Sacramento Multifamily Summary · •Local Market Cycle •Forecast of Key Indicators •Apartment...

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Sacramento Multifamily Summary

ADVISORY TEAMApartment

PRESENTED BY:

John Shaffer Brian Nelson Nicole Parrish

(916) 563-3035 (916) 830-2576 (916) [email protected] [email protected] [email protected]

mailto:[email protected]



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Points of Discussion

• MSA Market Fundamentals

• Transaction Volume and Pricing Trends

• New Construction Activity

• Rent Control Update

• Local Market Cycle

• Forecast of Key Indicators

• Apartment Advisory Team of Colliers Sacramento


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Sacramento MSA Q3 Market Fundamentals

YOY Change from Q3 2018 to Q3 2019

Overall Market Occupancy …………….…… 96.7% 96.9%

Average Market Rent ……………..………… $1,419 $1,495

Total Net Absorption …………..……………. 832 558

Total Unit Completions ……………………... 530 402

Total M-F Permits Issued …………………... 488 452

Units Under Construction …………………. 3,717 3,305

2018 2019

Source: MPF (Includes Properties of 5+ units in Sacramento, Placer, El Dorado, and Yolo Counties)

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Sacramento MSA Rental Rate Summary

Dec Sep


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Sacramento MSA Occupancy Summary

Dec

Average Market

Rent

Sep

Source: MPF (Includes Properties of 5+ Units in Sacramento, Placer, El Dorado, and Yolo Counties)

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Sacramento MSA Employment Analysis

Source: Bureau of Labor Statistics (Includes Sacramento, Placer, El Dorado, and Yolo Counties)

2008 2012

MSA employment peaked in June 2007, and

then proceeded to bottom in January 2011

after losing 110,000 jobs. The pre-recession

level was once again reached in October

2015, almost 5 years after bottoming.

2009 2010 2011 2013 2014 2015 2016 2017 2018 2019

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Sacramento MSA Employment Analysis

Source: Bureau of Labor Statistics (Includes Sacramento, Placer, El Dorado, and Yolo Counties)

2018 2019

November 2018 Employment Level: 1,017,000

November 2019 Employment Level: 1,033,500

Jobs Gained: 16,500 (1.6% Increase in 12 Mo.)

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• Rent Control in the Region





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Transaction Volume and Pricing Trends

Source: CoStar Sales Comparable for properties 10 units or greater in the 4-county region

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Transactions

7,739 Units

$1.106 B $1.214 B

135

Transactions

9,228 Units

2019 2018

Sacramento MSA Sales Activity Comparison

Avg. Price/Unit

$142,984

Avg. Price/Unit

$131,547

Jan - SeptJan - Sept

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Interest Rate – Cap Rate Relationship

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Sacramento MSA Multifamily Construction

Source: CoStar, MPF

Q3 2019 Total:

3,305 Units

Note: Totals above based on multifamily construction in four-county Sacramento region.

4,375 units

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Rent Control Update

Sacramento Update

• AB-1482 Tenant Protection Act of 2019 is now in effect statewide

as of January 1, 2020.

• Sacramento City Tenant Protection and Relief Act went into

effect September 13, 2019.

• The City and State are now consistent on rental rate increase

limitations. Regarding just-cause protections, the City Ordinance

applies to properties in the City, and the State Law applies to all

other properties in the MSA, that are subject to the protections.

• The California Rent Control Initiative may appear on the ballot as

an initiated state statue on November 3, 2020. This is a “second

bite at the apple” to repeal the Costa-Hawkins Act.

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Sacramento MSA Rental Rate Growth

Dec Sep


Actual average rent growth rate is 5.4%

Market dynamics

do work. They will

correct themselves

if left alone.

Allowable rent growth rate per rent control is 8.34%

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Rent Control Update

Sacramento Update

• AAT Colliers Sacramento published “Rent Control 101” in

June 2017, and has now updated the white paper to reflect

changes in this issue since that date.

Please email the following for a copy:

[email protected]

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Sacramento MSA Multifamily Cycle

Adjusted Sacramento

Apartment Cycle Line

Sacramento TodayMarket Statistics

2017 Rent Growth: 7.8%



5-YR Rent Growth: 7.6%

Q3 2016 Vacancy: 3.4%

Q3 2017 Vacancy: 3.5%

Q3 2018 Vacancy: 3.3%

Q3 2019 Vacancy: 3.1%

(Supply constraints will result in

an extended market cycle peak

period.)

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• Rent Control in the Region





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Sacramento MSA Forecast of Key Indicators

Next 3 Months Next 12 Months

Employment Growth N/A 2.00%

New Apt. Unit Supply 520 1,727

Apt. Demand (absorption) Neutral Negative

Occupancy Rate 96.8% 96.5%

Rent Growth 1.1% 5.4%

Rent Concessions Insignificant Insignificant

Apt. Sales Volume Strong Strong

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Sacramento MSA Rental Rate Forecast

Dec Sep


Q4 Q2 Q3Q1

FORECAST

Rents forecast to increase 1.1% over the

next 3 months, and increase 5.4% over

the next 12 months.

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Sacramento MSA Occupancy Forecast

Dec

Average Market

Rent

Sep

Source: MPF (Includes Properties of 5+ Units in Sacramento, Placer, El Dorado, and Yolo Counties)

Q4 Q1 Q2 Q3

Occupancy forecast to decrease 10

basis points by end of 2019, and slightly

decline 40 basis points over the next 12

months.

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Sacramento MSA Employment Forecast

Source: University Of The Pacific and Bureau of Labor Statistics

(Actual)

(1.7%) (2.0%) (1.2%)

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Sacramento MSA Forecast Results

Q3 2019 Forecast Q3 2019 Actual

Employment Growth 1.80% 1.90%

New Apt. Unit Supply 2,200 1,575

Occupancy Rate 96.2% 96.9%

Average Rent $1,487 $1,495

Apt. Sales Volume Strong Strong

($1.7B)

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Market Intelligence Campaign

• Sale Transactions

• Properties Available for Sale

• Quarterly Report

• Forecast of Various Apartment Indicators

Apartment Advisory Team of Colliers Sacramento

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Apartment Advisory Team of Colliers Sacramento

Sacramento Multifamily Summary · •Local Market Cycle •Forecast of Key Indicators •Apartment...

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