recommended