Industry Trends

Michael Shadeed, director for Franklin Street Insurance Services of Atlanta, shares his insight on how multifamily, office, industrial and retail property owners can work with insurers to expedite their Hurricane Florence policy claims, as well as how the loss damages will impact commercial property insurance premiums.

1. How is Florence’s impact on commercial real estate different from other major storms like Irma or Maria?  The impact was driven mainly by severe flooding, which brings bacteria and rotting exposure to commercial real estate assets.  With the consistency of storms over the last few years, Florence will have a profound effect on the federal government’s National Flood Insurance Program although it’s still too early to tell how rates will change.   

In the last five years, New York, Florida, Texas, Louisiana, South Carolina, and North Carolina have all suffered billions in loss damages from individual events, all of which were substantially larger than the total amount of premiums collected for the program.  The government continues to bear the brunt of these losses. The program is $20.5 billion in debt and losing money at a considerable rate.

The U.S. Department of Energy (DOE) and the Department of Housing and Urban Development (HUD) recognized Jersey City Housing Authority (JCHA) as the nation's first public housing authority to achieve its 20 percent energy savings goal as a partner in the Better Buildings Challenge. JCHA actually exceeded its goal, reaching 26 percent savings in only six years.

NEW YORK - Inc. magazine has revealed that LandSouth Construction, a Jacksonville-based general contractor specializing in multifamily, senior living and mixed-use development is on its 37th annual Inc. 5000, the most prestigious ranking of the nation’s fastest-growing private companies.

CFAA urges Senate to ban home growing

Yesterday, at the Senate Committee on Legal and Constitutional Affairs, CFAA President John Dickie urged Senators to “to prohibit all cannabis growing in all dwellings.”

South Florida private direct lender projected to generate $400 million in deals this year

According to the Washington Post, the U.S. Department of Housing and Urban Development is considering removing the words “free from discrimination” from its mission statement, as it reduces from 63 words to 23 words.  According to a memo sent The Huffington Post, the memo was being updated “in an effort to align HUD’s mission with the Secretary’s priorities and that of the Administration.”

Statement from the National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA) in response to President Trump’s State of the Union address:

Apartment market conditions continued to soften according to results from the January National Multifamily Housing Council’s (NMHC) Quarterly Survey of Apartment Market Conditions. The Market Tightness (36), Sales Volume (40) and Debt Financing (38) Indexes landed below the breakeven level of 50, while the Equity Financing Index increased to 58. In addition, the survey found that half of respondents expect green financing to increase in 2018.

“The latest survey results underscored the prevailing view at our recent Apartment Strategies Conference that we are late in the current cycle,” said NMHC Chief Economist Mark Obrinsky. “While some seasonality comes into play, the Market Tightness Index was a little below its long-term January average, indicating market conditions are slightly weaker than normal. Demand for apartments overall remains strong and equity capital still looks favorably on the apartment sector. However, many owners are satisfied with their holdings and more inclined to stand pat.”

New research released today by Freddie Mac indicates that affordability and changing attitudes towards renting are playing a significant role in the growing demand for rental housing. The study finds that an increasing number of America's renters are satisfied with their living situation and consider it the most affordable option for the foreseeable future. More renters believe this despite their view that housing prices -- both to purchase and rent -- continue to rise and supply continues to tighten.

Market conditions for the apartment industry remained soft in the National Multifamily Housing Council’s (NMHC) October Quarterly Survey of Apartment Market Conditions. While the Market Tightness (37), Sales Volume (45) and Equity Finance (46) Indexes remained below the breakeven level of 50 – with the Debt Financing Index (51) edging just above 50 – there was little change compared with three months earlier.

“The apartment market is headed into a seasonally slow leasing period with new deliveries easing upward pressure on rents and occupancy rates in many markets around the country,” said NMHC Chief Economist Mark Obrinsky. “The big increase in multifamily starts in 2015 and 2016 is finally filtering through to the marketplace on a broad basis.”

“Leasing activity appears to have picked up in Texas and Florida in the aftermath of Hurricanes Harvey and Irma. Some respondents also noted that fires on the West Coast may be pushing occupancy rates up,” said Obrinsky. “Elsewhere, new deliveries are leading to concessions becoming more commonplace.”

The Market Tightness Index decreased from 42 to 37, marking the eighth consecutive quarter of overall declining conditions. Forty percent of respondents reported looser conditions than three months prior, compared to just 14 percent who reported tighter conditions.

The Sales Volume Index declined two points to 45. Over a quarter (28 percent) of respondents indicated lower sales volume compared to the previous three months, compared to 19 percent who reported higher volume over the past quarter.

The Equity Financing Index remained unchanged at 46, with almost two-thirds (62 percent) reporting unchanged conditions. This marks the eighth consecutive quarter of declining conditions.

The Debt Financing Index increased from 47 to 51, crossing the breakeven level of 50 for the first time since July 2016, indicating improving overall conditions. While most respondents (62 percent) reported unchanged conditions, 14 percent believed that conditions for debt financing had become more favorable. Conversely, 12 percent of respondents reported worse conditions for debt financing compared to three months prior.

About the Survey:

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