Fast Facts
Considering New England? Here’s what you need to know:
1– Population: 13.9 million (2000 U.S. Census)
2– States: Connecticut, New Hampshire, Maine, Vermont, Massachusetts, Rhode Island
3– Unemployment: 4.7% (as of September 2006)
Notable: Boston’s subway was the first one built in the Western Hemisphere … Mount Washington (elevation 6,288 feet) in New Hampshire stands as the highest summit east of the Rocky Mountains … The world’s first nuclear-powered submarine, the USS Nautilus, was launched at Groton, Conn., in 1954.
–Steve Witten is a senior director of Marcus & Millichap’s National Multi Housing Group in New Haven, Conn.
Location Counts
Apartment and condo residents want short commutes.
Urban living is as hot ever, and we’ve got the numbers to prove it: About half of all households moving into apartments and condos with five or more units chose a central-city location, according to a NAHB study of data recently released from the 2005 American Housing Survey.
So what exactly draws multifamily residents to the city? A shorter commute tops the list. Approximately 40 percent of both renters and condo owners surveyed said they selected their neighborhood to be close to jobs, compared to just 24.5 percent of single-family residents. Next on the list: aesthetics. Multifamily residents value the looks and design of their neighborhood.
Interestingly, the percentage of households moving to cities has been fairly stable since 1997, which may be disappointing to infill developers hoping for increased activity in inner city real estate markets, says Paul Emrath, NAHB’s assistant staff vice president of housing policy research. But developers don’t seem to be having trouble filling their urban units.
“We’ll look at any infill location we can find,” says Tony Rossi Sr., president of Chicago-based RMK Management. “People prefer these areas, and they will pay a bigger price just to get that superior location.” And if gas prices stay high, you can bet that shorter commutes will be at the top of everyone’s holiday wish list.
–Rachel Z. Azoff
Stat to Watch
Conversion Crash
Once-popular condo conversions fall out of favor. The condominium conversion craze hit the skids as conversion sales fell to $248 million in September 2006 from a monthly peak of more than $4 billion a year earlier, according to data from Real Capital Analytics, a real estate research firm based in New York.
Multifamily executives weren’t surprised. “We had some projects that started as apartments and got switched to condos, and then they ended up as apartments again,” says Kevin Andrade, senior managing director of Trammell Crow Residential in Southern California.
Analysts say the multifamily market is strong enough to absorb the market shift. “A lot of these converters are able to resell to someone who wants to hold it as an apartment complex,” says Dan Fasulo, director of market analysis, at Real Capital Analytics. “I see no significant losses.”
Fasulo says that’s because there’s more information available to the industry now. “The markets were pretty much able to step on the brakes very rapidly this cycle,” he says. “Investors saw what was happening–banks, developers. There’s more information for making decisions.”
In fact, Andrade says the switch hasn’t hurt Trammell Crow. “We’re able to move quickly between rental and condo and land flipping and whatever is profitable at the moment.”
–Nichola Zaklan