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2023 State of The Commercial Real Estate Industry

oin eXp Commercial President James Huang and Economist KC Conway on January 17 for a fireside chat as they discuss the state of the 2023 economy and how you can prepare your business for success in the changing market.

Date: January 17, 2023
Time: 9 a.m. PT / Noon ET
Location: eXp World > eXp Commercial Auditorium

 

 

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https://www.creconsult.net/market-trends/2023-state-of-the-commercial-real-estate-industry/

Top 20 Property Management Companies of 2022

As many of our Multifamily Clients hire 3rd party Property Management Companies, we are sharing a recent review list of the top 20 Property Management Companies of 2022.

The best property managers efficiently run large multifamily investment properties, maintaining efficiencies and maximizing returns. If you have student housing, senior housing, income-based apartments, or any other type of multifamily investment property, these are the top 20 property management companies, according to the National Multifamily Housing Council. The NMHC has ranked these companies for 2022 in the following order and included some basic details about them.

Top Property Management Companies

The list of top-rated property management companies includes the largest ones in the country. Most of these companies manage properties regionally or nationally, and they all are responsible for 60,000 to 600,000 units.

Commercial Property Management Company

1. Greystar Real Estate Partners

Greystar Real Estate Partners is the largest property management company, with almost 700,000 managed units in 2022. That’s up slightly from the 669,00 units managed in 2021. The company is headquartered in Charleston, South Carolina, but has offices throughout the country and properties in all 50 states.

Uniquely, the company invests in property development in addition to property management. Greystar was listed in NMHC’s Top Owner, Top Developer, and Top Builder listings for 2022.

2. Lincoln Property Company

Lincoln Property Company is a distant second, with a stable 210,000 managed units in 2022 and 2021. The Dallas, Texas, company has a sizeable portfolio of military properties. It was also a 2022 Top Owner.

3. Cushman & Wakefield

Cushman & Wakefield is also based in Dallas and has a stable portfolio of ~170,000 units in 2021 and 2022. Current unit counts approximately match those from 2008. This is the largest listed company that’s steady but not growing quickly.

4. Asset Living

Asset Living continues to grow under CO Ryan McGrath’s 35+ years of leadership. The Houston, Texas, company jumped from 103,000 units in 2021 to 159,000 units in 2022. A number of these units are student housing.

5. FPI Management

Based in Folsom, California, FPI Management has ~140,000 units throughout the United States, excluding the Northeast. That’s up from 129,500 in 2021. The company has been expanding into the Southeast.

6. Apartment Management Consultants, LLC

Apartment Management Consultants, LLC is from Cottonwood Heights, Utah. The company grew approximately 13% from 2021 to 2022, increasing its unit count from 100,300 to 113,700. These are all market-rate units.

7. RPM Living

RPM Living is among the newest large property managers, having started in just 2020. The company grew from 81,500 units in 2021 to 112,000 units in 2022. The Austin, Texas, company is mostly in the Central and Southeast U.S.

8. BH

BH is a well-established property management company from Des Moines, Iowa. The company has steadily been increasing its portfolio for more than 20 years. The portfolio went from 100,000 units to 106,000 between 2021 and 2022.

9. WinnCompanies

WinnCompanies from Boston, Massachusetts, manages 103,000 properties throughout all 50 states. That’s nominally up from 101,000 in 2021. More than one-third is military housing. The company’s growth has been slow for the past ~10 years.

10. MAA

MAA from Germantown, Tennessee, has 100,000, which is the same as in 2021. These are all market-rate units throughout the Midwest, Central, and Southern U.S. The company was also a 2022 Top Owner, as it manages many of its own properties.

11. Morgan Properties

Morgan Properties develops and manages properties in the Midwest, South, and Mid-Atlantic. The company’s reach is increasing as it grows, however. The company increased from 94,300 units in 2021 to 96,100 in 2022. It’s also a 2022 Top Owner.

12. Avenue5 Residential, LLC

Avenue5 Residential, LLC has only been in business for 5 years, but those are 5 years of steady growth. It expanded from 75,800 to 86,900 units between 2021 and 2022. The company is out of Seattle, Washington.

13. Bozzuto

Bozzuto is slowly expanding through development. The firm was a 2022 Top Developer and went from 80,000 to 83,300 units between 2021 and 2022. These are throughout the West Coast, East Coast, and Upper Midwest. The company is in Greenbelt, Maryland.

14. AvalonBay Communities, Inc

AvalonBay is a 2022 Top Manager, Top Owner, Top Developer, and Top Builder from Arlington, Virginia. It’s slowly increasing units, which only went from 79,700 in 2021 to 80,500 in 2022.

15. Highmark Residential

Highmark Residential from Dallas, Texas, is cementing itself as a major property management company. It has 79,000 units, up from 68,300 in 2021. These are everywhere except the West Coast and New England.

16. Equity Residential

Equity Residential continues to be one of the largest property management companies, but its holdings are in decline. The Chicago, Illinois, company had 77,800 units in 2021 and just 77,300 in 2022. It is a 2022 Top Owner, however.

17. RangeWater Real Estate

RangeWater Real Estate is quickly making a splash, having grown to 74,100 units in just three years. Its 2021 count was 53,100. The newer company is based in Atlanta, Georgia.

18. Bell Partners

Greensboro, North Carolina, Bell Partners has had oscillating holdings over the past 13 years, but they increased from 62,400 to 68,800 between 2021 and 2022. The company is everywhere except the Midwest.

19. Edward Rose Building Enterprise

Edward Rose Building Enterprise has some of the most consistent historical growth. The continued trend took this company from 67,000 units in 2021 to 68,300 in 2022. The company from Bloomfield Hills, Michigan, is also a 2022 Top Owner.

20. Monarch Investment & Management Group

The Monarch Investment & Management Group is both a 2022 Top Manager and a 2022 Top Owner. The company went from 63,700 units in 2021 to 66,900 a year later. It’s based in Franktown, Colorado.

3 Things to Consider When Choosing the Best Property Manager

While these are the 20 top commercial property management companies, non of these companies is the best in every situation. The property manager that you choose should be specifically suited for your properties. These five considerations will help you determine which property manager is best suited for your particular properties:

• Region: The property management company should already have properties in your state, so they’re at least somewhat familiar with the local and regional markets.
• Specialty: If you have a student, senior, military, or other specific properties, look for a company that has lots of specialized housing already.
• Ratings: Good ratings by both professional organizations and tenants are marks of a quality property management company.

How Much Do Property Managers Charge?

The fees that property managers charge vary. Expect to pay 8 to 12 percent of rent as a property management fee. There can also be setup fees, repairs/maintenance fees, vacancy fees, eviction fees, termination fees, and other charges. Review any contract closely, as it’ll delineate all fees that a property manager charges.

Choose a Good Property Manager

If you need a property manager for one or more multifamily properties, these are some of the top property management companies throughout the country. One may indeed be well-suited for attending to your property. Investigate them further to find out which one company that is.

 

 

Source: Top 20 Property Management Companies of 2022

https://www.creconsult.net/market-trends/top-20-property-management-companies-of-2022/

Everyone Looks Good When CRE Is Doing Well. But What Happens When Things Get Ugly?

Where do smart investors put their money when the commercial real estate market is “pretty ugly”?

Walker & Dunlop CEO Willy Walker put that question to his three guests on this week’s Walker Webcast: Walker & Dunlop’s Ivy Zelman, executive vice president of research and securities; Kris Mikkelsen, executive vice president of investment sales; and Aaron Appel, senior managing director and co-head of New York capital markets.

Walker started the conversation by asking Zelman, co-founder of residential market analysts Zelman & Associates, to comment on her recent transaction survey that contained “some pretty depressing numbers” on the multifamily market and showed overall negative investor sentiment.

Zelman said the situation may change somewhat by the time she releases her November study this month but confirmed: “the October numbers were, no question, pretty ugly.”

“The metrics were across 12 years of data and were probably some of the worst metric results that we've seen,” Zelman said.

She noted that in the current economic maelstrom, underwriting has become much more stringent and rent assumptions more conservative, and the cost of capital has risen.

As a result, “It feels like the transaction market has come to a bit of a halt,” Zelman said.

Walker’s two other colleagues also painted a not very pretty picture of the state of CRE.

“It’s been an exceedingly challenging six months, as I think everyone that's listening to this call knows,” Mikkelsen said. “I would agree with some of the findings from Ivy’s report, particularly that the seller supply index is very, very low right now.”

He noted that transactions continue to get done, but that any optimism that may have blossomed in August around improving job numbers and other positive benchmarks ended the following month when it became clear that the Federal Reserve was maintaining its hawkish stance on inflation.

Appel noted that while the current environment is painful, not all CRE players are experiencing it in the same way.

“I think it depends on what you're doing,” he said. “For core, core-plus and value-add multifamily assets, there's plenty of liquidity, it just costs more. I think it's a cost of funds issue relative to what value is or what people are willing to pay. If their borrowing costs have increased substantially, then they need to pay less for the asset unless the revenues are going up, and clearly, revenues seem to have frozen in most markets.”

In light of this turmoil, Walker asked the panel what smart money is doing today.

Mikkelsen discussed a recent transaction involving “one of the savvier opportunistic investors in the market,” who was able to pay a good price for a multifamily asset that sits in a great neighborhood.

“They bought a phenomenal basis in the right location, and they've got the ability to hold that asset for the next five to 10 years,” Mikkelsen said. “This group has been doing 10-year floating rate debt and then hedging out or swapping the rate for the first five years to get them on the other side of the turbulence in the rate environment. So I think that's a pretty smart play.”

Zelman noted some CRE players see opportunities to acquire other businesses.

“I think that the smart money right now is taking advantage of the weaker players in the market that are not well-capitalized,” she said. “D.R. Horton announced an acquisition this week, and I imagine they got this builder at a pretty attractive price. I think that there's no question that to capitalize on those companies that are not well-positioned and have too much leverage, and to take advantage of good locations would be what the smart money will do.”

Appel noted that multifamily represents a greater share of the CRE market today, and going forward, “it’s going to be 50% of the market permanently.” At the moment, multifamily and industrial are the CRE asset classes that hold the most promise, he said.

“I would say that the smart money should be looking to buy multifamily at break-even leverage based on where today's rates are and to lock in what I would deem to be seven-year financing, with the ability to get out after five,” he said.

Appel said the Fed cannot keep interest rates elevated for an extended period. This bodes well for CRE investors who are willing to play the long game, he said.

“If you can buy break-even leverage in good rental markets where there's gonna be demand drivers and eventual employment drivers back on the horizon, and some level of supply constraint, I think you're gonna be a huge winner five, six years from now,” Appel said. “I think there's tremendous opportunity there.”

 

Source: Everyone Looks Good When CRE Is Doing Well. But What Happens When Things Get Ugly?

https://www.creconsult.net/market-trends/everyone-looks-good-when-cre-is-doing-well-but-what-happens-when-things-get-ugly/

Falling Housing Prices Signal Inflation Retreat Won't Be Far Behind

After over a year of unprecedented rent growth and soaring inflation, housing costs have been in retreat for three months.

Inflation measures, thanks to a lagging dataset, have yet to follow suit. But that could soon change.

In October, shelter made up the vast majority of the core consumer price index inflation measure, or more than 10 times what all other nonfood and energy sectors contributed, The Wall Street Journal reports. Yet when shelter costs were excluded, inflation all but vanished in the core consumer price index for October, mirroring what private sector research from entities like Zillow have observed in the housing market over the same period.

The Bureau of Labor Statistics bases its rent and estimated homeowner equivalent measures on what is actually being paid, while private estimates incorporate asking rents and newly signed leases, the WSJ reports.

As BLS data catches up to easing housing prices, inflation measures could retreat to near the Federal Reserve's target rate of 2% in the next few months, Piper Sandler Senior Economist Jake Oubina told the WSJ.

Though wage growth and employment rates are also focused of Fed policy, a retreat in inflation could give the financial regulator a signal that the aggressive interest rate hikes it pursued this year are no longer necessary.

If the Fed backs off on interest rates, it could in turn thaw the capital markets that have all but frozen for commercial real estate in the past few months.

Should inflation retreat along a friendly timeline and the Fed respond promptly, a significant recession may not happen, despite seeming like a near certainty to some in October.

Steep drops in value for several property sectors may represent the deflating of bubbles, as banks held to tighter underwriting and balance sheet standards implemented in the wake of the Great Financial Crisis, Bloomberg reports.

 

 

Source: Falling Housing Prices Signal Inflation Retreat Won’t Be Far Behind

https://www.creconsult.net/market-trends/falling-housing-prices-signal-inflation-retreat-wont-be-far-behind/

Multifamily sellers: How to qualify a buyer before going under contract

Multifamily sellers: How to qualify a buyer before going under contract

Don’t waste time and opportunities: learn how to select the right buyer every time

As the seller of a multifamily asset, it’s crucial that the buyer you select is the best possible prospect for your property. Don’t waste time, money, and opportunities: you must ensure they’re qualified and can close and execute the contract as signed.

Keep reading to learn why it’s essential to qualify a buyer before going under contract on your multifamily property and how to do it.

Why do I need to qualify a buyer?

It’s important to close with the first buyer you select. If you don’t, each buyer after that will ask themselves, “What did that other buyer discover about this property that I am missing?”.

When you enter into a contract with a refundable deposit, you’re basically giving your chosen buyer a free option on your property for a period of time, typically 30–60 days. Before you proceed, you must be confident that they can close and execute the contract as signed.

What’s more, your tenants and staff will be disturbed throughout the contract process. To minimize the period of disruption, you should do all you can to ensure the transaction will close successfully at the end of the contract process.

As a seller, you’re required to provide due diligence information to the prospective buyer. When you qualify your buyer, you’ll greatly reduce the risk of wasting a lot of time and doing a lot of work only to not close on the property.

How do I qualify a buyer?

Before you sign the contract, make sure that your prospective buyer can provide certain items. Always ask them for the following:

– Proof of funds

– Lender pre-qualification

– A list of the other properties they own

– A list of the sellers and agents that they have worked with

For added reassurance, it’s recommended that you call the buyer’s lender to confirm their pre-qualified status. You can also call the agents, sellers, and buyers they’ve closed with in the past to enquire about how the transactions went.

Has the buyer toured the property in person before making an offer? Have they reviewed the due diligence information beforehand? If they have, this is a great sign. It’s proof that they have seen and have taken into account any issues with your property, and this greatly reduces the chances that they may later want to back out of the sale, saying they were unaware of the building’s condition. Be very wary of a buyer who doesn’t tour your property in person.

A prospective buyer who shows they’re motivated and wants to move quickly is also a great sign for a successful closing. The shorter the due diligence period, the better, and the larger the deposit, the better.

When you spend the time making sure your prospective buyer fulfills these criteria, you’ll put yourself in a great position to close successfully and ensure a quick and smooth transaction.

If you need help selling your multifamily property, eXp Commercial is here. Our objective as your multifamily advisor is to help you achieve your investment goals: from determining the listing price to selecting the best buyer and handling the sale process through to the closing, we’ll facilitate a smooth transaction for you.

 

Source: Multifamily sellers: How to qualify a buyer before going under contract

https://www.creconsult.net/market-trends/multifamily-sellers-how-to-qualify-a-buyer-before-going-under-contract/

Happy Holidays

HAPPY HOLIDAYS FROM EXP COMMERCIAL! Wishing everyone a wonderful Holiday Season and a Happy, Healthy, and Prosperous 2023! For any Multifmaly Buying, Selling, and Financing needs, please keep us in mind all year long. Randolph Taylor, Chicago Area Multifamily Brokerage (630) 474-6441 | rtaylor@creconsult.net https://www.creconsult.net/ #chicagomultifamilybrokerage #multifamilybroker #apartmentbroker #multifamilyagent #apartmentagent

Do I need an attorney for my commercial real estate deal or is my broker enough protection?

Does a seller or a buyer of commercial real estate really have to hire an attorney? The unmistakable answer is, "Yes!"

A broker is a licensed professional who you hire to negotiate the sale or purchase of a real estate for a fee or a commission. However, they are typically not attorneys. Many of them will clearly state that real estate brokers are not providing legal advice. Real estate brokers don’t usually get paid unless they close the deal (or unless you are somehow obligated to pay a commission, for example, by withdrawing from a deal). Therefore, brokers are usually not going to take care of the legal details and may even try to push a deal to close as fast as possible.

Be sure that separate legal advice from a good real estate lawyer is usually worth the additional cost. It's much more cost-effective to hire an attorney to get the deal done right than to get involved in an expensive lawsuit.

A good attorney can also be crucial to getting a beneficial purchase. Also, keep in mind that it’s best to hire an actual commercial attorney who deals with this kind of transaction daily. It may cost a bit more than a general lawyer, but it’s well worth it.

What does a real estate attorney actually do?

The job of a real estate lawyer is to negotiate and make a transaction happen in a peaceful way that's amenable and fair to all parties.

A real estate lawyer takes over after the selling terms and price have been determined by the real estate brokers in the contract, and the parties have signed. At that point, a real estate lawyer reviews the contract and negotiates any necessary adjustments to deal with terms. In case any last-minute issues come up, the lawyer will be at your closing, together with your real estate agent.

Experts believe you should always hire a real estate lawyer, no matter your circumstances, because it’s an added layer of protection for both sides, which covers the buyer and seller for all of the contract items. It’s simply a necessary level of protection for large purchases or sales.

Some brokerages even offer the services of a real estate lawyer and broker in one at no additional cost.

A commercial real estate transaction includes many complicated steps, and if the seller hires an attorney early in the process, the lawyer can help the seller to both protect their benefits from the sale and avoid liability if unexpected issues come up.

Many sellers, even the ones that hire an attorney later to prepare the closing documents, don't hire a lawyer during the listing stage, which is also a mistake. Even though Listing Agreements seem to be "standard," many agents are willing to negotiate the terms and conditions.

Either way, both commercial real estate sellers and buyers should engage their own lawyer as early in the process as they can to ensure their best interests are being met throughout the whole real estate transaction.

 

Source: Do I need an attorney for my commercial real estate deal or is my broker enough protection?

https://www.creconsult.net/market-trends/do-i-need-an-attorney-for-my-commercial-real-estate-deal-or-is-my-broker-enough-protection/