29 January 2010

Grub & Ellis to Acquire Luxury Dallas Apartment Homes

PR Newswire

DALLAS -- Grubb & Ellis Apartment REIT, Inc. today announced that it has entered into an agreement to acquire Bella Ruscello Luxury Apartment Homes, a 216-unit multifamily community located in the Dallas suburb of Duncanville.  The acquisition is subject to customary closing conditions and the satisfaction of other requirements as detailed in the agreement. 

Located at 250 E. Highway 67, Bella Ruscello Luxury Apartment Homes was built in 2008 on roughly 10.6 acres.  Approximately 97.4 percent leased, the gated community offers one- and two-bedroom apartments as well as a community clubhouse featuring a media room, business center and a well-equipped gym.  The property offers four floor plans ranging in size from 655 square feet to 1,074 square feet, all of which include nine foot ceilings, detached garages, track lighting, full-size washer/dryer connections, ceiling fans and other amenities. The community includes a resort-style swimming pool, running and bike trail, landscaped grounds, direct access to a five-acre waterview park, as well as wooded, creek and pool views.  Residents enjoy easy access to Highway 67, Interstates 20 and 35, and nearby shopping and dining options. 

"Bella Ruscello Luxury Apartment Homes is a well-occupied and well-equipped luxury Dallas apartments community that adds tremendous value to the Grubb & Ellis Apartment REIT portfolio," said Stanley J. Olander Jr., president and chief executive officer.  "We believe we are in the midst of one of the most attractive acquisition environments in recent years, and I am thrilled be able to take advantage of this opportunity to add Bella Ruscello to our portfolio."

27 January 2010

California Investor Buys Preston Bend Apartments in Far North Dallas

Dallas News

Holliday Fenoglio Fowler LP said Wednesday that it has sold a Far North Dallas apartments development to a California investor.

The 255-unit Preston Bend complex is on nine acres at 18790 Lloyd Drive near State Highway 190 and the Dallas North Tollway.

The project was sold by Equity Residential and is more than 95 percent leased.

Anterra Realty Corp. negotiated the sale with Holliday Fenoglio Fowler. Terms of the transaction were not disclosed.

22 January 2010

Drop in Construction Could Lead to Apartment Shortage

The Dallas News

A dramatic decline in U.S. apartment construction could lead to a shortage of rental housing in the years ahead.

This year, developers are expected to start about 87,000 units – less than a third of what they build on average each year. And the outlook for 2011 isn't much better.

"We will be facing a severe shortage of apartments in the next few years, which will increase the cost of housing for consumers," Sharon Dworkin Bell, senior staff vice president of the National Association of Home Builders, said at this week's convention in Las Vegas. "We believe we should have 300,000 starts every year to have a stable market."

That's not likely in the foreseeable future.

"We have a combination of limited supply coming on and increased demand when the economy recovers," Bell said.

Michael Costa, a partner in McFarlane Costa Housing Partners of California, said, "We know that the demand for housing – especially rental housing – is going to be there. Each month we are not able to get our starts going, we fall further and further behind."

At some point, a lack of rental units will take a bite out of consumers' pocketbooks. "We are predicting now we may see upwards of double-digit rent increases," Costa said.

His firm, which typically starts up to 35 rental communities nationwide each year, has just four projects in the works.

The slowdown has been even sharper for developer Jerry Durkin, whose Wood Partners builds rental units across the country, including several recent projects in the Dallas area.

In 2006, Atlanta-based Wood Partners started about 6,500 units.

"We closed one start in 2009 – a 150-unit deal," Durkin said. "I don't know how 2011 ramps up unless capital frees up."

Over the last couple of years, the Dallas-Fort Worth area has been one of the country's top rental housing construction markets. But startups of new Texas apartments have virtually stopped.

More than 11,000 Houston and Austin apartments were under construction in North Texas at the start of 2010, however, and there are lots of new units on the market, so rents have been falling and vacancies increasing.

The same is true in other U.S. markets, which makes apartment analyst Greg Willett of MPF Research skeptical about a shortage.

"To get back to an essentially full occupancy rate of about 95 percent, we've got to absorb about 600,000 apartments nationally and about 30,000 Dallas-Fort Worth apartments," Willett said.

"The builders are overestimating the number of kids in the basement" who will move out of their parents' homes when the economy rebounds, he said.

Dr. James Gaines of the Real Estate Center at Texas A&M University also says a shortage is a ways off.

"An offsetting factor is the number of foreclosures and other distressed properties being bought by investors and turning into rentals," he said.

Dallas apartments analyst Ron Witten predicts apartment markets around the country could be full by 2012, but that doesn't mean building would start right away.

"Developers have to find and entitle sites, then begin construction," he said. "It could easily be 2014 and possibly later before a meaningful number of new apartments are available for residents."

21 January 2010

Another Down Year in Housing

Houston Chronicle

The Houston-area real estate market took another hit last year, as credit remained tight, unemployment rose and wary consumers kept their distance from the housing market.

Home sales declined for the third straight year, falling 7.3 percent in 2009, according to figures released Tuesday by the Houston Association of Realtors.

While sales were down 25 percent from their peak in 2006, last year's decline wasn't as steep as in 2008.

And as long as unemployment doesn't rise, the association sees better times ahead.

“2010 surely is going to have lots of challenges, but there is so much opportunity out there,” said Margie Dorrance, the association's chair, referring to low mortgage rates, a healthy stock of houses for sale and the federal housing tax credit.

But even though a modest amount of job growth is expected later this year, rising mortgage rates could dampen the recovery.

Houston economist Barton Smith expects rates to reach close to 6 percent when the Federal Reserve stops buying mortgage-backed securities — as it has been doing to help stem the housing crisis by keeping rates low.

“Rising interest rates are going to give the Houston market another dose of reality,” said Smith, a University of Houston economics professor and director of the Institute for Regional Forecasting.

Higher mortgage rates will cause prices to fall in the lower end of the market where buyers are more sensitive to price, he said.

For now, values have held steady overall.

The median price for a single-family home last year rose slightly to $153,000, according to the housing group, which tracks sales through the Multiple Listing Service across greater Houston.

At $152,550, the December single-family home median price — the figure at which half of the homes sold for more and half sold for less — rose 5.2 percent from one year earlier, representing the eighth consecutive monthly increase, according to the report, which also included monthly data.

But sales fell 2.1 percent last month compared with December 2008.

It was the first monthly decline since August, and a more accurate reflection of the housing market.

Hurricane Ike brought home buying to a standstill in the fall of 2008, so gains toward the end of last year were skewed.

There are other potential storm clouds.

Foreclosures are still high in the lower end of the housing spectrum, Smith said.

And the number of pending sales — those listings expected to close within the next 30 days — was down at the end of last month by 17.9 percent, signaling another decline in sales volume for January.

Throughout 2009, sales and home prices were down across most of the regions tracked by the realty association.

Values fell in Brazoria County and northern parts of the Houston area where demand wasn't as strong and foreclosures were more prevalent.

Even the Inner Loop saw declines as sellers took their homes off the market and slashed prices on luxury homes.

But home shoppers expecting to get bargains in close-in areas like Montrose, the Heights and Garden Oaks were disappointed, said broker Robert Searcy of Texas Real Estate & Co.

“The deals in those established markets weren't there,” he said.

Searcy said there were bargains in what he calls “emerging markets,” neighborhoods on the fringe of Loop 610 with housing stock similar to that inside the Loop.

Areas that saw price increases included parts of Fort Bend County, Montgomery County and Katy south of Interstate 10.

On another positive note, listings aren't rising.

The number of homes on the market at the end of last year declined 1.3 percent from December 2008 to 43,185.

That represents 2,267 fewer active listings of Houston apartments and other properties than one month earlier and reflects what the industry considers a healthy absorption of housing inventory from the marketplace, the association said.

Dorrance said she's seen good activity in the $150,000 to $300,000 range.

The lowest end of the market has slowed, but showings have started picking up in the higher prices, she said.

While it's a small slice of the home sales pie, sales of properties priced at $500,000 and higher were up 48 percent last month.

11 January 2010

Homeless Women Find Room In Dallas Apartments

The Dallas News

The walls are bare. The closets, nearly empty. And there's barely any furniture inside.

But for 40 formerly homeless women, the Pebbles Apartments are home sweet home.The Metro Dallas Homeless Alliance, which coordinates area homeless services, opened Dallas' first permanent supportive housing program for homeless women and children there last month. A full-time caseworker helps tenants with things such as medical care and job searches.

The homeless alliance, one of 24 nonprofits that receive donations through The Dallas Morning News Charities, moved the women from Dallas' homeless assistance center, The Bridge.

The residents come from a variety of backgrounds. But they all lacked what the Pebbles complex offers: the stability of a home.

Lawanna Rogers, who moved in last month, had lost homes, jobs and the ability to care for her children because of her longtime addiction to a drug she now calls "Satan." She said she had resorted to theft and prostitution to support her addiction to crack cocaine.

"It took my life for over 20 years," said Rogers, 41, who was incarcerated last year on a drug possession charge. "By the grace of God, I'm still here."

She has gone through drug treatment and hopes to find work and reconnect with her family. Relatives have raised her daughter, 18, and son, 9, because Rogers said she "chose drugs over [her] children."

"The night before I went into labor, I did $300 worth of dope," she said, referring to her pregnancy with her daughter. "I was praying at the same time. I said, 'Please don't let anything happen to my baby because of my stupidity, but I can't put this drug down.' "

Rogers said she stays in touch with her kids, who are doing well.

Last summer, the Denton woman decided she'd had enough. And in five months, she went from a mat at The Bridge to a bed in a cubicle there to her own apartment.

While Rogers jumped at the chance for a home, neighbor Candice Kratson was hesitant.

Kratson, 50, worried about living on her own, something she had not done in many years. After a month in her apartment, Kratson, who's disabled with bipolar and schizoaffective disorders, said she is adjusting.

She said she was relieved to be away from what she called an abusive situation at a place where she used to live.

"I've settled in quite a bit," she said recently as she rested on her couch and watched a TV placed on the floor. "There's not too many people who will set you up with an apartment like this."

Dallas officials consider housing programs like the Pebbles the solution to homelessness. The city has a goal of opening 700 units of permanent supportive housing by 2014 but has faced neighborhood opposition to several proposals.

Before opening the Pebbles, homeless alliance officials met with community leaders to gain neighborhood support, said Mike Faenza, president and chief executive officer of the group. The project, which used to be a public housing site, sits in Vickery Meadows, next to other apartment complexes and a strip mall.

Faenza said the homeless alliance could not have opened the program without help from the Dallas Housing Authority, which owns the property. The housing authority leased the building to the homeless alliance for $1 a year, said MaryAnn Russ, DHA president and chief executive officer.

"To have a permanent supportive housing complex focused on vulnerable women and children is a great thing," Faenza said. "The moms and individual women are really grateful to be there."

No one may be more thankful than Rogers' daughter, Tanisha. The 18-year-old recently got to visit her mother at her apartment.

The high school student, who was raised by her grandparents, said she has hoped for years that her mother would change. She was skeptical when her mother headed to Dallas for help last summer.

But the teenager said she cried when she found out her mother was doing well enough to move into Dallas apartments.

"I'm very happy for her because she's been a drug addict for a long time. I hadn't given up on her, but I was beginning to doubt that she would change," Tanisha Rogers said.

"I've been praying for her. I know she's better than that."

10 January 2010

Home Construction In Dallas-Fort Worth Rises For First Time In 3 Years

The Dallas News

Home construction in the Dallas-Fort Worth area rose for the first time in more than three years during the fourth quarter.

The almost 10 percent gain in home starts came as the inventory of new houses on the market fell to low levels, housing analyst Residential Strategies Inc. said Thursday.

The increase in the final three months of 2009 "marks the first uptick in the annual start rate since second quarter 2006," Residential Strategies' Ted Wilson said. "This is a significant event signaling that the housing market is in the bottoming process."

Builders started 3,615 homes in the fourth quarter, up from 3,200 in the same period of 2008.

The biggest increase in starts was for homes priced between $150,000 and $200,000, Wilson said.

"Some of the larger builders are flexing their muscles and trying to pick up market share," he said. "The strategy appears to be to have some speculative homes ready for buyers to move into this spring."

For all of 2009, home starts in the D-FW area totaled 13,499 units – the lowest construction volume since 1991.

But while home construction is picking up, sales of new homes lagged in the final quarter of 2009.

Builders closed 4,710 home sales, down about 15 percent from fourth quarter 2008. Still, sales in the just-completed quarter were the strongest in all of 2009.

"The fourth quarter typically is a slower period for new home sales," Wilson said.

The increase in homebuilding in the D-FW area comes after more than two years of annual declines.

"Home starts were generally up fourth quarter nationally, but the level is still way below where it was several years ago," said James Gaines, an economist with the Real Estate Center at Texas A&M University.

Builders in North Texas have fewer homes and Texas apartments left to peddle than their counterparts in other parts of the country. There is almost an eight-month supply nationally.

"Overall, the supply of housing inventory is in excellent shape," Wilson said of the D-FW area. "Total new home inventory is at a 6.5-month supply."

A six- to 6.5-month supply of new homes is considered market equilibrium, he said.

At the end of December, there were fewer than 2,700 new vacant homes on the market in the D-FW area.

Wilson said the new home market won't have a real turnaround until the underlying economy rebounds.

"Consumers need jobs if they are going to feel confident about making new home purchase or home remodeling decisions," he said.

04 January 2010

Apartment Vacancies At Highest Levels In 20 Years

Dallas News

Apartment vacancies in Dallas-Fort Worth have grown to the highest level in more than 20 years thanks to a combination of overbuilding and the recession.

At the end of 2009, about 11 percent of local rental units were empty. Occupancy fell by a full percentage point in the fourth quarter as several large apartment communities opened their doors, adding to inventory.

“While those numbers are bad, they actually look better than we’d anticipated a few months ago,” Greg Willett, vice president of research with MPF Research said in the firm’s report released Monday. “Several of the properties that were finished right at the end of 2009 report initial lease-up moving along pretty well, so North Texas sidestepped the seasonal net move-outs that are routine during the last few months of the year.”

D-FW renters leased an additional 1,520 apartments in the final months of 2009. But at the same time, developers were opening the doors for 7,895 new units.

“That’s the biggest quarterly block of new supply seen since savings and loan associations fueled a frenzy of overbuilding during the early and mid-1980s,” Willett said.

More new apartments were added in North Texas in 2009 than in any market in the country - 18,029 units.

Last year the sagging economy reduced demand for Fort Worth apartments.

“Job loss weakened the apartment figures seen early in the year,” Willett said.

For all of 2009, net apartment leasing was down by 890 units from 2008, MPF reports.

Overall rents in the area dropped by 2.6 percent last year to an average of $748 a month.

With the credit crunch and recessions, apartment development in D-FW and across the country has slammed to a halt.

Willett said that developers began only a handful of new projects here in the second half of 2009.

But more than 11,000 Dallas apartments remain under construction.

“Texas will be one of the last markets across the country to wrap up its construction cycle” Willett said. “Thus, despite the comparatively positive outlook foreseen for the local economy, Dallas-Fort Worth seems apt to trail the apartment market recovery anticipated elsewhere.

“It’s certainly possible that occupancy has essentially bottomed out now, but it’s going to be a while before the leasing environment is healthy enough for rents to move up again.”