North County Apartment Market. Joshua Ohl Senior Market Analyst

Transcription

1 North County Apartment Market Joshua Ohl Senior Market Analyst

2 Agenda: FUNDAMENTALS CONSTRUCTION RENTS CAPITAL MARKETS

3 Orange County Historical Employment Growth 6% Employment Growth (Y/Y) 4% 2% 0% (2%) (4%) (6%) (8%) (10%) * Orange County United States Sources: Moody's Analytics; CoStar Market Analytics *Year to Date

4 Total Nonagricultural Office-Using Business Services Trade Leisure and Hospitality Education/Health Services Government Manufacturing Financial Activities Construction Information Orange County Job Growth By Employment Sector* 140% 120% 100% 80% 60% Employment As A % Of Prerecession Peak 110% 104% 100% 94% 121% 123% 100% 71% Employment Growth (Y/Y) 92% 84% 59% 5% 4% 3% 2% 40% 1% 20% 0% 0% (1%) Employment As A % Of Prerecession Peak Employment Growth Last 12 Months Sources: Moody's Analytics; CoStar Market Analytics *Employment sectors ordered by total number of workers.

5 Irvine South County Huntington Beach/Seal Beach Anaheim Central OC West of I-5 North County Tustin Newport Beach Central OC East of I-5 Costa Mesa Orange County Median Household Income 6,000 Number of Units 5,000 4,000 3,000 2,000 1,000 0 New Supply Since 2013

6 Apartment Fundamentals 10.0 Demand & Supply (000s Units) Vacancy 8.0% % % % % % % % * 0.0% Supply Change Demand Change Vacancy National Vacancy *Year to Date

7 North County Submarket Fundamentals 600 Annual Change in Demand & Supply Vacancy & Vacancy Average 7.0% % % 0 4.0% 3.0% (200) 2.0% (400) 1.0% (600) 8% 6% 4% 2% 0% (2%) (4%) (6%) (8%) * Annual Rent Growth 6.9% 6.3% 4.7% 4.3% 4.8% 4.6% 3.4% 2.8% 1.9% 0.9% -1.1% -6.6% * *Year to Date 0.0%

8 SFR Housing Starts And Apt Deliveries vs Household Growth 16,000 SFR Starts & Apt Deliveries vs Household Growth 14,000 12,000 10,000 8,000 6,000 4,000 2, Housing Starts Household Growth Apartments Growth Source: Moody's Analytics; CoStar Market Analytics As of 17Q3

9 Orange County Cumulative Housing Unit Supply Cumulative Net Supply of Housing Units in Thousands (5) (8) (12) (16) (16) (19) (18) (23) (27) (28) (31) (35) (38) (48) Source: Moody's Analytics; CoStar Market Analytics As of 17Q3

10 Orange County Rent Growth vs Income Growth 8% Rent/Personal Income Growth 6% 4% 2% 0% (2%) (4%) (6%) (8%) * Income Growth (Y/Y) Rent Growth (Y/Y) *Year to Date

11 Orange County Rent Growth vs Income Growth 40% Rent/Personal Income Growth 35% 30% 25% 20% 15% 10% 5% 0% * Cumulative Income Growth Cumulative Rent Growth *Year to Date

12 Median Home Prices and Annual Pricing Growth $900,000 Median Single Family Home Price Annual Growth* 30% $800,000 20% $700,000 $600,000 10% $500,000 0% $400,000 $300,000-10% $200,000-20% $100,000 $ % Median SFR Price Percent Growth Sources: Moody's Analytics; CoStar Market Analytics *Rolling Four Quarter Average

13 How Long Does It Take to Save Up A Down Payment In OC $900,000 Median Home Price Years to Save a Down Payment 25 $800,000 $700, $600,000 $500, $400, $300,000 $200,000 5 $100,000 $ Median Home Price Years to Save A Down Payment (10% Savings Rate) Source: Moody's Analytics, CoStar Market Analytics As of 17Q3

14 Orange County Rent Growth vs Housing Price Growth 30% SFR Home Price/Rent Growth 20% 10% 0% (10%) (20%) (30%) (40%) * SFR Home Price Growth (Y/Y) Rent Growth (Y/Y) *Year to Date

15 FIELD RESEARCH AERIAL RESEARCH

16 Irvine South County Huntington Beach/Seal Beach Anaheim Central OC West of I-5 North County Tustin Newport Beach Central OC East of I-5 Costa Mesa Orange County Construction By Submarket 6,000 Number of Units 5,000 4,000 3,000 2,000 1,000 0 New Supply Since 2013

17 Irvine Huntington Beach/Seal Beach South County Tustin Newport Beach Central OC East of I-5 Anaheim Central OC West of I-5 North County Costa Mesa Largest Percent Of Inventory Growth Since % 18% Percentage of Growth 17.6% 16% 14.9% 14% 12% 10% 9.9% 8% 6% 4% 2% 0% 5.7% 4.5% 3.6% 2.9% 2.1% 2.0% 0.7%

18 Top Lease-Up Rates For Deliveries Since Units Leased Per Month Centerpointe Boardwalk by Windsor Gateway II Avella Portola Court Katella Grand I Avalon Huntington Beach Reata Oakbrook Village Malden Station Apartment Homes Sendero Gateway Apartment Homes As of 17Q3

19 New Rent Series Diagram of Possible Combinations of Configurations

20 CoStar Multifamily Data Collection $4,000 Rents in Irvine Submarket $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 CoStar Research collects data by actively reaching out to communities $ As of 16Q3

21 CoStar Multifamily Data Collection $4,000 Rents in Irvine Submarket $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 Community Callers collect rent information as potential renters $ As of 16Q3

22 CoStar Multifamily Data Collection $4,000 Rents in Irvine Submarket $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 Automated Data Collection uses web scraping technology to collect high-frequency rent observations $ As of 16Q3

23 CoStar Multifamily Data Collection $4,000 Rents in Irvine Submarket $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 Apartments.com Feeds provide daily rents at a unit or unit type level (20% sample shown) $ As of 16Q3

24 Orange County Rent Level & Growth $2,000 Rent Level/Month Rent Growth (Y/Y) 8% $1,800 6% $1,600 $1,400 4% $1,200 2% $1,000 0% $800 (2%) $600 $400 (4%) $200 (6%) $ * (8%) Rent Growth Rent Level *Year to Date

25 Irvine South County Huntington Beach/Seal Beach Anaheim Central OC West of I-5 North County Tustin Newport Beach Central OC East of I-5 Costa Mesa Orange County Rent Growth By Submarket 6,000 Number of Units 5,000 4,000 3,000 2,000 1,000 0 New Supply Since 2013

26 Rent Ranges Of Recent Deliveries By Submarket $3.10 Asking Rent/SF $2.90 Malden Station $2.70 Valentia Apartments $2.50 $2.30 Alexan Aspect Valentia Apartments (2017) 335 Units - $2.66/SF Developer: Fairfield Residential $2.10 $1.90 $1.70 $1.50 North County Anaheim Central OC Malden Station Apartments (2016) 200 Units - $2.88/SF Developer: CW Driver Alexan Aspect (2017) 323 Units - $2.33/SF Developer: Trammell Crow Residential

27 North County Annual Rent Growth By Bedroom 9.0% Annual Rent Growth 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% * Studio 1 BR 2 BR *Year to Date As of 17Q3

28 Orange County - Metro Central OC West of I-5 Newport Beach Central OC East of I-5 Anaheim North County Huntington Beach/Seal Beach Tustin Costa Mesa South County Irvine Average Asking Rent By Star Rating $3,500 Asking Rent $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 4 & 5 Star Asking Rent 3 Star Asking Rent

29 Concession By Type In New Construction North County - Concessions by Type 1% Metro - Concessions by Type 6% 39% 41% 27% 44% 6% 1% 18% 17% No Concession Other Concession (Non-Rent) Rent Concession (< 1-Month Free) 1-Month Free Greater Than 1-Month Free Source:CoStar Market Analytics

30 The Highest Concession Buildings That Delivered Since % Concession Rate 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Alexan Aspect Metropolis The Alton Valentia Apartments Apex Villas Fashion Island Vantis Apartments Boardwalk by Windsor Nineteen01 Residences on Jamboree Malden Station Apartment Homes As of July 2017 *For Properties Delivered Since 2015

31 Orange County Sales Volume And Pricing $2,500 Sales Volume (Millions) Price Per Unit (000s) $300 $2,000 $250 $200 $1,500 $150 $1,000 $100 $500 $50 $ * $0 Annual Sales Volume Average Price Per Unit *Year to Date

32 North County Sales Volume And Pricing $600 Sales Volume (Millions) Price Per Unit (000s) $300 $500 $250 $400 $200 $300 $150 $200 $100 $100 $50 $ * $0 Annual Sales Volume Average Price Per Unit *Year to Date

33 North County Quarterly Sales Volume $250 Transaction Volume (Millions) $200 $150 $100 $50 $ st Quarter 2nd Quarter 3rd Quarter 4th Quarter

34 North County Quarterly Sales Transaction Count 20 Transaction Count st Quarter 2nd Quarter 3rd Quarter 4th Quarter

35 Orange County Repeat Sales Pricing Still Positive 50.0% Annualized Appreciation 50.0% 40.0% 40.0% 30.0% 30.0% 20.0% 20.0% 10.0% 10.0% 0.0% 0.0% -10.0% (10.0%) -20.0% Annual Appreciation Median As of 17Q3

36 Apartment Cap Rates By Star Rating 7.0% Cap Rate 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% * 1 & 2 Star 3 Star 4 & 5 Star *Year to Date

37 CoStar Market Analytics PRESENTED BY: JOSHUA OHL SENIOR MARKET ANALYST These CoStar Market Analytics materials contain financial and other information from a variety of public and proprietary sources. CoStar Group, Inc. and its affiliates (collectively, CoStar ) have assumed and relied upon, without independent verification, the accuracy and completeness of such third party information in preparing these materials. The modeling, calculations, forecasts, projections, evaluations, analyses, simulations, or other forward-looking information prepared by CoStar and presented herein (the Materials ) are based on various assumptions concerning future events and circumstances, which are speculative, uncertain and subject to change without notice. You should not rely upon the Materials as predictions of future results or events, as actual results and events may differ materially. All Materials speak only as of the date referenced with respect to such data and may have materially changed since such date. CoStar has no obligation to update any of the Materials included in this document. You should not construe any of the data provided herein as investment, tax, accounting or legal advice. CoStar does not represent, warrant or guaranty the accuracy or completeness of the information provided herein and shall not be held responsible for any errors in such information. Any user of the information provided herein accepts the information AS IS without any warranties whatsoever. To the maximum extent permitted by law, CoStar disclaims any and all liability in the event any information provided herein proves to be inaccurate, incomplete or unreliable CoStar Realty Information, Inc. No reproduction or distribution without permission.