2011: Is It Getting Better?

2011: Is It Getting Better? My Answer to The National Apartment Association's Question
By: Nicholas A. Dunlap, CPM


Whether you are an investor, owner/operator, manager or broker, the 2011 forecast for the apartment industry is something to smile about. Depending on your market, property values are likely trending upward toward more attractive sales prices, interest rates have decreased and held steady & both new and old players alike are abound in the marketplace creating a surge in energy we have not seen in years. Consider the aforementioned along with the fact that rents are increasing, move-in specials disappearing and we have the perfect climate for investment and expansion. The better question for 2011 is not is it getting better, but how much better will it get?

An Investor's Thoughts On the Census

An Investor's Thoughts On the Census
By: Nicholas A. Dunlap, CPM


Property owners should marvel over the recently released 2010 US Census data. The United States now has over 308,745,538 residents. Additionally, the South and West were the strongest geographical areas in terms of overall percentage growth at 14.3% and 13.8% since 2000. Texas has grown 20.4% since 2000. California has grown 10% in the same time. Arizona and Nevada were also strong at 24% & 35% respectively, although they have trended downward from previous highs in recent years. The data can be viewed and interpreted here: http://2010.census.gov/2010census/data/.

With the strong population growth in the Southwest, investors should next look to the local markets that have added or will add the most jobs in the short-term. While this information was not monitored by the Census, I discussed this in my December 14th blog here: Property Lines: The Texas Two Step Texas is especially looking to attract California businesses. Additionally, Texas' statewide unemployment rate is projected to drop from near 8% to 6% by the end of 2011, with market-specific unemployment rates lower in select primary markets.

If you are considering investing in commercial real estate or expanding your investment portfolio to include positive cash flow, tax sheltered investments, please contact me directly at: ndunlap@dpgre.com to discuss how we can make your new year a fruitful one.

The Age of Value

The Age of Value
By: Nicholas A. Dunlap, CPM


As perplexing as it may seem, it took the multifamily industry a great while to adapt to the ways of the American consumer. It was as if landlords felt that their product was different than other commodities that are purchased and sold. Although housing provides warmth, comfort and a privacy non-existent in many other items available for purchase, the physical, mental and emotional acts of buying and selling are identical whether you are looking for the best move-in special or the slickest flat screen television you can find.

Americans want value. With the recession behind us, current retail sales statistics show us that Americans are again spending money on high-end, big ticket items that they perceive to represent value. We are now in the age of value. Smart landlords are playing to the retail consumer in everyone.

View some of the recent sales data here: http://mashable.com/2010/11/27/black-friday-retail/

The Texas Two Step

The Texas Two-Step
By: Nicholas A. Dunlap, CPM


Disgruntled public employees in California must love the headline in today’s Orange County Register. Often behind the times and trends of Business and Real Estate, the Register today proclaimed that Texas has begun to “Lasso California Businesses”. Essentially what the state of Texas has begun to do is send out invitational letters to businesses encouraging them to explore the pro-business climate that Texas has to offer. Yes, public employees and civil servants, that means that the tax dollars and activity that pays your salary is leaving this unionized, California king-sized pension mess of a state and heading southwest. There’s a lot to be said about a balanced budget, no state income tax and the fact that are actually thousands of jobs being added each month. Current and future population and job growth is paramount to commercial real estate investors who are looking for returns unsatisfied in primary California markets.

UCLA’s Anderson School of Business announced last week although Texas might have the appeal, California performed better than much of the nation this year, seeing a 2.7% rise in personal income and projecting a 3% increase next year. And while California’s unemployment levels are projected to drop from 10.9% to around or under 10%, over 5 million jobs in the construction, manufacturing and retail industries that were lost are unlikely to return. For those keeping score at home. Texas unemployment rate is 7.9% and is projected to drop to 6% by late 2011 due to the number of technology, manufacturing and engineering jobs being added.

To read the Register’s bit on Texas, click here:
http://jan.ocregister.com/2010/12/14/texas-trying-to-lasso-calif-businesses/51006/

To read the statistics from UCLA Anderson’s Release, click here:
http://www.latimes.com/business/la-fi-1207-econ-forecast-20101207,0,226435.story

The Blind Side

The Blind Side
By: Nicholas A. Dunlap, CPM


Clinton had 35%, Bush and Reagan over 50%, now at just 10%, Barack Obama has become the US President with the least private sector experience in his cabinet since JFK had 28% in 1963. Clearly, these significant differences also illustrate the growing ineptitude of the Government towards fiscal and economic policies relating to businesses both big and small. California will soon realize a similar crisis at the State level with Jerry Brown at the helm. In order for both Jerry and Barack to proceed with the handouts, they must first maintain and promote an environment conducive to business. Yes, this means tax breaks and credits. Yes, this means alluring and enticing businesses to house and operate their daily operations within a specific geographic area on a local or national basis.

Review the stats here: http://washingtonexaminer.com/blogs/beltway-confidential/less-10-percent-obama-cabinet-has-private-sector-experience

When Obama Gives You Lemons, Make Lemonade

When Obama Gives You Lemons, Make Lemonade
By: Nicholas A. Dunlap, CPM


Newspaper headlines can almost be read as sarcastic when they proclaim that mortgage rates have reached 6 month highs at a whopping 4.87%. However, the slight increase represents a .5% bump in just two weeks. While the Federal Reserve appears to understand the dire straits of our country’s economic climate, it is imperative they continue to act accordingly. In this case, the appropriate response is to, in the words of John Lennon: “let it be”. Leave rates low, make permanent the first-time homebuyer tax credits and keep Obama’s meddling in financial policy to a minimum. Yes, this also means continuing to allow the deduction of Mortgage Interest for homeowners/taxpayers. Nightmarish headlines in the Washington Post announced that the need to cut the deficit will “transform home financing”. That’s great, isn’t it?

So while I am certainly not panicked, I think that if you have recently tested the waters and considered refinancing or repositioning the debt on your property, now would be a good time to lock in attractive rates for the long-term. And while you’re at it, take some of that equity and put it back into some of the better-performing product types and marketplaces. There are great values out there. Transactions equal activity in the marketplace which equals jobs, growth and expansion. It’s an easy cycle to follow. Keep things churning!

The Hollywood Farmer's Market Fiasco

The Hollywood Farmer's Market Fiasco (From a Property Owner's Point of View)By: Nicholas A. Dunlap, CPM


I love a farmer's market as much as the next guy. In fact, I frequent the two here in Fullerton and try to support the small businesses who participate in these weekly events as much as possible. But what right do a City and it's residents have to restrict a property owner access to his/her property simply because they have been allowed to for nearly 20 years? I would hope you'll answer none, but that's not the case if you have been following what is going on in Hollywood.

The City of Los Angeles and the hundreds of people who have begun to protest the private property owner's rights to access their property during a certain time so that the Farmer's Market can continue to be held in the same location feel that the property owner (in this case a Film School) should not have the right to relinquish the courtesy that had been extended to the public for nearly two decades.

Hopefully the City of Los Angeles will realize that while it is the public who enjoys the event, it is the private property owner and his/her taxes and fees that foot the bill for the public services that allow these events to go on. The Market will go on, but hopefully in a different location and not at the expense of the property owner.