“Editor’s Notebook” With Diana Mosher

How Do You Measure Consumer Confidence?

May 252010

I was chatting on the phone with a publicist earlier this week. After he got done with his editorial pitch, the conversation turned to other topics. He and his wife are thinking about downsizing and also moving to a warmer climate… maybe Florida, where there are condo bargains waiting to be snatched up.

It was just one consumer talking, but his optimism was contagious.

This anecdotal evidence reinforces the May numbers released by the Conference Board Consumer Confidence Index® which now stand at 63.3, up from 57.7 in April. The Present Situation Index increased to 30.2 from 28.2. The Expectations Index improved to 85.3 from 77.4 last month.

According to Lynn Franco, Director of The Conference Board Consumer Research Center, consumer confidence posted its third consecutive monthly gain, and although still weak by historical levels, appears to be gaining some traction. “Consumers’ apprehension about current business conditions and the job market continues to slowly dissipate. Consumers’ expectations, on the other hand, have increased sharply over the past three months, propelling the Expectations Index to pre-recession levels (August 2007, 89.2).” Franco added, “The improvement has been fueled primarily by growing optimism about business and labor market conditions. Income expectations, however, remain downbeat.”

So it must have been the perception of a good deal—or getting a lot for their money—that created a stir in Hawaii where dozens of people reportedly camped out for as long as two days outside the sales office of the Pacifica Honolulu condominium project.

They wanted to be among the first to snatch up a good deal. The project is now being developed by San Diego-based OliverMcMillan which has rebranded the condominium and increased the allure of the property.

This is good news since Pacifica Honolulu had stopped construction in the fall of 2008 after the developer lost his construction loan and stopped funding the project with his own equity. The 27th floor of the concrete tower had been poured, and the exterior glass and interior finishes were partially underway.

What good news are you hearing from your consumers?

Editor’s Note: Catch the Student Housing Wave

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Apr 262010

On March 31, just days after signing his controversial healthcare legislation, President Obama advanced another piece of his domestic agenda. In what he has called “one of the most significant investments in higher education since the G.I. Bill,” the President signed The Health Care and Education Reconciliation Act of 2010, which includes legislation to revamp the federal student loan program. “We will provide the support necessary for you to complete college and meet a new goal,” President Obama pledged to the American public. “By 2020, America will once again have the highest proportion of college graduates in the world.” The new law will help student borrowers manage their loan debt by capping repayments at 10 percent of their discretionary income, so it will be easier for students to repay loans after graduation.

Students reportedly will also benefit from the elimination of the fees paid to private banks for serving as intermediaries in the loan process. The Pell Grant Program will be extended, and the new law will invest $2 billion in community colleges over the next four years to provide education and career training programs to workers eligible for trade adjustment aid after dislocation in their industries. These measures are designed to make higher education more affordable—whether they’ll create additional opportunities for student housing investors, developers and property managers remains to be seen. But, the picture is already rosy for this multifamily niche. According to the Chronicle of Higher Education, this year will see 18.6 million students enroll in college, up slightly from 18.4 million in 2009. Enrollment is expected to increase to 19.2 million by 2013, and 20 million by 2017. And The New York Times reports that applications to elite private colleges rose again this academic year despite economic constraints on many families.

This month’s cover story, “Catch the Student Housing Wave” (page 20 of the magazine), includes a look at the differences between student and market-rate housing. Some investors see student housing rents as virtually guaranteed by parents, so as demand rises along with enrollment, there is the opportunity for excellent financial returns. On the down side, everyone clears out in the summer and the leasing effort can be daunting to newcomers, but consider that student housing tends to rent at a premium. A four-bedroom apartment with four student residents each paying $500 a month can yield as much as 30 percent more than the apartment norm in that region. Donna Preiss, president, the Preiss Company reports, “In the past three months, we have been 93 percent leased for the fall.” The trend of fewer students living on campus also bodes well for the student housing niche. University of Texas, for example, has an enrollment of about 50,000 but has room for only 6,500 students in campus dorms. And when’s the last time you heard of a student housing community in foreclosure? Fans of the student housing niche say it’s nearly recession-proof… knock on wood.

Diana Mosher

Editor-in-Chief
dmosher@multi-housingnews.com

‘Editor’s Notebook’ with Diana Mosher: If You’re Listening to Residents, Shout it Out

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Oct 062009

At the end of August I joined a new demographic when we dropped my oldest son at college for Freshman Orientation. It’s been a difficult transition for his parents and younger brother; but, it’s also an exciting one that we’re all enjoying vicariously, as he experiences his first taste of living away from home.

He likes his roommate, his instructors are brilliant, and the campus is just what he was looking for. We all agree the food is awful, but at least student feedback is encouraged. There’s a bulletin board in the dining hall where students can tack a note with their suggestions to the menu planners (and they do—by the dozens).

There’s really just one thing wrong with this picture…

The school doesn’t offer the option of paying tuition by credit card. Had we not been asleep at the wheel during the selection process, this small but important fact would have been noticed. And, it may have factored into the final decision.

We always put the family’s big-ticket purchases on the credit card. We do this for one very important reason: so that we can accumulate travel points for family vacations. Not being able to do so is a major disappointment—and a source of resentment. Especially since (I was told by the school) many other parents have also called, as I did, to see when this antiquated policy was going to be revisited. Apparently not anytime soon.

The college’s stance drove home for me the critical nature of some of the points raised during MHN’s recent webinar (which you can access here) “Found Money: Learn How To Streamline Financial Operations And Gain Efficiency.” Take-aways included recognizing that residents truly appreciate and value having choices in how they pay their rent, and that automation can dramatically reduce the costs associated with payment processing.

Whether picking a college or choosing an apartment home, the consumer is typically faced with a number of choices.

The apartment community that goes out of its way to make life as pleasant and convenient as possible has a clear advantage. The management team that not only takes the time to check in frequently with its residents, but also implements their suggestions, needs to convey these habits to prospects. Properties that implement suggestions can translate this proactive stance into a powerful marketing message.

Your competitors across the street might not be listening to their residents. If you are, be sure you shout it out.

[Diana Mosher is Editor-in-Chief at MHN. She can be reached at DMosher@multi-housingnews.com]

‘Editor’s Notebook’ with Diana Mosher: What will ‘Smart’ Multifamily Look Like in 2050?

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Sep 282009

Over the weekend I attended the wedding of a high school friend—her second marriage and his first. While she has had other attractive proposals during the 10+ years since her divorce, this suitor was different. He shared her life-long dream of leaving the suburbs for an authentically rustic lifestyle in Vermont.

We all know people who despise the hustle and bustle of city living. Hopefully there will always be a choice that suits them. Demographers predict that by 2050 as much as 70 percent of the earth’s population will be living in cities. Click here for a fanciful look at what some of tomorrow’s “mega cities” might look like.

IBM is just one organization that is looking to shape this trend as it unfolds.

To glimpse what a true smart city might look like, IBM suggests looking at Masdar City, which is being erected near Abu Dhabi, in the United Arab Emirates. Click here for MHN’s most recent coverage of the project. Planners there are working with top scientists, engineers and innovators to create interconnected systems and manage them through an integrated city dashboard.

IBM is aggressively spreading its message and capabilities to consumers. A new report from the IBM Institute for Business Value, “A Vision of Smarter Cities,” argues that cities must use new technologies to “transform their systems to optimize the use of finite resources. As sustainability for cities and the planet becomes ever more important, the question isn’t whether cities will do this; the question is: Which ones are doing it first? And who will do it best?”

There’s not much detail about the role of housing in IBM’s messaging, but multifamily will play a pivotal role in the success of the cities of 2050.

What steps will apartment owners need to take to retrofit existing properties and what “smart” systems will need to be offered in new construction from an operational as well as amenities perspective?

(Diana Mosher is Editor-in-Chief of Multi-Housing News. She can be reached at Diana.Mosher@Nielsen.com)

‘Editor’s Notebook’ with Diana Mosher

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Aug 062009

Delaware Apartment Association Expands Scope of Services

Since the economic crisis began, the apartment industry has looked for a variety of ways to help renters stay in their apartments. But sometimes, despite these efforts, residents do lose their homes. The Delaware Apartment Association wants to help.

As Kevin Wolfgang, President of the Delaware Apartment Association, points out, multifamily professionals are on the front lines of this hardship and they witness the devastating impact on families.

“Renters want to know where they can turn for information and help. Through our own experiences as apartment operators and our involvement in task forces,” says Wolfgang, “we found it incredible that there is no single agency, source or web site where renters in Delaware can go to get all the information, resources and support they need to successfully manage their rental experience.”

With these needs in mind, The Delaware Apartment Association now offers an online Renter Resource Center to help all renters manage the renting process from beginning to end.

The Renter Resource Center provides information ranging from financial assistance to online rental guides, community services to renter’s insurance, tenant’s right guides to employment assistant—and more.

“While the website was created for renters, we are very excited by all the positive feedback we have gotten from the nonprofit agencies, charities, branches of government, and state agencies that have chosen to become our partners,” comments Wolfgang. “If an organization who provides a service to renters wishes to be part of this website, we encourage them to contact us.”

For more details, contact Michelle Carre at DelawareApartmentAssociation@gmail.com.

‘Editor’s Notebook’ with Diana Mosher

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Aug 032009

Coney Island: Balancing Profit with Personality

The Long Island beaches and the Jersey shore are both just a day trip away from my home, but my family sometimes enjoys staying within city limits for our beach outings. We like being able to get on the subway in our neighborhood and be at Rockaway Beach or Coney Island an hour later. Coney Island in particular (my new favorite) possesses a gritty urban vibe that I really like.

As Sebastian Smith explains in his travel report at TheAge.com, “The decline of Coney Island began more than half a century ago as urban crisis, social change and property disputes stymied development along the sprawling city beach.”

Yes, it’s seen better days, but the sense of history lingers on—and the people watching is fantastic. No New York City spot brings together as diverse a group. If you’re looking for local color, this is the place.

Developers like Coney Island too. Especially now that the subway terminal at Stillwell Avenue has undergone a major reconstruction with a terra cotta façade recalling the splendor of the former terminal as well as a roof with arches like those found in classic European train sheds (don’t forget the camera, like I did).

Also noteworthy is the fact that the new subway terminal is the largest renewable-energy enabled mass transit station in the United States. The roof is glazed with 76,000 square feet of photovoltaic panels that generate an annual output of 250,000 kW hours.

The potential for multifamily and hospitality development is staggering given the prices that ocean views would likely fetch. And the retailers will want to be there as well. While redevelopment efforts have been thwarted in the past, last week the City Council did indeed vote to approve zoning changes that will allow the city to reinvent this prime real estate. The rezoning plan includes hotels, restaurants, and four high rises as well as a 12-acre amusement district. The Coney Island Development Corporation has big plans. Click here for more about proposed projects and initiatives.

Now all eyes are on Brooklyn developer Joseph Sitt, who controls a large piece of land that the city needs in order to realize its plan. According to a report by Crain’s New York Business.com, Sitt appears to be close to cutting a deal with the Bloomberg administration.

Opponents say redevelopment will ruin Coney Island’s character. What do you think?

‘Editor’s Notebook’ with Diana Mosher

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Jul 132009

NAA Exhibitors ScentAir and Beaulieu Demonstrate the Role of Scent Management in the Apartment Business

We know that the smell of baking cookies can make a house more attractive to prospective buyers. So why not apply the same principle to rent apartments—or to keep residents from moving elsewhere when their leases are up?

There is a growing body of research on the sense of smell to affect consumer responses.

According to The Scent Marketing Institute, “scent can be highly effective in helping us distinguish
one product from another. It can trigger a memory or desire that
influences a purchase decision. Alternatively, scent can remind us of
pleasant associations, whether that is home, the beach or a meadow.
These associations help to create an environment in which we feel
comfortable… ‘at home.’ In a consumer setting this impacts our decision
to stay longer and consume more.”

Apartment marketers can select a familiar scent to appeal to a target demographic or create a totally signature identity for a portfolio properties. The marketing and branding possibilities are endless.

“The scent branding revolution has begun,” according to ScentAir, which demonstrated its ability to mimic a wide range of diverse scents at the NAA event in Las Vegas. For maximum effectiveness the scent needs to be just above the subconscious level. Delivery systems release fragrance without sprays, aerosols or heated oils.

ScentAir’s multifamily clients include Post Properties, Greystar, and Camden Property Trust.

Your brand’s signature fragrance in the club house is a good thing, but cooking and pets odors that linger after residents have moved out are not. Property owners and managers at the NAA event also stopped by Beaulieu of America for a look at its new Property Management Solutions program and exclusive Magic Fresh carpet treatment.

Magic Fresh helps extend the life of carpet in multifamily settings by reducing and eliminating common household odors like smoke, cooking, and pet odors. It’s a surface-active additive that relies on a proprietary salt-base compound similar to baking soda and is applied to Beaulieu carpet in liquid form as part of the finishing process. The Magic Fresh molecules bond to the carpet fibers and become a permanent part of the finished carpet, according to the manufacturer. Steam cleaning is reported not to reduce the effectiveness of the treatment.

This Magic Fresh carpet treatment was the company’s focus at the show. “The benefits to the multi-housing property manager or owner are huge,” commented Patricia Flavin, Senior VP of Marketing. “This makes carpet an even more practical flooring choice, especially for pet-friendly properties.” Beaulieu conducted Magic Fresh demonstrations for visitors at the booth.

Beaulieu was also spreading the word about its Property Management Solutions program created as part of its new focus on the multffamily sector. This interest is fueled, according to Beaulieu executives, by the increasing demand for apartments as a result of the economy, growing immigrant populations, and changing demographics which are fueling a projected growth in the U.S of $1.1 trillion in new apartment buildings by 2030. Beaulieu says it intends to be a major floor covering brand serving this growing market.

‘Editor’s Notebook’ with Diana Mosher

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Jul 102009

Greywater is Making a ‘Splash’ in Portland, Oregon

It’s hard to ignore the fact that the affordable multi-housing sector frequently leads the way in green initiatives. In Portland, Oregon, for example, the work of Central City Concern (CCC), a non-profit affordable housing provider, has helped direct statewide regulatory change.

Commercial and residential buildings in Oregon are now allowed to use rainwater.

This change will result in significant savings for owners as well as low-income residents. It will also help conserve a precious resource.

As CCC points out, the greatest challenge of a truly sustainable building is… water independence. Its groundbreaking work has helped put Oregon in the top tier nationally among a handful of states with progressive
water regulations.

A water- independent building harvests rainwater, and all of its
wastewater (greywater and also blackwater) for reuse. This eliminates both
the use of municipally supplied water and the outflow of stormwater and sewage
off the property.

CCC’s report, “Achieving Water Independence in Buildings,” explains water reuse
strategies and what current regulations allow. It was instrumental in seeking rainwater
and greywater allowances in Oregon
and it may offer guidance for multi-housing developers in other states.

‘Editor’s Notebook’ with Diana Mosher: Countdown to San Diego

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May 202009

Spotlight on Operations Track

A recent assessment by the Wharton School shows a dramatic surge in economic losses from natural catastrophes worldwide, up from just over $50 billion in the 1950s to almost $800 billion in the 1990s.

William Gray, a forecaster and the head of the Tropical Meteorology Project at Colorado State University, warns that the probability of a major hurricane striking the U.S. Coast is estimated at 74 percent, compared with the average of 52 percent over the past century.

Recently MHN talked to Michael Payton, senior vice president of CAS Partners Insurance Services, the parent company of apartment manager Riverstone Residential, and others about how to handle the unprecedented risks faced by apartment companies today. Click here to read “Weathering the Risks.”

Severe weather conditions brought on by climate change are cause for concern. But just as worrying to property managers and property owners are the effects of the economic crisis on the resident population.

What impact has the changing economy had on bad debt and overall credit risk? Don’t find out the hard way. Join us in San Diego on Thursday, October 1 for “Screening: Best Practices Ensure Maximum Occupancy and Minimal Bad Debt.”

Click here to see the full Multi-Housing World 2009 Leadership Summit conference schedule. Registration is now open.

A panel of multifamily experts, including Mark Van Tilburg, director of operations, Archon Residential, will discuss the most effective screening strategies—and how they can be optimized to ensure maximum occupancy and minimal bad debt. This session will also explore how credit score trends, rental payment history and criminal database changes impact rental decisions.

Van Tilburg oversees all aspects of corporate operations at Archon Residential, including acquisition due diligence, ancillary revenues, utility programs, energy management, project management, systems implementation, national purchasing and OneSite systems.

David Carner, president LeasingDesk, RealPage Inc. will moderate the panel.

See you in San Diego between September 29-October 1.

Please click here for a video interview with Jay Harris of First Advantage SafeRent about the results of the first quarter 2009 Multifamily Applicant Risk Index.

(Diana Mosher can be contacted at Diana.Mosher@nielsen.com)

‘Editor’s Notebook’ with Diana Mosher: Phoenix Light Rail Opens up New Possibilities

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May 112009

The next time you’re in Phoenix, I highly recommend taking a ride on the newly opened light rail. Whether your niche involves marketing apartment communities, financing them or building them (or, like me, reporting on them) I’d say checking out public transportation options from time to time is a no-brainer. It’s interesting to see the backbone of future transit-oriented development in action.

I didn’t intend to research the Metro Light Rail ($2.50 for a day pass) while in Phoenix for the NAA’s green conference, but it turned out that my hotel was much closer to the airport than to downtown. Also, I thought the train would save me lots of time—it did, but first I had to get myself to the light rail. This meant catching a ride with the hotel shuttle, and aligning myself to its schedule.

Needless to say, I just took an expensive taxi back from the convention center that evening. As the Urban Land Institute points out in its “10 principles for Successful Development Around Transit,” TOD is a great idea, but it can be challenging to get people to ride transit.

Overall, my experience drove home the reality that while some cities are made for driving, it’s also true that many more of us could develop an appetite for public transportation if it’s fast, inexpensive, and stops at ALL the places we need to go.

The Metro Light Rail describes itself as “a great way to get to work, school, shopping and events in Phoenix, Tempe and Mesa.”

The city of Phoenix has initiated a Station Area Planning Program in support of transit-oriented development (TOD) around light rail stations. Local residents, business owners, and community groups are encouraged to improve the connectivity of their neighborhood’s light rail system by becoming involved. They’ve been invited to submit plans to identify opportunities for new development.

However, as Eugene Gilligan, senior editor, Commercial Property News, reports, “In the near term, development along the light rail corridor is likely to be subdued due to the credit crisis and the economic recession. But there’s a silver lining. The slowdown in the development cycle,” will mean more time that can be used for planning purposes. Click here to read his story, “As Phoenix Light Rail Debuts, Will T.O.D. Get on Track?”

(Diana Mosher is Editor in Chief of MHN. You can contact her at Diana.Mosher@nielsen.com).