Several Evenings ago I had the occasion to attend the GCNKAA annual market update and forecast. Below are my takeaways and summary of the presentation from that evening.
National
Labor Shortage hurts Construction Cost
GDP growth to grow 2 to 3 %
Interest rates are low, government doesn’t want to raise rates b/c all the debt they have
10 yr. is forecasted to stay around 2%
Fannie/Freddie- Lended 140B in MF in 2019
Agencies are slated to lend 100B in 2020
Lenders are notice the workforce housing shortage and want to lend to Midwest.
USA MF Industry
Developers have issues with building Workforce Housing, labor shortage and an increase in construction cost.
Vacancy 4.1%
YoY Rent Growth 2.6%
Demographics contribute to the Multifamily Demand
National Demand for MF- 34M Renters have grown to 43M Renter Households the last 10 years
SFH buying went down 68-65%
Delayed marriages have had an impact on rentership
Student Debt 1.5 Trillion and continues to rise
Positive Absorption nationally
Lifestyle choices-Nimble
Challenges for Owners
Rent Growth in Urban Core
Workforce Housing- Rent growth is growing faster than wage growth
Local Cincy Market
Pop growing .5%/year
HH income- On pace with National average
Unemployment-Below National Ave, we are at full employment, labor strained.
Top 15th place to make a movie -75M into the local economy
Occupancy
Cincinnati Occupancy 2019-95.1%
20 year Ave Occupancy in Cincinnati- 92.2%
NKY 96.8% Occupancy- Just wait until Amazon, the market needs more product
Rents- 5.9% Ave Rent Growth in Cincinnati- Workforce Housing value add deals are a major contributor
20 year ave rent growth 2.2%
Strong overall market performance
Rent Growth is out pacing wage growth
Positive Absorption
We are in expansion mode still
Sales: USA 184B Apartments Traded in 2019
Cincy Sales- 556M Traded- 69 transactions over 1M in 2019
Ave Sales Vol last 10 years 325M (last 2 years 525M,526M)
Price Per Unit: Ave 2013,2014,2015 62K/Unit
Ave 2017,2018,2019 72K/Unit
66% Transactions in 2019 were from out of town investors- this is happening throughout the Midwest
Development
Pipeline-Next 3 years 7,200 units delivering
We are not seeing overbuilding
National
Labor Shortage hurts Construction Cost
GDP growth to grow 2 to 3 %
Interest rates are low, government doesn’t want to raise rates b/c all the debt they have
10 yr. is forecasted to stay around 2%
Fannie/Freddie- Lended 140B in MF in 2019
Agencies are slated to lend 100B in 2020
Lenders are notice the workforce housing shortage and want to lend to Midwest.
USA MF Industry
Developers have issues with building Workforce Housing, labor shortage and an increase in construction cost.
Vacancy 4.1%
YoY Rent Growth 2.6%
Demographics contribute to the Multifamily Demand
National Demand for MF- 34M Renters have grown to 43M Renter Households the last 10 years
SFH buying went down 68-65%
Delayed marriages have had an impact on rentership
Student Debt 1.5 Trillion and continues to rise
Positive Absorption nationally
Lifestyle choices-Nimble
Challenges for Owners
Rent Growth in Urban Core
Workforce Housing- Rent growth is growing faster than wage growth
Local Cincy Market
Pop growing .5%/year
HH income- On pace with National average
Unemployment-Below National Ave, we are at full employment, labor strained.
Top 15th place to make a movie -75M into the local economy
Occupancy
Cincinnati Occupancy 2019-95.1%
20 year Ave Occupancy in Cincinnati- 92.2%
NKY 96.8% Occupancy- Just wait until Amazon, the market needs more product
Rents- 5.9% Ave Rent Growth in Cincinnati- Workforce Housing value add deals are a major contributor
20 year ave rent growth 2.2%
Strong overall market performance
Rent Growth is out pacing wage growth
Positive Absorption
We are in expansion mode still
Sales: USA 184B Apartments Traded in 2019
Cincy Sales- 556M Traded- 69 transactions over 1M in 2019
Ave Sales Vol last 10 years 325M (last 2 years 525M,526M)
Price Per Unit: Ave 2013,2014,2015 62K/Unit
Ave 2017,2018,2019 72K/Unit
66% Transactions in 2019 were from out of town investors- this is happening throughout the Midwest
Development
Pipeline-Next 3 years 7,200 units delivering
We are not seeing overbuilding