brokerage development consults development lease-up employment investment sales management services newsletter rental application residents work orders

our mission contact us career opportunities

Special to the Statesman Journal - May 9th 2008

Strong Performance expected in rental properties

Anyone who listens to political, financial and even local news generally comes away confused about the future. There is no clear direction the U.S. economy is going to take in the next decade, and this year is an election year. Promises are being made and economic rescue plans are being formulated by Congress and the Bush Administration to save us from the dreaded "R" word -- recession.

Now back to ground level. Apartment investors currently holding property in Oregon and Southwest Washington can expect rent growth with low vacancies to continue throughout 2008 and likely beyond.

However, it isn't as simple as saying "rents will go up." The placement of a property is important. Competition with other properties, specific features of your property and your marketing plan will be the most determining factors in staying full and raising rents.

Tighter lending requirements and prices may help stop the loss of reliable renters to home ownership. Meanwhile, all areas of the Northwest may see continued job growth over the next eight years. The state Employment Department anticipates an increase in employment from 10 percent to 25 percent during the next eight years. This will attract some of the 90,000 new households expected to move to Oregon during the next five years. Many will be renters, at least ini¬tially.

Apartment construction has lagged these past five years in the face of the single-family-housing boom. This is expected to change in the coming years, as apartments begin to make financial sense to developers — but not immediately. For now, some condos will be converted to apartments, and some new apartments are in the works but not enough to exceed the demand.

Positive market demand should continue to put upward pressure on rents, which we have seen rise 4.56 percent in the last seven months. Apartment owners may enjoy healthy rent increases and low vacancies this year.

What about apartment investors? There are still opportu¬nities for low-cost financing, although the days of extreme leveraging are gone. Current owners may wish to take the profit from appreciation they have accumulated during the price, run-ups of the past few years and exchange into a newer, larger or otherwise more desirable assets.

Reading this may give investors some insight into the decisions they will face in the coming years, and hopefully, information that makes those decisions a little easier.

— Brian Bjornson is managing director of Norris & Stevens Inc., a Portland commercial real estate company doing business in the mid-Willamette Valley, including selling and leasing properties in Woodburn. He can be reached at 503-225-8438 or brianb@norris-stevens.com. .