Rental Housing Journal Colorado December 2016

Rental Housing Journal Colorado

December 2016 - Vol. 8 Issue 12

3. Residential Landlord Tenant Update 2016 4. Dear Maintenance Men - Water and Wax Removal 6. Survey Reveals What Millennial Renters Want in 2017

www.rentalhousingjournal.com • Professional Publishing, Inc

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2Q16 Market Overview Multifamily Housing Update Denver, CO

Payroll Job Summary Total Payrolls Annual Change RCR 2016 Forecast RCR 2017 Forecast RCR 2018 Forecast RCR 2019 Forecast RCR 2020 Forecast Unemployment (NSA)

1,455.7m 48.0m (3.4%) 44.8m (3.2%) 50.6m (3.5%) 43.9m (2.9%) 31.7m (2.1%) 25.5m (1.6%) 2.9% (Oct.)

3Q16 Payroll Trends and Forecast Hiring by Denver establishments accelerated for the third consecutive quarter, rising to a 48,000-job, 3.4% year-onyear rate, up from 2Q’s 44,700-job pace.

The construction and extraction sectors set the pace, adding workers at a blistering 12,500-job, 13.0% annual rate, suggesting a housing boom and possibly an oil and gas renaissance. Leisure services establishments also recorded a hiring bump as growth advanced from 2Q16’’s 7,900-job, 5.1% performance to 5.8%. Meanwhile, the skilled services sectors continued to expand at healthy rates, highlighted by 3.6% and 3.0% annual growth rates in the professional and technical business and health-

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Landlords and Property Managers Bullied and Harassed Over Rent Increases

By John Triplett, Rental Housing Journal

A

Portland landlord says he and his property managers have been bullied and intimidated over rent increases after he purchased a small apartment building and had to raise existing rents to afford his new mortgage payments.

He said demonstrators have picketed his personal residence. The have placed notices on the doors of neighbors, camped overnight on his lawn, defecated on his lawn and marched into his property managers’ offices scaring the staff, according to his spokesman, John McIsaac.

The landlord, Landon Marsh, raised rents “only to the lower end of current market rates in Portland,” said McIsaac in a recent interview.

McIsaac said the rent increases came after Marsh purchased the small apartment complex, did substantial work to improve the condition of the building

and raised rents to cover his costs and mortgage. Unfortunately the rent for one tenant went up by 40 percent and the tenant complained to the Portland Tenants United group.

is that all of the property owners are huge, out-of-state multimillion-dollar concerns. That is not the case. A lot of these property owners have day jobs,” McIsaac said.

Telling the landlords’ side of the story McIsaac said he is speaking out because many in the landlord and property management industry do not feel their side of the story has been told, and that more attention has been focused on what the activists’ demonstrations, and what the tenants say.

“I represent the landlords and property managers who do not want to have exorbitantly high rents, we want more housing stock,” McIsaac said.

“In Portland, 85 percent of the landlords are small operators. They might have their retirement tied up in these properties, but they don’t make a ton of money off of them. So the stereotype

The story of one small landlord McIsaac said that with the hysteria over rent increases, “the activist group has targeted a couple of landlords in particular. They are not going after the big guys who own thousands of units.

They are going after the little guys who own like 20 units.

“And this one guy, Landon Marsh, who is my client, is in the hospital interior-design business. He is a one-man consulting business. He does not do property development for a living. He has investment properties. They are small ones. All three buildings he owns combined make up 20 units.” continued on page 8

Apartment Rents Weakening?

Rent growth Slowing

By: Cliff Hockley, President, Bluestone & Hockley Real Estate Services

O

n September 14 of 2016, Mark Barry, MAI local apartment appraiser, updated brokers and investors at a local Morgan Chase Bank presentation. In his speech he highlighted the significant sales volume in 2014, 2015 and 2016, but issued warning signs.

He indicated that apartment rents were beginning to flatten as vacancies were beginning to increase.

He said: Vacancies are beginning to rise mainly in the urban core as new construction goes up, which equals more competition. In Portland we are seeing significant rent concessions in

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Rental Housing Journal Colorado

Market Overview ...continued from page 1 care services subsectors. Only financial services and manufacturing exhibited moderate decelerating trends.

Seasonally-adjusted figures were largely consistent. This series recorded a 11,200-job net payroll increase in 3Q15, up from 10,800 and 10,500 in the year-earlier and prior quarters, respectively. But the preliminary November datum was a negative outlier, reflecting a 5,500-job net loss, the worst month since April 2009.

Although a degree of early 4Q16 slowing was evident in the unadjusted data series as well, the RED Research payroll model projects further 3%+ job growth for the nest two years. The equation includes the rate of change of U.S. job growth (+) and GDP(t-3) (-) and metro personal income growth (+) as independent variables. The 98.2% adjusted-R2 (S.E.=0.3%) model forecasts decelerating growth afterward, reflecting slower U.S. GDP, job and income expansion late in the decade. Still, Denver is expected to outperform U.S. job and income performance through 2021.

Occupancy Rate Summary Occupancy Rate (Reis) 94.9% RED 50 Rank 38th Annual Chg. (Reis) -0.9% RCR YE16 Forecast 94.3% RCR YE17 Forecast 94.0% RCR YE18 Forecast 94.1% RCR YE19 Forecast 93.8% RCR YE20 Forecast 93.9%

3Q16 Absorption and Occupancy Rate Trends Reis report that tenant demand fell materially during the summer quarter as renters net leased 632 vacant units, down from 1,151 and 2,345 during the prior and year-earlier quarters, respectively. This represented the fewest units absorbed during a July to September period in four years. Lower supply was partially responsible as developers completed only 960 units, the smallest vintage in nearly three years.

No shortage of class-A units is evident

though — vacant stock of 7,585 units was highest in 12 years - suggesting some demand weakness. Occupancy averaged 94.9%, lowest in five years, down -10 basis points sequentially and –90bps year-on-year.

Axiometrics data obtained from 484 stabilized same-store properties found average occupancy of 94.6%, also down –90bps y-o-y. Including 37 properties (10,021 units) that were in lease-up since 3Q15, occupancy averaged 94.3%.

Stabilized occupancy across classes varied in a tight 94.3% (“A”) to 94.8% (“C”) range. Four of 19 submarkets reported occupancy above 95%. Three submarkets fell below 94%, most notably Denver-Central (93.3%) The demand outlook is promising over the next five years. RCR’s occupied stock growth model (ARS=93.1%/S.E.=0.4%) projects 2.4% average growth through 2021, down only 0.2% from the 2012- 2016 average.

Supply, however, is likely to be slightly above the recent average, resulting in moderate occupancy decay throughout the five-year forecast interval. Our point estimate forecast calls for a decrease to the high-93% region in the forecast out-year.

Effective Rent Summary Mean Rent (Reis) Annual Change RED 50 Rent Change Rank RCR YE16 Forecast RCR YE17 Forecast RCR YE18 Forecast RCR YE19 Forecast RCR YE20 Forecast

$1,105 5.3% 12th 4.3% 4.0% 4.2% 3.4% 3.7%

3Q16 Effective Rent Trends Metro rents increased at a brisk if moderately slower pace during the third quarter. Reis report that effective rent advanced $17 (1.5%) sequentially, compared to $18 (1.7%) and $25 (2.5%) in the prior and year-earlier quarters, respectively. Expressed on a year-on-year basis, average rent as-

cended 5.3%, down from 6.3% in 2Q16, representing the smallest gain recorded in three years. B&C asking rent trends accelerated quarter-to-quarter, providing the lion’s share of market impetus; “A” trends slowed.

Stabilized, same-store properties surveyed by Axiometrics indicated that the these trends were more advanced among larger, professionally-managed assets. Rents among this sample were up only 3.1% y-o-y, down from 5.1% in 2Q16 and 10.8% in the year earlier period. Classes-B and –C led the market down, the former falling from 4.8% y-o-y to 2.8%, and 7.4% to 41%, respectively. Class-A gains were slightly stronger (3.2% vs. 3.0%). Aurora- Central-SE (6.6%) and Denver-Central (5.2%) posted the best growth, and Arvada (1.2%) and Littleton (1.4%) the slowest.

RCR analysis finds that absorption (+), occupancy (+), home prices (+) and inventory (-) growth are the principal economic drivers of DEN rent growth, serving as independent variables in its 96.6% ARS (S.E.=0.3%) forecasting equation. The model forecasts slower growth as Denver digests a further 2-year wave of heavy supply. As supply diminishes, rents again will accelerate above the 3.9% long-term historical average, averaging 3,8% over 5 years.

Trade & Return Summary $5mm+ / 80-unit+ Sales 24 Approximate Proceeds $1,316mm Average Cap Rate (FNM) 5.1% Average Price / Unit $197,136 Expected Total Return 6.9% RED 47 ETR Rank 25th Risk-adjusted Index 2.65 RED 47 RAI Rank 43rd

3Q16 Property Markets and Total Returns Sales velocity was steady over the summer as 24 multifamily properties valued at $5 million or more exchanged hands, matching the previous quarter performance. Sales totaled

$1,316mm in proceeds, a 13% increase quarter-on-quarter. By the same token, the average price per traded unit fell –11% to $197,136, largely due to greater buyer concentration in older value-add properties.

Fourth quarter trade promises to be the strongest since 1Q16 (46 transactions/$2.8bn) and the second most prolific quarter ever. Through mid-December, buyers had closed on 23 acquisitions for proceeds of $1.3bn. Although per-unit prices were nearly unchanged, the average cap fell to 4.96%, according to CoStar, down from 5.42% in 3Q16, and the lowest metric observed in the series. Cap rates for infill trophies remain in the low– to mid-4% area.

Transit oriented mid-rises and class-B+ suburban garden projects fall in the mid-4% area to 5.0%. Value-add class-B and B– properties traded in a wider range, from the low-5s to mid-6s.

In light of the strong second-half 2016 bid for DEN assets, RCR elected to trim another 10 basis points from the cap rate proxy to 4.7%. At this purchase yield, a terminal cap of 5.5%, and model derived rent and occupancy point estimates we estimate than an investor would expect to earn a 6.9% 5-year unlevered total return, ranked 25th among the RED 47 peer group. As regards risk -adjusted returns, Denver’s risk-adjusted index of2.65 ranks group #43, reflecting the low cap rate and moderately high model errors.

By Daniel J Hogan

Director of Research djhogan@redcapitalgroup.com 614-857-1416 Office 1-800-837-5100 Toll Free

continued on page 7

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Rental Housing Journal Colorado · December 2016

Rental Housing Journal Colorado

Residential Landlord Tenant Update 2016

By: The Loeffler Law Group PLLC

T

here have been several important changes in landlord-tenant law in 2016. First, the Seattle City Council enacted an ordinance to require landlords to rent premises on a first-in-time basis. Second, HUD officially took the position that it is improperly discriminatory to adopt a policy rejecting all tenants with a criminal history. Third, Seattle enacted legislation prohibiting discrimination based on source of income. The Washington legislature extended the time period for providing an accounting of security deposits to 21 days and created a mechanism for sealing.

The First-in-Time Ordinance The Seattle City Council enacted ordinance 125114 in August. The “First in Time” Ordinance requires landlords to offer a rental property to the first qualified applicant based on who submitted the completed application first.

The stated purpose of the ordinance is to reduce discrimination by limiting the landlord’s ability to choose to whom to rent.

To comply with the ordinance, Landlords are required to process completed applications chronologically in the order in which they are received and

keep records of each application’s date of submission. Landlords also should list their tenant selection criteria. The city intends to hire specialized officials to develop and implement an enforcement strategy. This likely will include “sting” operations. This ordinance will be effective January 2017. Landlords are strongly advised to revise their tenant selection criteria and procedures accordingly.

Criminal Background Checks In April 2016, the United States Department of Housing and Urban Development (HUD) published a memorandum opining that tenant screening criteria discriminating against tenants and applicants based on their criminal history is a violation of the Fair Housing Act. HUD observed that minorities have a disproportionately higher rate of arrest, conviction and incarceration rates than the general population. A screening program or criteria prohibiting all tenants with any criminal history is therefore prohibited as it is more likely to affect minorities.

This does not mean all criminal screening is banned or that a landlord is required to rent to all convicted criminals. To satisfy HUD requirements,

screening criteria must be carefully tailored to prevent discrimination.

This will require Landlords to review tenants’ criminal history on a case-bycase basis. Landlords are advised to consider the nature and severity of the crime, the time that has passed, and whether the tenant has complied with terms of any sentence (i.e. paid fines, completed probation, etc.).

Source of Income and Place of Employment Discrimination The Seattle City Council enacted an ordinance prohibiting landlords from discriminating against tenants for their source of income or place of employment. Landlords may not refuse to accept a tenant who receives a rent subsidy from a public entity such as Section 8 or a private entity such as the YWCA. Landlords are also prohibited from favoring tenants based on employer, such as providing rental incentives for employees of Microsoft or Amazon.

When calculating rent for a tenant receiving a rent subsidy, the rent is effectively reduced by the amount of the subsidy. For example: a landlord requires tenants to have a monthly income three times the amount of rent, the rent is $1,000.00, and Section 8 provides monthly $800.00 subsidy. The tenant needs to only show income of $600.00, or three times the rent after applying the subsidy payment.

Lengthening the Time to Account for a Security Deposit In late 2015, the Court of Appeals ruled that the landlord’s “passive delay” in accounting for the security deposit at the end of a tenancy “falls woefully short” of showing that circumstances beyond the landlord’s control prohibited it from accounting for the security deposit within 14 days. The landlord, therefore, must demonstrate that it actively attempted to determine its damages at the end of the tenancy within the statutory deadline. The Washington State legislature subsequently determined to lengthen that deadline from

14 days to 21 days. While the additional seven days is helpful, landlords are advised that the courts will look more carefully at how the landlord used the time allotted in determining whether the landlord properly and timely accounted for the tenant’s security deposit.

Order of Limited Dissemination The Legislature added a new section to the Residential Landlord-Tenant Act. RCW 59.18.367. This new section authorizing the court to order an unlawful detainer action to have limited dissemination if the case was without basis, the tenant reinstated its tenancy by law, or for “other good cause.” The tenant has the option to move the court for an order that effectively prohibits tenant screening service providers from disclosing the unlawful detainer action in a tenant screening report or using the report as a factor for determining whether to recommend that tenant for future tenancies.

An order of limited dissemination does not prohibit a landlord from doing its own court search for an eviction and using that information. It only limits a screening company’s ability to disclose the information to the landlord.

This new rule may be used as a negotiation tool for existing and past tenants. Tenants who desire clean rental histories may be more willing to pay old judgments or pay their rent current in order to get a landlord’s cooperation for an order of limited dissemination.

Evan Loeffler is the principal at the Loeffler Law Group PLLC in Seattle. Mr. Loeffler’s practice emphasizes landlord-tenant relations and real estate litigation. He is the author of several chapters on landlord-tenant law in the Washington Lawyers Practice Manual and is on the faculty for several landlord-tenant CLE programs.

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DEAR MAINTENANCE MEN:

Water and Wax Removal

By Jerry L’Ecuyer & Frank Alvarez

Dear Maintenance Men: I have a bathroom sink that is slow draining. I have already snaked the drain and found no stoppage. When I remove the pop-up assembly and have an open drain, water whooshes down with no problem. However, with the pop-up in place, water backs up into the sink and drains very slowly.

Paul Dear Paul: Most bathroom sinks have an overflow hole near the top edge of the sink.

This hole serves two purposes; 1: Acts as a safety drain to keep the sink from overflowing should the water rise above a certain level in the sink. 2: The overflow hole also serves as an air vent for the sink when the water levels are above the pop-up plug. The overflow hole allows air to escape through the drain and the water to evacuate more efficiently.

What has happened is hair, toothpaste, grime etc. have built-up and sealed off the overflow drain where it exits just below the pop-up assembly plug. Most snakes are too big to go through the overflow drain. Alternatively, a speedometer cable will work great or even a long zip tie will work.

Push the cable or zip tie down through the overflow hole at the top of the sink and push any gunk out into the drain.

Use water to help push the debris out the overflow drain, a funnel works great to direct a good flow of water. If you cannot get the overflow to drain, disassemble the main drain assembly to gain access to the overflow drain exit. Once the overflow drain has good airflow, the sink should drain a bit faster. If this does not solve the problem completely, look at restricting the water flow coming out of the faucet. Use a restrictive aerator to cut down on the GPM of the faucet.

Dear Maintenance Men: My property has 100-gallon gas fired water heating that serves four units.

It is about 8 years old. The tenants are complaining of very little hot water. I have checked the tank and the thermostat is working, the water is hot.

Are my residents making up stories?

What am I missing?

Thorne

4

cause of the age of the tank; while you have the port open, check the inlet dip tube and the anode rod inside the tank.

If the anode rod is corroded, replace it by pulling it out from the top of the tank and inserting a new one. The anode rod is a sacrificial zinc rod that helps keep the tank from corroding. The second item to check is the cold-water inlet dip tube. Cold water entering the heater is routed to the bottom of the tank by the dip tube. If the tube is corroded, broken or missing, the tank will develop hot and cold areas, leading to complaints about short-term hot water. The dip tube is located inside the cold-water inlet pipe. Replacements for both the anode rod and dip tube can be found at most plumbing supply houses.

Dear Maintenance Men: How do I remove candle wax or gum from my rental unit’s carpet?

Janet Dear Janet: The best way to remove candle wax from a carpet is to use a hand held clothes iron. Put an absorbent paper towel over the wax and heat the area with a hot iron. The paper towel will absorb the wax as it melts. Be careful not to burn the carpet as an iron can melt certain carpet fibers and scorch others.

Start on the lowest setting. Remove any left over stain by blotting the area with a small amount of dry-cleaning solvent.

(Dry-cleaning brand names to look for: Guardsman Dry Cleaning fluid, Woolite Dry Cleaning Secret, Dryel or any dry fabric cleaner and in a pinch; lighter fluid.) Also, blotting with a mild detergent mixed with warm water may work. Make sure the detergent does not contain any alkaline or bleaches.

Remove gum by either freezing the gum and removing it by pieces or using peanut butter to loosen the gum’s grip on the carpet. A product known as “Goo-Gone”, found at Home Depot, may be used to remove gum, tar, grease and glue. Use Goo-Gone sparingly Bio: If you need maintenance work or consultation for your building or project, please feel free to contact us. We are available throughout Southern California. For an appointment please call Buffalo Maintenance, Inc. at 714 956-8371

Dear Thorne: The water heater may need a bit of maintenance. The first thing to do is Jerry L'Ecuyer is a licensed contractor & clean out the sediment at the bottom real estate broker. He is currently on the of the tank. This will require a shut- Board of Directors and Chairman of the down of the heater for a couple of hours Education Committee of the Apartment and some hands and knees work. Most Association of Orange County. Jerry has 100-gallon gas water heaters have a been involved with apartments as a proclean-out port at the front of the tank. fessional since 1988.

The port is either round or oval. Be sure Frank Alvarez is the Operations Director to get a new clean-out port gasket be- and co-owner of Buffalo Maintenance, fore starting this job. Once the water Inc. He has been involved with apartment is drained and the port opened, remove maintenance & construction for over 20 all the sediment from the tank. You can years. He is also a lecturer & educational expect to haul out one to two buckets instructor. Frank can be reached at (714) of calcium buildup. (Sediment removal 956-8371 Frankie@BuffaloMaintenance. should be done once a year.) Removing com For more info please go to: www.Bufthe sediment will greatly improve the faloMaintenance.com heating efficiency the water heater. BeRental Housing Journal Colorado · December 2016

Rental Housing Journal Colorado

Apartment Rents Weakening? ...continued from page 1 class A properties within urban core.

There are many properties offering first month rent concessions with one year leases. (Some are even offering two months free.)

Properties on the outside (farther East, South and West) have more stable rents. As inner core prices begin to rise people will be moving outward. Currently, 9,000 units are under construction, mostly in the 30 units and under range. With 25,000 more currently proposed, competition is increasing no matter what.

Not all new construction currently proposed will be built as not all will be able to get the rents they are planning on. Properties that are pushing rents are seeing higher vacancies because the market is so competitive.

According to Mark Barry’s research, Studios have the highest vacancy rate at 5% with 1, 2 and 3 bedroom units around 2%. (In a recent phone survey (early October 2016) of local residential property managers the vacancy rate has increased to over 3 %.)

Important statistics to consider: Population In 2010, The Portland–Vancouver– Hillsboro Metropolitan Statistical Area (MSA) was the 23rd largest in the United States, with a population of approximately 2,226,009. Since then, the Portland metropolitan region added 40,621 new residents from 2014 to 2015, a growth rate of 1.72 percent. The new estimates show the 7-county greater Portland region just shy of the 2.4 million population mark, with 2,389,228

Founded in 1972, Bluestone & Hockley’s staff totals nearly 110 employees, including 20 licensed brokers. The company’s property management division serves commercial buildings, apartments, condominium associations and houses in the Portland / Vancouver metro area, while the brokerage division facilitates both leasing and sales of investment properties throughout Oregon and Washington.

residents as of July 1, 2015. Most of the immigrants are from California, followed by immigration from the rest of the US. Additionally most of the immigrants have a higher education and are root seekers (from 25 -35 years old).

Employment Despite the increase in new residents, unemployment in the Portland Metro areas has stabilized. Household income is averaging $64,000 a year, slightly above the national average of $56,516.

The US economy is slowing down, with a particular focus in the manufacturing sector. American manufacturing barely grew in September as a broader swath of a strong dollar and faltering overseas markets.

The Institute for Supply Management’s factory index reflects this decrease in activity. The index fell to 50.2, from 51.1 in the it has been since May 2013. Fifty is the dividing line between expansion and contraction.

Out of eighteen industries, only seven grew in the past month, the fewest since December 2012.

Oil-related weakness among energy companies is now spreading to computer, plastics and machinery makers. The stronger dollar combined with slower growth in emerging markets hurts foreign sales. Auto dealers and construction companies are insulated by the spending of American consumers.

Summary We are at the top of the market. In Oregon 3 -3 ½ % growth rate is expected due to the relocation of many businesses from out of state. The glut of new developments and lower demand for Class A multi- family properties has increased competition between units as demonstrated by the amount of free is can it continue to grow? With increased vacancy rates it’s hard to judge if we are seeing pre-election jitters or the beginning of an economic downturn? I am not sure facing a rejection of ever increasing rental rates.

Cliff earned a degree in Political Science from Claremont McKenna College and holds an MBA from Willamette University. He is a Certified Property Manager and has achieved his Certified Commercial Investment Member designation (CCIM).

Bluestone & Hockley Real Estate Services is an Accredited Management Organization (AMO) by the Institute of Real Estate Management (IREM).

Cliff is a member of the Institute of Real Estate Management and was named Certified Property Manager of the year in 2001 and 2003. Cliff is a frequent contributor to industry newsletters.

Bluestone & Hockley offers customized brokerage, property and asset management, as well as maintenance services to property owners and investors throughout the Portland/Vancouver metro area.

The company’s full-service approach benefits busy property owners and investors, who know they can count on Bluestone & Hockley for high quality real estate services start to finish.

A Better Real Estate Experience.

503-222-3800

Clifford A. Hockley is President of Bluestone & Hockley Real Estate Services, greater Portland’s full service real estate brokerage and property management company.

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M

Survey Reveals What Millennial Renters Want in 2017

illennials recently surpassed Baby Boomers as the largest living generation on Earth, and with millions continuing to put off traditional life milestones like home ownership, property owners are taking note. To reveal just what Gen Y looks for in a rental, Schlage®, a brand of Allegion which creates technologically advanced lock products to help multi-family property owners secure and manage

their units while streamlining operations, has announced the results of a nationwide survey conducted with Wakefield Research of 1,000 U.S. renters in multi-family dwellings. Results include a desire for tech upgrades and the integration of next-generation access control systems as critical elements to entice renters.

Of millennial renters who live in multi-family dwellings, 86 percent are

doors. In fact, 55 percent are likely to pay more for an apartment that had "high-tech" door locks compared to ones that did not.

Schlage Control™ Smart Deadbolts and Schlage Control™ Smart Interconnected Locks are available in the Greenwich and Addison styles, with finish options including Satin Nickel, Aged Bronze, Satin Chrome and Bright Chrome. To learn more about Schlage and its offerings, please visit www.Schlage.com/Multifamily *Survey Methodology This survey was conducted by Wakefield Research among 1,000 U.S. renters in multi-family dwellings, between Oct. 1224, 2016, using email and an online survey. Results of any sample are subject to sampling variations. For the interviews conducted in this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 3.1 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.

• Smart Renters: On average, millennial renters would pay about a fifth more for smart home features.

• Tech vs. Parking: 44 percent of millennials would give up a parking space to live in a "high-tech" apartment.

• Advanced Security: 63 percent would move out of an apartment due to lack of security.

• Work/Rent Balance: 64 percent feel that being close to work is more important when choosing an apartment than being close to friends and family.

• The Future: 45 percent of renters feel that physical door keys will be obsolete in the next 10 years.

Schlage continues to innovate with smart multi-family technology, including its latest launch, Schlage Control™ Smart Interconnected Lock, recently named a "Top 101 Product" for 2016 from Building Design+Construction Magazine. Featuring ENGAGE™ Technology, this new offering provides multi-family property owners with highly scalable, efficiency-boosting capabilities with a greater appeal for residents.

willing to pay more for a "smart" apartment, meaning one that is equipped with automated or remotely controlled devices, compared to 65 percent of Boomers. This is big, considering nearly half of American renters in multi-family dwellings expect to be renting an apartment for the next five or more years.

"As the multi-family marketplace continues to evolve with flexibility being a key factor in most living situations, consumers can feel confident that Schlage's latest door hardware offerings are paving the way for a new era of convenience and security," said Ann Matheis, marketing director, Allegion.

"Apartments won't look the same in 10

years, from the inside or the outside, and with our long-established position in both the residential and commercial sectors, we have a unique vantage point that helps bring targeted, outcome-driven innovation to multi-family facilities because electronic access is the future."

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Publisher Will Johnson – will@propubinc.com Designer/Editor Kristin Flores – kristin@propubinc.com

Results of the industry survey include six key insights into the millennial renter.

• Lock Down: Millennials want tech upgrades right down to the locks, as more than 61 percent are likely to rent an apartment specifically because of electronic access features, including keyless entry

About Allegion™ Allegion (NYSE: ALLE) is a global pioneer in the field of safety and security. We keep people and their property safe, wherever they are, bringing together simple solutions and advanced technology. Allegion is a $2 billion company, with products sold in almost 130 countries. For more, visit www.allegion.com.

Advertising Sales Will Johnson – will@propubinc.com Terry Hokenson – terry@propubinc.com Larry Surratt – larry@propubinc.com

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Rental Housing Journal Colorado · December 2016

Rental Housing Journal Colorado

Market Overview ...continued from page 2

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Rental Housing Journal Colorado ¡ December 2016

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Rental Housing Journal Colorado

Landlords and Property Managers Bullied ...continued from page 1 Where this all started with apartment building purchase “He bought one building around seven or eight months ago out in a semi-blighted part of East Portland, a working-class area,” McIsaac said.

“It was built about seven years ago.

And it needed some repairs just from wear and tear. The tenants asked him to make these repairs and he said, ‘Yes I will do that.’ “ “So he set to making the repairs. But he had bought the building at market value. And market value right now is a hell of a lot higher than it was seven years ago – it’s a lot higher.

“He said that he was going to have to raise the rent. But he said he would keep the rents – and he stuck to this – at the very low end of market rates. So he’s not a profiteer by any stretch of the imagination,” McIsaac said. He said in his opinion, “This guy is a liberal, progressive classic Portlander. He is a caring, altruistic, sensitive man.”

Sign held by protester outside of the 2016 Spectrum Tradeshow

Group pushing rent control and end to no-cause evictions for Portland Portland Tenants United is a growing tenants union dedicated to organizing tenants to take action to strengthen and enforce tenants’ rights and protections, according to their Facebook page.

At a recent press conference, Portland Tenants United and City Commissioner-elect Chloe Eudaly, promoting something called “Keep Portland Housed,” called for a freeze on rent and an end to no-cause evictions in Portland until there is a policy in place to improve conditions for renters.

Leader says group wants municipal disobedience and rent control “We’ve been in an officially declared housing emergency for over a year.

Despite that, tenant protections – the most critical component to preventing homelessness – have not meaningfully improved, and conditions continue to worsen,” Eudaly said in a press release. “My election, and the passage of Portland’s housing bond, present a clear and obvious mandate to City Council to act.”

Eudaly admits state laws prohibit local rent control measures. But she wants city commissioners to commit “municipal disobedience,” do it anyway and fight the resulting lawsuits, she told the Portland Tribune.

Portland Tenants United is focused on lowering the eviction rates in Portland by organizing tenants to vocalize their concerns. Gabriel Erbs, organiz8

er for the group, insists the fight is far from over, according to a report on Portland Patch. "Tenants can be evicted, for whatever reason or no reason at all, at the landlord’s whim," he said.

Protesters outside of the Portland Art Museum

Landlord and tenant activists have clashed Tensions escalated late in 2016 at the Portland Art Museum during an awards ceremony. Multifamily NW, an association promoting quality rental housing, was holding its annual ACE awards ceremony for its members when protesters from Portland Tenants United showed up.

Dozens of protesters gathered across the street from the museum. It didn’t take long for tempers to flare, according to koin.com.

The television station reported that, “Tensions were high. Some choice words were exchanged as well as some apparent shoving as protesters came face to face with ceremony attendees. Shouts calling the multifamily association attendees ‘parasite’ and ‘bloodsucker’ rang out from protesters.”

A small group of protesters stormed past security into the museum to disrupt the event. They were soon removed by security, according to katu.com.

Deborah Imse, executive director of Multifamily NW, said in response to the protest, “Over the past few years, rents in Oregon have risen while incomes have lagged behind, creating an urgent housing crisis. In order to thrive, the region needs to work together to create more quality housing options for families of all incomes.

“With demand for housing continuing to increase, we must take action to reduce rental costs by increasing the variety of housing types available to people of all incomes and creating more subsidized affordable and market-rate units,” Imse said in the statement.

business harder has the reverse effect on the problem they want to solve,” Multifamily NW’s Imse wrote in an email to the Portland Mercury.

“As the organization representing property owners and managers, Multifamily NW has adopted a solutions-oriented approach to address the housing shortage. The market data we collect, along with reviews of affordable housing policies across the country and the experience of our members, have shown us the best way to create affordability in the housing market: adopting proven strategies that add to the housing supply,” Imse wrote in an article on Oregonlive.com in early 2016.

Barrier to constructing new apartments need to be removed “To increase the overall housing supply, we need to remove barriers to building. This includes updating zoning codes to allow for a wider variety of housing types at a range of price levels.

“At the same time, we should streamline the process for development review and permitting new construction while retaining standards for high-quality buildings. Under the current process, approvals can take a year or more, adding to project costs and delaying the construction of much-needed market-rate and affordable units,” Imse wrote.

Protesters holding sign in front of a news anchor

Landlords Trying To Do The Right Thing Caught in the Middle McIsaac said Marsh tried to work with the existing tenants on payment plans and provide plenty of lead time and help moving if they decided not to pay the rent increases. Most tenants decided to stay, he said.

Protesters marching through the streets

No lawsuits have been filed.

“But they have come up with some non-factual statements about how he has treated tenants and what he has said to them. And he has bent over backwards, and so has the rental company, to make it easier for tenants,” McIsaac said.

“So it is interesting here in Portland the media has not jumped on him, they have been extremely neutral on him.

The head of the tenants union has taken it upon herself to negotiate with landlords on behalf of the tenants and she is not a lawyer, not a property owner, she’s just an activist,” McIsaac said.

Property management groups say more apartment units needed Any solutions to the Portland housing issue, property management organizations say, should be market-based. A spring 2016 apartment report released by Multifamily NW says that “Portland’s current development pipeline includes an impressive 21,600 proposed units.”

“More housing is the solution, and our priorities are to help increase supply and educate politicians on the fact that simply adding fees and making

Activists marched into property management office Activists were protesting at one event and then went over to the office of the property management company Marsh had been using to handle his rentals.

“They marched into the A&G Rental Management LLC office and intimidated the people working there. Drove some of them from the main area back into their offices. They had to lock themselves in their offices. And the principals were not in the office at the time, so they basically attacked the support staff – not physically – but scream-

ing, bullhorns, stomping, just marching through this office. It’s not very big, maybe a grand total of 1,000 square feet. So 30 of them came in there so it was pretty unpleasant,” McIsaac said.

Security and protesters outside of the Portland Art Museum

Challenge of buying apartments at market rates “The bottom line is, if somebody buys a new rental property at market rate from somebody else who owned it for 10 years, the owner is going to sell it at market value. The new owner is going to have to raise the rents to make the monthly mortgage. If you do away with no-cause evictions, then you also do away with the ability to evict bad actors who are drug dealers or domestic abusers, because that is what the law exists for,” McIsaac said.

“His (Marsh’s) other properties have long-term tenants – his other two properties – and so it’s just a crazy, uncomfortable situation. I think the property managers and the landlords are really willing to work with tenants because of the type of city we have here – but the tenants union has refused conversations and any negotiations that are not absolutely in their favor,” he said.

“And they have a couple of politicians on their side,” McIsaac said. “Some politicians support no-cause evictions and rent control. But they don’t know the facts. If they did, they would not do it.

The Portland Tenants Union is funded by the national Service Employees International Union (SEIU). No-cause evictions are No. 1 and rental control is No. 2 but I think there are other things lurking underneath if they can get these laws passed.

Protesters marching through the streets

“If you have rent control you cannot improve your buildings. You have to be an altruistic millionaire to improve a building with rent control because rent is where you derive your income.”

Rental Housing Journal Colorado · December 2016