Now is a Good Time to Reposition an Apartment Community
By: Multifamily Real Estate Industry Team
Robert A. Koch, AIA, in his May 20, 2009, “White Paper on Apartment Property Repositioning” published in Multi-Housing News, states that this is a good time for apartment owners to consider repositioning their apartment properties. Repositioning involves more than renovation; it also involves matching a property to the market in which it is located. Neighborhoods and what makes an apartment project attractive in the market can change over time.
Reevaluating a property’s positioning is not advisable at this time, it is essential. Current financial conditions have led to dramatic shifts in not only property values but the profiles of prospective tenants. The current turmoil in the financial markets has led to a decline in asset values. At the same time, former homeowners who have been displaced either by foreclosure or by abandoning homes that are under water have led to a pool of prospective tenants who have damaged credit. Foreclosures and loss of value in the residential market have created a shadow rental market for condominium units and houses that is increasing the real inventory of available rental units. Additional units are also available in fractured condominiums (i.e., condominium projects where only part of the available units have been sold) and condominium properties that have been taken off the market and offered as rental properties. These properties are likely to create downward pressure on rents and that trend is likely to continue for some time.
Property owners must face these realities and make a realistic assessment of the positioning of their properties, both where they are and where they want them to be. Only then can a property owner decide how and whether to reposition their property.
(For more information visit http://www.multihousingnews.com/multihousing/content_display/in-focus/e3i4a37a99835be851bdc1c4f4163bcc41e.)
(This entry posted by Erica Harvey, a member of Womble Carlyle's Real Estate Development group)
Reevaluating a property’s positioning is not advisable at this time, it is essential. Current financial conditions have led to dramatic shifts in not only property values but the profiles of prospective tenants. The current turmoil in the financial markets has led to a decline in asset values. At the same time, former homeowners who have been displaced either by foreclosure or by abandoning homes that are under water have led to a pool of prospective tenants who have damaged credit. Foreclosures and loss of value in the residential market have created a shadow rental market for condominium units and houses that is increasing the real inventory of available rental units. Additional units are also available in fractured condominiums (i.e., condominium projects where only part of the available units have been sold) and condominium properties that have been taken off the market and offered as rental properties. These properties are likely to create downward pressure on rents and that trend is likely to continue for some time.
Property owners must face these realities and make a realistic assessment of the positioning of their properties, both where they are and where they want them to be. Only then can a property owner decide how and whether to reposition their property.
(For more information visit http://www.multihousingnews.com/multihousing/content_display/in-focus/e3i4a37a99835be851bdc1c4f4163bcc41e.)
(This entry posted by Erica Harvey, a member of Womble Carlyle's Real Estate Development group)
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