Background/Summary of Ammonia Investigations in the Sacramento
Sacramento Multifamily Summary · •Local Market Cycle •Forecast of Key Indicators •Apartment...
Transcript of Sacramento Multifamily Summary · •Local Market Cycle •Forecast of Key Indicators •Apartment...
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Sacramento Multifamily Summary
ADVISORY TEAMApartment
PRESENTED BY:
John Shaffer Brian Nelson Nicole Parrish
(916) 563-3035 (916) 830-2576 (916) [email protected] [email protected] [email protected]
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Points of Discussion
• MSA Market Fundamentals
• Transaction Volume and Pricing Trends
• New Construction Activity
• Rent Control Update
• Local Market Cycle
• Forecast of Key Indicators
• Apartment Advisory Team of Colliers Sacramento
Sacramento Multifamily Summary
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Sacramento MSA Q3 Market Fundamentals
YOY Change from Q3 2018 to Q3 2019
Overall Market Occupancy …………….…… 96.7% 96.9%
Average Market Rent ……………..………… $1,419 $1,495
Total Net Absorption …………..……………. 832 558
Total Unit Completions ……………………... 530 402
Total M-F Permits Issued …………………... 488 452
Units Under Construction …………………. 3,717 3,305
2018 2019
Source: MPF (Includes Properties of 5+ units in Sacramento, Placer, El Dorado, and Yolo Counties)
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Sacramento MSA Rental Rate Summary
Dec Sep
Source: MPF (Includes Properties of 5+ units in Sacramento, Placer, El Dorado, and Yolo Counties)
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Sacramento MSA Occupancy Summary
Dec
Average Market
Rent
Sep
Source: MPF (Includes Properties of 5+ Units in Sacramento, Placer, El Dorado, and Yolo Counties)
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Sacramento MSA Employment Analysis
Source: Bureau of Labor Statistics (Includes Sacramento, Placer, El Dorado, and Yolo Counties)
2008 2012
MSA employment peaked in June 2007, and
then proceeded to bottom in January 2011
after losing 110,000 jobs. The pre-recession
level was once again reached in October
2015, almost 5 years after bottoming.
2009 2010 2011 2013 2014 2015 2016 2017 2018 2019
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Sacramento MSA Employment Analysis
Source: Bureau of Labor Statistics (Includes Sacramento, Placer, El Dorado, and Yolo Counties)
2018 2019
November 2018 Employment Level: 1,017,000
November 2019 Employment Level: 1,033,500
Jobs Gained: 16,500 (1.6% Increase in 12 Mo.)
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Points of Discussion
• MSA Market Fundamentals
• Transaction Volume and Pricing Trends
• New Construction Activity
• Rent Control in the Region
• Local Market Cycle
• Forecast of Key Indicators
• Apartment Advisory Team of Colliers Sacramento
Sacramento Multifamily Summary
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Transaction Volume and Pricing Trends
Source: CoStar Sales Comparable for properties 10 units or greater in the 4-county region
104
Transactions
7,739 Units
$1.106 B $1.214 B
135
Transactions
9,228 Units
2019 2018
Sacramento MSA Sales Activity Comparison
Avg. Price/Unit
$142,984
Avg. Price/Unit
$131,547
Jan - SeptJan - Sept
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Interest Rate – Cap Rate Relationship
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Points of Discussion
• MSA Market Fundamentals
• Transaction Volume and Pricing Trends
• New Construction Activity
• Rent Control Update
• Local Market Cycle
• Forecast of Key Indicators
• Apartment Advisory Team of Colliers Sacramento
Sacramento Multifamily Summary
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Sacramento MSA Multifamily Construction
Source: CoStar, MPF
Q3 2019 Total:
3,305 Units
Note: Totals above based on multifamily construction in four-county Sacramento region.
4,375 units
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Points of Discussion
• MSA Market Fundamentals
• Transaction Volume and Pricing Trends
• New Construction Activity
• Rent Control Update
• Local Market Cycle
• Forecast of Key Indicators
• Apartment Advisory Team of Colliers Sacramento
Sacramento Multifamily Summary
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Rent Control Update
Sacramento Update
• AB-1482 Tenant Protection Act of 2019 is now in effect statewide
as of January 1, 2020.
• Sacramento City Tenant Protection and Relief Act went into
effect September 13, 2019.
• The City and State are now consistent on rental rate increase
limitations. Regarding just-cause protections, the City Ordinance
applies to properties in the City, and the State Law applies to all
other properties in the MSA, that are subject to the protections.
• The California Rent Control Initiative may appear on the ballot as
an initiated state statue on November 3, 2020. This is a “second
bite at the apple” to repeal the Costa-Hawkins Act.
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Sacramento MSA Rental Rate Growth
Dec Sep
Source: MPF (Includes Properties of 5+ units in Sacramento, Placer, El Dorado, and Yolo Counties)
Actual average rent growth rate is 5.4%
Market dynamics
do work. They will
correct themselves
if left alone.
Allowable rent growth rate per rent control is 8.34%
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Rent Control Update
Sacramento Update
• AAT Colliers Sacramento published “Rent Control 101” in
June 2017, and has now updated the white paper to reflect
changes in this issue since that date.
Please email the following for a copy:
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Points of Discussion
• MSA Market Fundamentals
• Transaction Volume and Pricing Trends
• New Construction Activity
• Rent Control Update
• Local Market Cycle
• Forecast of Key Indicators
• Apartment Advisory Team of Colliers Sacramento
Sacramento Multifamily Summary
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Sacramento MSA Multifamily Cycle
Adjusted Sacramento
Apartment Cycle Line
Sacramento TodayMarket Statistics
2017 Rent Growth: 7.8%
2018 Rent Growth: 3.8%
2019 Rent Growth: 5.4%
5-YR Rent Growth: 7.6%
Q3 2016 Vacancy: 3.4%
Q3 2017 Vacancy: 3.5%
Q3 2018 Vacancy: 3.3%
Q3 2019 Vacancy: 3.1%
(Supply constraints will result in
an extended market cycle peak
period.)
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Points of Discussion
• MSA Market Fundamentals
• Transaction Volume and Pricing Trends
• New Construction Activity
• Rent Control in the Region
• Local Market Cycle
• Forecast of Key Indicators
• Apartment Advisory Team of Colliers Sacramento
Sacramento Multifamily Summary
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Sacramento MSA Forecast of Key Indicators
Next 3 Months Next 12 Months
Employment Growth N/A 2.00%
New Apt. Unit Supply 520 1,727
Apt. Demand (absorption) Neutral Negative
Occupancy Rate 96.8% 96.5%
Rent Growth 1.1% 5.4%
Rent Concessions Insignificant Insignificant
Apt. Sales Volume Strong Strong
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Sacramento MSA Rental Rate Forecast
Dec Sep
Source: MPF (Includes Properties of 5+ units in Sacramento, Placer, El Dorado, and Yolo Counties)
Q4 Q2 Q3Q1
FORECAST
Rents forecast to increase 1.1% over the
next 3 months, and increase 5.4% over
the next 12 months.
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Sacramento MSA Occupancy Forecast
Dec
Average Market
Rent
Sep
Source: MPF (Includes Properties of 5+ Units in Sacramento, Placer, El Dorado, and Yolo Counties)
Q4 Q1 Q2 Q3
Occupancy forecast to decrease 10
basis points by end of 2019, and slightly
decline 40 basis points over the next 12
months.
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Sacramento MSA Employment Forecast
Source: University Of The Pacific and Bureau of Labor Statistics
(Actual)
(1.7%) (2.0%) (1.2%)
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Sacramento MSA Forecast Results
Q3 2019 Forecast Q3 2019 Actual
Employment Growth 1.80% 1.90%
New Apt. Unit Supply 2,200 1,575
Occupancy Rate 96.2% 96.9%
Average Rent $1,487 $1,495
Apt. Sales Volume Strong Strong
($1.7B)
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Market Intelligence Campaign
• Sale Transactions
• Properties Available for Sale
• Quarterly Report
• Forecast of Various Apartment Indicators
Apartment Advisory Team of Colliers Sacramento
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Apartment Advisory Team of Colliers Sacramento