Apartment Unit Permitting Chart from Axiometrics Posted

[Giovanni Isaksen]

Axiometrics posted their latest chart of multifamily permits for their top 40 metros- it's good to know how much new competition you'll be facing. Their chart also shows the job growth for those areas. Theses are two critical statistics for apartment market selection and investment decisions. The piece missing is what percent of existing stock the new permits represent, you'll have to find the total size of your market from other sources to complete that calculation.

See the whole Axiometrics report here: http://bit.ly/1dWjEUX

Good hunting-

[Giovanni Isaksen]

Ask and you shall receive- Was just on the Institutional Property Advisors - Marcus & Millichap Research call who shared this chart of the top and bottom 10 markets for 2014 completions forecast and the percent of current inventory that the new completions will represent:

So for those 20 metros we can do a little math; dividing the number of completions by the completions as a % of inventory to get the size of the market and then match that against the number of permits from above to get a sense of what's coming in terms of new supply. It's interesting to see that while NYC's 8,800 new units will be 3.7% of the 238k of the apartments in that market but Houston's 10,900 will barely move the needle, 1.8% of the 605k units in that market.

Sean Breslin, EVP at Avalon Bay (one of the large apartment REITS) who was also on the call said that one dynamic that they really look at when selecting markets is job growth vs. new supply and sure enough M&M Research had a slide on that too:

The rule of thumb that you hear from the institutional guys is that on average it takes about 5 new jobs to fill a new unit. You can see that play out by looking at Austin which is projected to have only 3.5 jobs per new unit with vacancy climbing a full 1% while Houston with 10.2 new jobs is forecast to have vacancy fall 10bp. There are many markets that seem to buck that trend as well like LA with 15.8 new jobs per unit but vacancy rising 40bp. That says two things I believe; one, that each market can have its own dynamic and ratio and two, that you probably have to watch the trend in this ratio over a longer period than just one year.

BTW if these charts won't zoom enough to be readable shoot me a message and I'll send them to you directly. There are more great charts from this presentation as well as from the JPM Big Book of Charts that I'll be posting about later on the Ashworth Partners website so check there Friday for the full update.