Rental Rock 'em, Sock 'em

Rental Rock ‘em, Sock ‘em

By: Nicholas A. Dunlap, CPM

According to this morning’s OC Register, Apartment rents are now hitting bottom. Funny, they said the same thing a few months ago. Truth is, rents at B and C Class Properties in Orange County are now on the rise, up from where they were last year at this time. A Class properties are a different story. The influx of high-end development and failed condo projects in Anaheim, Orange and a handful of South Coast Metro locations that are now operated as rentals have increased competition amongst landlords. With that, the bare-knuckle, rock ‘em, sock ‘em type combat remains in place.

Rock ‘em, sock ‘em is the perfect parallel to the buffoonery that occurs at the helm of some of these properties. To start with, a barrage of soft, short and uneffective punches, the equivalent to a dismal jab would be reflected in the initial offering of 2007 prices in the 2010 market. Then, the jabbing would escalate into a more serious exchange of powerful jolts. These punches, more aggressive in nature, are more serious and effective, liken them to the offering of 2 or 3 months free on a 2 year lease. Yes. That’s correct. Commercial lease terms and incentives finding their way into Residential operations. This is when the robots really begin to rattle. Right now, in A Class multi-family, the robots are rattling. Not just in Orange County, but nationwide.

And thus, we stand and observe: waiting for heads to pop off.

Thoughts On the Newest 2011 Economic Outlook

Thoughts On the Newest 2011 Economic Outlook
By: Nicholas A. Dunlap, CPM


Orange County will lead the Southern California economy out of the recession next year, at least according to an outlook published yesterday by the Los Angeles Economic Development Corporation. Job losses, though down, will continue through the end of the year and firms small to large will generally refrain from hiring through the end of the year unless absolutely necessary. 2011 is officially predicted by UCLA Anderson, CSUF Mihaylo and now: The LAEDC, as a turning point in our recessionary slump. Yes, 2011 is predicted by The LAEDC to welcome the addition of 18,400 jobs, up 1.3% from the previous 3 years. Tourism, manufacturing and infrastructure related jobs will generate the most positions.

For landlords, this could mean an increase in occupancy rates at office, multi-family, industrial and retail properties; as companies grow and need more space and as people begin to earn more money and decide to pair down from doubling up. With these new jobs, unemployment figures will inch downward from 9.5% countywide to 8.3% by year’s end 2011. Will this be a strong enough decline to impact property owners? We shall see.

Of course, none of this growth will occur unless the statewide economic climate is more conducive to owning and operating a business. November will be key in restoring order to the state. Jerry Brown’s track record of destroying and doing away with tax breaks and benefits for businesses is not what California needs now or ever for that matter. Having a business-minded Governor such as Meg Whitman could be all the difference that we Californians need to succeed.

Indecisiveness Shared Amongst Multifamily Investors

Indecisiveness Shared Amongst Multifamily Investors
By: Nicholas A. Dunlap, CPM


Shared sentiments in recent studies published by The Wall Street Journal and Apartment Finance Magazine demonstrate high levels of indecisiveness amongst multifamily investors. Interest rates are down, as are property values but so is transaction volume. Then what gives? Fear of a double-dip recession leads some investors to believe that although we are seeing some of the best investment fundamentals in years, there may still be another hit coming.

That hit, depending on how significant, could have a large impact on an investor’s going-in cash flow. Maneuvering an asset through turbulent economic times is certainly a skill, however, the actual numbers at the time of acquisition are paramount to the property’s potential for success. So while the current climate might be the best in years, hopes that there is better weather around the corner is keeping a number of big players out of the market.