April 2008 Newsletter
Keeping Things On A High Level
By Joe Greenblatt, CPM®
Fall's fires and drought have been replaced by the rainy season. There are some floods and mudslides in California, but that's expected. And with the elections now going strong, it's an interesting time of year.
Moving into spring, the phrase "cautiously optimistic" comes to mind. Whether due to deeper pockets, more financial sophistication, or increased renters from foreclosure in the home market, the apartment rental community appears to be in fairly good shape.
Our industry's long-term health seems assured as we see relatively low interest rates continuing for the foreseeable future.
This positive news is furthered by the continued expectation of a 20% population growth by 2020 in southern California and Arizona.
True, economic weakness is causing occupancy to drop a bit in some markets. And rising job losses pose a very real threat to weaker players in our regional economy. Some of our residents may even choose to seek greener pastures.
How will this impact your bottom line? Experts throughout California see rent increases of 3-6% in 2008. In Arizona, It's more like 1-3%. As always, vacancy rates will be impacted by local factors like nearby student populations, central city vs. outlying areas, etc.
Overall, low availability, increasing demand, low interest rates, and a growing population seem to spell opportunity and rising prices for the owner willing to take a longer view.
In spite of all the gloom being portrayed in the news about jobs and tight money, Dennis Brown of Phoenix First advises "Good business plans for investing in properties will find ample lenders to lend money on their projects."
Says he: "Commercial properties are excellent investments today, but timing could be key." He adds; "There's always financing available." Our call: Owners with adequate resources should not only weather the storm, but stand to potentially benefit handsomely when this thing turns itself around in a year or two.
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