Due to a perfect storm of economic conditions, condominiums are about to stage a major comeback in Portland. Over the past year, local housing and rentals have become more expensive, generating pressure and demand for more affordable alternatives. Homeowners who want to sell and take advantage of higher homes values have nowhere to go. Likewise, renters don’t want to forgo the convenience and luxury of urban living. As a result, both existing renters and homeowners have begun to flock to condominiums.

It’s no surprise that condominiums are regaining strength in 2015. Both national and local economic reports indicate a wavering housing recovery. Though prices and sales of existing homes are rebounding, new home construction is weak. According to the Case-Shiller index, prices in the Portland area outpaced those in most comparative markets and showed a year-over-year gain of 6.8 percent in December 2014. The limited supply of homes effectively lifted prices to higher levels.

Yet, more expensive homes pose an even greater challenge to first-time homebuyers. Larger down payment requirements are typically the biggest hurdle for homeownership. In the wake of the recession, the ability to save with stagnant wage growth has been tremendously difficult.

Also, Portland’s apartment market is limited. The city has undergone and will continue to experience significant transformation. Over the next three to five years, an estimated 25,000 new units are slated for downtown. Within the next 20 years, the city overall is projected to gain approximately 112,000 new units.

Low vacancy and high rents have substantially driven Portland’s robust apartment boom. Nationally, economists have noted that since 2000 rents have increased twice as much as wages. This is quite problematic, especially when more than one-third of Americans are renters. Portland isn’t exempt from this trend, and the median rent in January 2015 jumped by more than 7 percent from just a year earlier.

As a result of these conditions, both renters and homeowners are feeling pressure to explore alternative living options and opportunities. Though existing condominium sales dipped in 2014 due to low inventory, 2015 is expected to improve dramatically with more permits and project proposals. Residential mortgages are becoming more accessible with low interest rates and many lenders are considering options for smaller down payments.

Additionally, renters wanting to own don’t need to sacrifice their urban lifestyle and forsake the city for the suburbs. Condominiums preserve the convenience and interconnectivity of urban living, but also offer all the benefits and amenities of homeownership.

Though there is returning interest and growing demand for condominiums, the market has changed since pre-recession booms. Today, Portland’s condominiums have expectations more equivalent to the operations of a high-end hotel.

In order to compete in the market, existing condominiums need to adapt and remain current as new projects become available. Similarly, new projects must offer consummate finesse and stability. Therefore the marketable game changer is the homeowner’s experience.

Of course, the experience of owning a condominium is an extension of the capabilities and dependability of the property management team. It is not only the long-term steward of the building, but also responsible for the care of each resident. Property management is vital to the successful run of an asset, especially during competitive market conditions. After all, managers are the indispensable lifeline making a daily difference. It’s their job to work in tandem with an asset’s ownership to preserve integrity, enhance value and maintain a building’s cycle of care.

Management of condominium communities today entails much more than basic customer service. Property management teams should be willing to operate with complete transparency for both residents and owners. This includes a low turnover of dedicated on-site staff and a 24/7 concierge.

A strong staff support system ensures that residents are being championed with quality attention and timely communication. Team members should become integral participants within the community, taking time to understand idiosyncrasies, personalities and lifestyles. They must become acutely aware of each individual’s need and anticipate problems with readily prepared resolutions. Ideally, they offer reassurance and peace of mind to residents and ownership alike.

Such attentiveness allows property management teams to maximize opportunities and increase efficiency. For example, a staff attuned to a community’s day-to-day needs will appropriately time and coordinate projects in an effort to avoid inconvenience or hassle.

Condominiums in Portland have become a catered luxury, and property management teams must operate with this in mind to remain competitive and relevant. Quality property management is an investment in an asset’s reputation, but most importantly, it’s the deciding factor for retention and future homeowner attraction.

Susan Stratton is president of NBS Multifamily Management, a division of commercial real estate service provider NAI Norris, Beggs & Simpson. Contact her at 503-952-0750 or sstratton@nbsmultifamily.com.

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Portland’s apartment market has become quite tight. This is a substantial change from the start of the recession, when a flood of condos-turned-apartments hit the market and landlords offered generous incentives like free rent. But with apartment vacancy below 3 percent for nearly two years, we’re definitely seeing a landlord’s market.

Developers are trying to meet demand, and many new projects are being targeted to Portland’s high concentration of Generation Y renters – 20- and 30-somethings who have their own unique set of preferences.

Location, location, location: The old saying rings true, with young renters wanting to live in urban, walkable neighborhoods. They like to be able to walk to grocery stores, restaurants, bars and movie theaters, and bike to work.

That’s why many of the projects we’re seeing are in trendy neighborhoods in popular areas like inner Southeast, North/Northeast and Northwest. These areas are fairly underserved by new apartments, and developers have responded with construction under way or planned for small infill apartments.

Southeast Division Street, for instance, has four projects in the works within a few blocks of each other, and North Williams Avenue and other neighborhoods in North/Northeast are seeing many new projects.

Transportation: Today’s renters want multiple transportation options; some don’t own cars, and those who do would like to be less dependent on them. Many apartment complexes, like the Prescott on North Interstate Avenue, are being developed on or near MAX lines. Bike storage is being offered in almost all new projects, with some even including designated bike repair/washing areas.

With so many infill projects in already dense neighborhoods, parking has become an area of concern. Parking is not generally a main priority for urban Portland renters, and the city has supported residential development that is transit-oriented with few or no requirements to include parking.

But nearby home and business owners are concerned that new renters will monopolize already tight street parking. Many communities that lack parking market their apartments to people without cars by offering plentiful bike parking and designating spaces for car sharing programs like Zipcar.

Green features: An environmentally friendly living space is a priority for a growing number of renters, and most new buildings have green features. Leadership in Energy and Environmental Design ratings are sometimes being pursued.

Buildings are being designed with efficiency in mind (such as large windows to provide natural light and exterior corridors that don’t need to be heated or cooled), and with features like energy-efficient fixtures and solar panels.

EcoFlats and The Albert on North Williams, for instance, have rooftop solar panels that provide the building’s hot water and supplement its heat. Carpeting has all but disappeared, while flooring is tending toward eco-friendly options like bamboo, finished concrete or linoleum.

Size: The large, luxury apartments that were so popular in the last boom cycle are now relics, with new ones smaller and more modest. Many Portland renters don’t place a high priority on the amount of space; they prefer a good location near work or amenities, so average square footage is shrinking.

Even with smaller apartments, however, many renters are doubling up because of finances. Rents have risen significantly in the past few years, but incomes have not kept pace. Unemployment, though stabilized, also remains a significant challenge for many people. At the height of the recession many young people moved home; they’re now moving back into apartments, but may only be able to afford to do so with roommates.

Community space: As individual units shrink, proximity to shared community spaces is becoming a way to attract renters and help create community, which is important to a lot of renters. Space permitting, many developers are opting for outdoor gathering spaces (like outdoor spaces with a fire pit and barbecue area planned for Savier Street Flats in Northwest), along with more traditional amenities like fitness centers and community rooms. Community-oriented businesses like Hopworks Bike Bar at ecoFlats also provide gathering places for residents.

Pet-friendliness: Men’s Health magazine recently rated Portland as the nation’s best city for dogs, and developers are taking note of renters’ canines and other furry friends. A few of the city’s larger new projects, including Savier Street Flats and the Prescott, include dog washing stations. Some communities will even bring in groomers on weekends, and many have open green space.

Technology: Searching for an apartment has changed significantly with the popularity of online listing sites like Craigslist and PadMapper. The latter takes listings of available apartments from Craigslist and other websites and aggregates them on a map, making it simple to search a certain area while setting parameters like maximum rent and number of bedrooms.

PadMapper has gotten into hot water for using Craigslist’s listings, but has found a legal workaround. Craigslist has started displaying maps in some of its apartment listings, including in Portland.

Owners and management companies are using all of the technology they can to appeal to younger renters. Leasing offices are printing fewer brochures, instead opting to show photos, advertise and communicate electronically, and even sign lease documents on iPads or other tablets. They’re also using technology to make tenants’ lives easier, with many offering options to pay rent and submit a maintenance request online, and to stay current on community news by following a Facebook page or blog.

Management: NBS Multifamily Management is seeing owners bring apartment managers on earlier in the development process. Managers have extensive experience in day-to-day apartment building renting and operations, so getting them involved early on in the vision and decision-making process can be significantly beneficial.

Susan Stratton is president of NBS Multifamily Management, an apartment management company. Contact her at 503-223-7181 or sstratton@nbsmultifamily.com.

The post Well-located, small and green: trends in Portland apartment development appeared first on Daily Journal of Commerce.

The Portland-metropolitan area is a unique multifamily housing market, and though affected by the recession, it remains relatively healthy. Vacancy decreased during most of 2010 and was slightly more than 3 percent during the fourth quarter, according to NAI Norris, Beggs & Simpson’s reports.

Apartment developers must continue to innovate and set themselves apart in order to find development opportunities that will attract renters. And in Portland, that often means incorporating sustainable features.

Renters consider a wide variety of factors when choosing an apartment. Location and price are two key factors, but there are myriad more, including sustainability – a priority for many renters in Portland.

But how can renters be sure apartments are green? A few different certification programs allow buildings’ energy efficiency to be compared on a level playing field. Without a certification system or some way to measure sustainability, greenwashing may occur: a building is misleadingly marketed as being environmentally friendly, but doesn’t necessarily live up to those standards.

The most prevalent certification for commercial and multifamily buildings is Leadership in Energy and Environmental Design. A number of categories exist, including LEED for new construction, commercial interiors and existing buildings. The certification is based on factors like energy use, building materials, site and water efficiency. Projects are ranked on a 100-point scale and are designated as platinum, gold, silver or certified.

The LEED certification process has been the subject of some criticism. One study has suggested that some LEED-certified buildings don’t achieve the energy efficiency projected. Applying for LEED certification can be pricey, and include registration and certification fees, administrative costs, and design and construction adjustments. Some of that money, however, may be recovered via cost savings in operations.

LEED isn’t the only sustainability program available. The Energy Star program rates home appliances like washers and dryers, but also commercial buildings. Its program for multifamily buildings is in the early stages, but it has a pilot program in a few states, including Oregon, for multifamily buildings. The Energy Star website also has a number of free resources that apartment managers and engineers can use to help conserve energy and become more sustainable.

Various local, regional and state sustainability programs also exist. One newer example is Energy Trust of Oregon’s Path to Net Zero pilot, which aims to develop buildings that produce as much energy as they consume. EcoFLATS, a new 18-unit apartment building on North Williams Avenue, is scheduled to be completed this month. It is the only apartment building in the pilot. The unique project was designed for bikers and the environmentally conscious – people who want to incorporate sustainability into the way they live, from home energy use to transportation.

EcoFLATS’ energy system is a main element. A trellis on the roof of the four-story building features 3,000 square feet of solar panels that should generate energy and heat water for the whole building. A hydronic heating system is featured. Every aspect of the building was designed with energy efficiency in mind.

Perhaps the project’s most distinctive feature is that tenants will work together to help conserve energy. A monitor in the building’s entrance will show how much energy is being created and used, both in common spaces and in individual units. So residents will be aware of their energy use and may hold each other accountable. Coupons or gift certificates to nearby businesses may be given for low energy use or meeting a certain goal. The building’s ground-floor retail space will have a restaurant, and a community courtyard and garden space will be on-site, which should encourage tenants to get to know each other.

EcoFLATS is geared toward bikers and public transportation users, because it has no designated parking spaces for cars. It has plentiful bike parking and is located on a major bike corridor, and even features a ramp alongside stairs so that bikes can easily be transported to upper floors. The neighborhood, which features lots of restaurants and local businesses, is walkable and has plenty of access to public transit.

These unique features sound like they could translate into higher rental prices. But ecoFLATS’ developers wanted to show that living green doesn’t have to be expensive. The rental cost for the building’s 1- and 2-bedroom units is anticipated to be from $900 to $1,500, and include all utilities.

The trend toward green design and features in apartment buildings will only increase in the future. As apartment construction starts to pick up in 2011 and 2012, we will likely see more innovation in green design, and perhaps more local and regional programs to encourage sustainability.

Susan Stratton is president of NBS Multifamily Management, an apartment management company. Contact her at 503-223-7181 or sstratton@nbsmultifamily.com.

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