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CFO Survey Preview: Cap Rates to Rise Next Year
Lindsay Machak / MULTIFAMILY EXECUTIVE / July 17, 2013
Jay Hiemenz is hopeful that the first markets into the recession are now, finally, making their way out.
The Alliance Residential CFO is keeping a close eye on specific markets that may have room for growth. Phoenix-based Alliance is using a green movement to attract potential residents while employing aggressive research and development and marketing tools to keep NOI in the black.
The company, which owns and operates market rate, affordable and student housing units, has seen a wide spectrum of improvement across the board with markets that were hit hardest by the recession making a comeback behind the hot primary metro areas.
Atlanta and Phoenix have been on Hiemenz’s radar as improving markets to watch this year. He expects them to continue a strong recovery throughout the second part of the year.
Atlanta is starting to gain momentum while Phoenix is seeing positives in both job growth and rent growth.
“It’s almost like the ones that have improved over the last year haven’t bounced back all the way yet,” Hiemenz said.
Residents in the 24 to 35 year-old age range are fueling the demand for rental housing, as the improving employment market creates opportunities for Millenials to venture out into the housing market. However, they’re not eager to buy homes since the job market is fluid and many of the recession’s graduates are transient, creating the perfect driving factor for an even better 2014 than 2013.
“The unemployment in that key renter segment is down,” Hiemenz said. “That’s creating demand that really wasn’t in the market in the last few years.”
There are still markets that are playing catch up and working toward a more stable economy. Vegas is one key market where Hiemenz has pulled the reins in a bit tighter as the local market struggles. However, completely pulling out of the market isn’t an option since there are still good opportunities to do projects that don’t involve bringing new units online, he said.