Vacancy Rates Are Already Rising
[{"id": "cvpa1ul", "text": "Am I missing something in the article, they argue both sides?", "replies": [{"id": "cvpd5w4", "text": "I felt the same way but you almost have to argue both sides.  For example, in the Phoenix Metro, about 90% of the current UC product is Class A, with little actually hitting the market until now.  From 4Q on is when we'll get our first true look at absorption rates for multiple property deliveries.  Easy to show high absorption when you're the first to market and have little, to no competition.  I'm still rather bullish on B/C properties especially in areas near (1-3 miles) Class A construction epicenters with rent delta's anywhere from $150 to $500 (very submarket/location specific).  \n\nI know I'm curious to see if Phoenicians adopt mid-to-hi-rise living at an amount that justifies their current construction.", "replies": [{"id": "cvsyxti", "text": "I am starting to see more of our developers searching out that C-&gt;B conversion in strong secondary markets. ROE is pretty attractive for many of those deals.", "replies": [{"id": "cvt0kkh", "text": "Absolutely plus gobbling up assemblages.  From a strict purchase and hold strategy, buying on the periphery of new apartment development epicenters is an awesome place to focus on.  New developments are pricing out a lot of existing tenants (could be good or bad depending upon the location).  All existing owners in the area have to do is mild updates, remain affordable (fairly easy considering the deltas between new construction and exisiting).  Although occupancy rates are high across the board, if you look at historic rates (esp in Phoenix Metro) these properties have kept high occupancy rates during both boom and bust time periods. ", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "cvpe0j9", "text": "No surprise. The market I'm in (see user name) is over speculated with apartments. It's a great area and maybe 10 years from now we'll see demand meet the inventory levels right now, but currently it's not close to there ", "replies": [{"id": "cvpf2pz", "text": "I've only looked at the Raleigh market in askance, what type of developments are you seeing there, i.e. mostly mid-to-hirise or more garden variety?", "replies": [{"id": "cvpfaxk", "text": "I really don't do much multi-family. I primarily focus on retail and office, however I'm also live downtown and i'm in that \"apartment generation\" age group. \n\nBasically we're seeing about 10 or 11, 5-6 story mixed use projects going up. They're all very generic and I just don't see the demand. Particularly because one of the great attributes about raleigh is that it is relatively low cost of living, but these apartments are at times mirroring rents that you see in Atlanta or Nashville. \n\nMaybe I'm wrong, this is all anecdotal, but I just don't see the demand. ", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "cvqhwgd", "text": "Ugh, that chart sucks fat nuts. It doesn't track to any data in the article, there is no explanation of the chart.  \n\nThat said, it's too bad that CBRE makes their reports so hard to share. Their Q2 2015 MF Marketview report says  \n\n&gt; Vacancy nears 15-year low as new supply is swiftly absorbed  \n\nThey don't predict vacancy to go much higher than 5% into 2018. There is no doubt that vacancy can't go down forever, but I guess the question you have to ask is how many millennials do you think will eventually buy, and how many boomers are going to downsize into apartments. ", "replies": [{"id": "cvqje8d", "text": "Very good questions indeed.  To add to your questioning, particularly here in Phoenix Metro, can we sustain $2/sf+ asking rents which this metro has never crested save for a few, select properties? \nI think high occupancy numbers for B/C properties are here to stay, however I really don't know the appetite for high priced, multi-story apartment living (more likely to be adopted on the coasts than interior US).  Conversely, the opportunities for home ownership are dwindling faster as Frank-Dodd legislation continues its Orwellian breakdown of the mortgage market.  Nonetheless, that could change with the flick of a bureaucrats pen.\nFinal question, how will the continued wealth transfer from Baby Boom to Gen X/Millennials (some $2-$3T expected over next 15-20 years) impact housing?  Will they use those funds (depending upon whom you ask avg transfer amounts from $8K to $20K) be used?  Down payment on a house? Debt reduction? New Car? ", "replies": [], "depth": 2}], "depth": 1}]