Biden Unveils $2T Infrastructure Plan, With $213B For Affordable Housing

 The Biden administration has rolled out its proposal for roughly $2 trillion in infrastructure spending. The plan calls for funding to repair basic infrastructure, such as roads and bridges, but also a host of other priorities, including upgrades to the U.S. housing stock, electrical grid and water systems, as well as expanding access to broadband internet and improving the pay of home healthcare workers.

The plan calls for $213B to preserve and retrofit more than 2 million affordable housing units and commercial buildings and build more than 500,000 new low-cost housing units. As part of the spending on affordable housing, the president is calling on Congress to pass the Neighborhood Homes Investment Act, which would offer $20B in tax credits for affordable housing over the next five years.

Another part of the Biden proposal would be to enact a grant program that awards money to jurisdictions that eliminate barriers to producing affordable housing, such as exclusionary zoning laws. 

The plan would also use $10B to modernize federal buildings, including through the Federal Capital Revolving Fund, with the aim of making the structures more sustainable. The greening of federal properties, which was a focus of the Obama administration, was de-emphasized under President Donald Trump.

As part of spending more on federal facilities, the plan calls for $18B for the modernization of Veterans Affairs hospitals and clinics. The administration points out that the median age of U.S. private sector hospitals is about 11 years, while the facilities in the VA hospital portfolio have a median age of 58 years. The plan calls for upgrading U.S. schools as well.

The president is expected to start stumping for the plan in a speech in Pittsburgh on Wednesday afternoon, framing it as an economic recovery package, especially one that will create union jobs, but also as a way to compete with China. 

In the statement released by the White House on Wednesday morning, China was specifically mentioned as a prime U.S. rival in the world economy, and the new infrastructure spending was characterized as critical to competing with "the ambitions of an autocratic China."

Much of the funding for the plan would come via tax increases, which the administration will outline in a separate proposal called the Made in America Tax Plan. Among other measures, that proposal is expected to include raising corporate taxes to 28% from the 21% rate enacted by the Tax Cuts and Jobs Act of 2017, which replaced a tiered structure from 15% to 39%, the Wall Street Journal reports. The tax proposal would also increase taxes on U.S. companies’ foreign earnings to help cover the cost of the infrastructure package. 

As an indication of the Biden administration's infrastructure priorities, the Department of Transportation announced in mid-March that it was seeking applicants for the fiscal year 2021 round of the Infrastructure for Rebuilding America grant program, which will fund national and regional transportation projects. The funding available totals about $889M.

For the first time, DOT will look for projects that address climate change and environmental justice, and the department will consider racial equity as a selection criterion. It will also consider whether a project is in a federally designated community development zone, including opportunity zones.

https://www.bisnow.com/national/news/construction-development/biden-administration-unveils-2-trillion-infrastructure-plan-including-213b-for-affordable-housing-108335

Online real estate brokerage Compass cuts deal size 48% ahead of $463M IPO

 Compass, which operates an online residential real estate brokerage platform, lowered the proposed deal size for its upcoming IPO on Wednesday. In its latest filing, the company also disclosed indications of interest.

The New York, NY-based company now plans to raise $463 million by offering 25 million shares at a price range of $18 to $19. Insiders intend to purchase $159 million worth of shares in the offering. The company had previously filed to offer 36 million shares at a range of $23 to $26. At the midpoint of the revised range, Compass will raise -48% less in proceeds than previously anticipated.

Compass was founded in 2012 and booked $3.7 billion in revenue for the 12 months ended December 31, 2020. It plans to list on the NYSE under the symbol COMP. Goldman Sachs, Morgan Stanley, Barclays, Deutsche Bank and UBS Investment Bank are the joint bookrunners on the deal. It is expected to price during the week of March 29, 2021.

Relevant Profile: COMP

https://www.renaissancecapital.com/IPO-Center/News/80229/Online-real-estate-brokerage-Compass-lowers-deal-size-by-48-ahead-of-$463-m

CDC will extend national eviction ban through June 30

 The Centers for Disease Control and Prevention has extended the national ban on evictions through the end of June.

“The COVID-19 pandemic has presented a historic threat to the nation’s public health,” CDC director Dr. Rochelle Walensky said in a statement. “Keeping people in their homes and out of crowded or congregate settings — like homeless shelters — by preventing evictions is a key step in helping to stop the spread of COVID-19.”

The eviction ban was scheduled to expire in two days, and advocates warned of a spike in evictions without an extension.

Around 20% of adult renters said they didn’t pay last month’s rent, according to a survey published in March by the Census Bureau. Closer to 33% of Black renters reported the same.

Likely informing the health agency’s decision to extend the ban for three months is the fact that mass evictions could undermine the country’s attempts to get the coronavirus pandemic under control. That’s because many displaced people double up with family members or friends or are forced to turn to crowded shelters.

During the pandemic, 43 states and the District of Columbia temporarily prohibited evictions, some for as little as 10 weeks. Researchers found that allowing evictions to continue in these states caused as many as 433,700 excess cases of Covid-19 and 10,700 additional deaths in the U.S. between March and September, when the CDC ban went into effect nationwide.

“When you’re looking at an infectious disease like Covid-19, evictions can have an impact not only on the health of evicted families, but also on the health of the broader community,” said Kathryn Leifheit, one of the study’s authors and a postdoctoral fellow at the UCLA Fielding School of Public Health.

At least two federal judges have questioned the CDC’s power to ban evictions. And property owners have criticized the policy and say landlords can’t afford to continue housing people for free.

“Short-term policies like eviction moratoria leave renters accruing insurmountable debt and jeopardize the ability for rental housing providers to provide safe, affordable housing,” said Bob Pinnegar, president of the National Apartment Association.

Housing experts said that it wouldn’t have made sense to allow the eviction ban to expire before rental assistance goes out to people. Congress has now allocated more than $45 billion in aid for renters, but it could take a few months for the money to be disbursed.

The CDC’s eviction ban applies to individuals who earn less than $99,000 a year and couples who make under $198,000. To qualify, renters also have to attest on a declaration to their landlord that they’re unable to afford their rent and that being evicted could result in them doubling up with others or becoming homeless.

https://www.cnbc.com/2021/03/29/cdc-will-extend-national-ban-on-evictions-ban-through-end-of-june-.html

"Last Mile' Amazon and UPS Hubs Raise Concerns in Brooklyn Enclave

 The small waterfront community of Red Hook, in Brooklyn, is home to a cruise terminal, a 346,000-square-foot Ikea store and one of two Tesla showrooms in New York City.

Some residents say they have managed to coexist with a variety of large commercial footprints but have concerns about two future neighbors. Amazon.com Inc. and United Parcel Service Inc. both have plans for package-and-delivery hubs in the area to keep up with skyrocketing e-commerce demand. Other package-distribution sites in the area could be on the way, according to local elected officials.

"Industry is not something we are afraid of in Red Hook, but the last-mile delivery is a whole other issue," said City Councilman Carlos Menchaca, a Democrat who represents the neighborhood and is a longtime resident. "There's real terror about what could happen here."

Last-mile delivery is the crucial final step in getting packages from a distribution center, where goods come in, to the customer. With the explosion of online shopping during the Covid-19 pandemic, and increased demand for same-day or even two-hour delivery services, the placement of delivery hubs closer to the millions of homes they serve in New York City has become a key competitive edge in e-commerce.

Construction is currently under way in Red Hook for two Amazon last-mile delivery stations totaling more than 600,000 square feet, according to the company. The retailer said it would bring hundreds of jobs to the area and is committed to using electric vehicles in coming years. UPS is planning a 1.2-million-square-foot facility on 12 acres of waterfront property in the neighborhood.

Some residents said fleets of trucks and sprinter vans coming in and out will increase congestion on the neighborhood's narrow roads, many of which are in disrepair. Surrounded by water on three sides and bordered by an often-clogged expressway, Red Hook has only a few ways for trucks to enter the neighborhood.

Amazon and UPS said they are committed to being good neighbors, communicating with residents and mitigating the impact of their delivery hubs on traffic congestion and pollution.

"We are committed to working closely with local stakeholders to ensure these delivery stations minimize any disruption in the community we're so thrilled to be joining," Amazon spokeswoman Jenna Hilzenrath said. "Our goal is to not only provide great pay and benefits, but also become part of the fabric of Red Hook by embracing the people, the needs and the spirit of the community."

Glenn Zaccara, a UPS spokesman, said the company has been sharing a number of solutions with the city and the community including infrastructure investments and pilot programs for cargo bikes to address concerns.

Amazon is no stranger to community opposition in New York City. Two years ago, the company pulled out of plans for a headquarters in Long Island City, in Queens, after facing pushback from some local elected officials and community groups.

The company said it has plans for several other last-mile delivery hubs in New York City neighborhoods in the Bronx, Brooklyn, Queens and Staten Island. That would add to several other city distribution centers Amazon has built in recent years.

Mr. Menchaca and other Red Hook residents said they fear that the neighborhood, which is about one square mile, will be overwhelmed by the delivery and trucking operations -- and there is nothing stopping more from being built.

Because of Red Hook's zoning, delivery hubs can be built with no special permits or environmental-impact studies required. Mr. Menchaca and other locals have been calling on the city to amend the neighborhood's zoning. They are also pushing for a comprehensive traffic study and a moratorium on new last-mile warehouses until the potential impact on the neighborhood has been studied.

New York City Department of Transportation spokeswoman Lolita Avila said the agency has been in regular contact with local elected officials about mitigating the impact of the developments and would welcome "a much broader conversation about land use and transportation in industrial zones throughout the city" that a long-term solution would require.

Red Hook, with a long history as a working-class enclave, is home to Brooklyn's largest public-housing complex, where more than half of the neighborhood's 11,000 residents live. In recent years, its quaint streets, some cobblestone and with views of the Statue of Liberty, have experienced an influx of boutiques, chic restaurants, distilleries and artists' workshops.

The neighborhood was flooded in 2012 during superstorm Sandy. As it was rebuilt and repaired, companies including Tesla Inc. have moved in, along with construction of more multimillion-dollar homes and a private school.

Real-estate developers have been buying up property in Red Hook to build additional delivery hubs and lease them to companies such as Amazon, Mr. Menchaca said. Several other properties in the neighborhood are being built out as distribution warehouses.

Dov Hertz, president of DH Property Holdings, a real-estate firm that is developing distribution centers for Amazon, said with e-commerce here to stay, New York City needs these facilities. The projects will create jobs that will serve the people in the neighborhoods where they are built, he said.

"If New York is going to be a competitive city, it has to have the distribution infrastructure in place to meet the needs of its residents, " he said.

https://www.marketscreener.com/quote/stock/AMAZON-COM-INC-12864605/news/Last-Mile-Amazon-and-UPS-Hubs-Raise-Concerns-in-Brooklyn-Enclave-32821029/

Clubhouse: New Powerful Real Estate Deal-Making Hub

 In the coming days, Vernell Stewart is set to realize one of her lifelong dreams. Her business, Sweet Tea Factory, is preparing to open its first physical location after eight years of selling tea online, distributing to grocery stores and with a mobile beverage truck.

The tea shop is scheduled to open this weekend in a kiosk at the Tanger Outlets mall in Savannah, Georgia, while it builds out a 1K SF retail space in the mall Stewart plans to open June 1. Stewart, who also works in retail branding and product design, didn't secure the deal for her first location by consulting a real estate broker or online property listing marketplace.

She landed the deal on Clubhouse, a growing social media app that is quickly becoming a valuable deal-making tool for commercial real estate professionals. 

"I never even thought or considered that an app would bring about great opportunities like this," Stewart said. "This right here has been phenomenal. If you could strike all deals like this, that would be perfect."

Unsplash/William Krause

Clubhouse, a social networking app that launched last year, allows people to meet new contacts and discuss shared interests through a series of audio-only chat rooms.

The rooms function similarly to a conference panel or online webinar, with a moderator and a handful of speakers discussing an agreed-upon topic, and a virtual room full of listeners who can click a hand-raise icon to ask a question or share their opinion.

The app is currently only available on the iPhone, and it requires new members to be invited by an existing user. But Clubhouse CEO Paul Davison said in a town hall meeting Monday the app plans to launch on Android phones and ditch the invite-only model "in the coming months," Business Insider reported. After launching on the iOS App Store in September, Clubhouse had reached 12.7 million downloads as of last week, SocialMediaToday reported.

In January, Clubhouse raised $100M in a funding round led by renowned Silicon Valley investment firm Andreessen Horowitz that valued the company at $1B, Axios reported. It gained more attention in early February when eccentric billionaire Elon Musk spoke on the app, and it has continued to build momentum as a networking tool for a variety of industry sectors, including commercial real estate. 

Of the 10 Clubhouse-using commercial real estate professionals Bisnow spoke with for this story, most said they spend at least an hour every day on the app. They said they have met a host of new contacts, and in many cases secured new deals to grow their businesses. 

Some commercial real estate professionals have used platforms like Twitter and LinkedIn to grow their networks for years, but they say Clubhouse is more valuable because its audio-only format allows them to have candid, meaningful conversations with their peers. 

The app has also created a way for industry newcomers to advance their careers, because the Clubhouse users who have built the largest followings are not the ones with the most experience or the most recognizable names, they are the ones who have the most interesting things to say. 

“You can’t fake it on Clubhouse," said Natalie Wainwright, a Las Vegas-based tenant broker who is also active on Twitter. "You either know your craft, you know your market or whatever the topic is, or you don’t. There’s no time to bullshit. There’s no editing. There’s no redoing. It’s your call to the carpet, and what you say either lands or it doesn’t, and I love that element.”

Beth Azor, a retail real estate investor in South Florida, organized the Clubhouse room where Stewart connected with Tanger Outlets. The room, which she named Space Tank and modeled after TV's popular Shark Tank, allowed retail businesses to pitch their concepts to an audience of landlords.

She has hosted the Space Tank room twice and said she has made over 50 matches between landlords and businesses, though not all of them have turned into deals like the Sweet Tea Factory lease. Azor joined the app on Dec. 30, spent the holiday weekend exploring its rooms, and she said it has only gotten better over the last three months. 

"The more of the commercial real estate community that got on, the better, because we were able to start doing business together, and that's why I'm still on it," Azor said. 

Azor has also landed new business for herself on Clubhouse. Through the app, she met New York developer Beatrice Sibblies; she flew up this past weekend to meet with the BOS Development founder about partnering on a development deal in New York City, something Azor has hoped to do for years. 

"I had this interest in New York before Clubhouse because I believe there's going to be opportunity there," Azor said. "Now I get on Clubhouse and find [Sibblies], and I'm like, 'This is my woman,' and my idea that I have maybe wouldn't have come to fruition because I didn't have the right partners."

Courtesy of Beatrice Sibblies

BOS Development Managing Partner Beatrice Sibblies

Sibblies described this weekend's meeting with Azor as "very productive," but the two declined to provide details about what they are working on. Sibblies said Azor was the first Clubhouse contact who has flown from a different city to meet with her, but she has had meetings with multiple New York-based professionals she met through the app. 

She said the app is especially valuable for her because she develops across a variety of different property types, and Clubhouse can help her learn more about the sectors she is looking to enter. Sibblies, who focuses on the Bronx and Harlem, said she is planning her first hotel project, and she has learned about the sector and made important hotel contacts through Clubhouse. 

"What I like about Clubhouse is it allows you to network beyond your geographic neighborhood and beyond your silo," Sibblies said. "Because I am multi-asset class, it is extremely helpful ... I've never seen a networking tool like this."

With in-person events limited during the coronavirus pandemic, Clubhouse has provided a new way for commercial real estate professionals to grow their networks, something that has been especially valuable for newcomers to the industry. 

CBRE associate Kelani Blackwell joined the brokerage firm in February 2020, her first job in commercial real estate after working for a residential firm that flipped houses. She joined Clubhouse in November, and she now has over 23,000 followers. 

A multifamily investment sales broker based in Columbus, Ohio, Blackwell said she has secured multiple clients through Clubhouse, and her team has deals in the works with the new clients to sell a 200-plus-unit property and a 150-acre development site. (She declined to provide further details on the deals, which haven't closed.)

"Clubhouse has been instrumental for me because I joined CBRE three weeks before a pandemic," Blackwell said. "The world shut down, and I'm tasked with trying to create a book of business from behind a computer screen, which is tremendously hard, and Clubhouse has played a huge, instrumental role."

She said Clubhouse can be helpful for women and people of color in the industry to grow their network and advance their careers. 

"It helps you feel a lot less siloed," Blackwell said. "There are only so many diverse brokers and developers in the CRE space, so when you actually meet these folks, it's validating that you're not the only person experiencing the things you're experiencing."

Blackwell leads a club on the Clubhouse app called Women in Real Estate that has over 5,000 members. She hosted a room Tuesday in partnership with Sabrina Bier titled "How Real Estate Professionals Are Using Clubhouse." 

Courtesy of Sabrina Bier

Screenshots of the Clubhouse App showing a room held Tuesday by Women in Real Estate titled "How Real Estate Professionals Are Using Clubhouse"

During the hour that Bisnow tuned into the room Tuesday, more than 140 people joined, and more than a dozen people spoke about their experience with the app, including professionals across the U.S. and in the U.K. and Nigeria. Speakers discussed how Clubhouse can help them share ideas, make new connections, support people in the industry and empower diversity. 

Bier, a longtime residential real estate broker who now works for a title insurance agency in Chicago, said she has been hosting the "How Real Estate Professionals Are Using Clubhouse" room every week since January, and she partnered with Blackwell's club to increase its visibility.

She said the room is meant for residential and commercial real estate professionals to learn how to best utilize the app, and she plans to continue hosting it every Tuesday at 9 a.m. EDT. 

"There are so many people that join it and still don't even use it," Bier said of Clubhouse. "I want to keep it consistent so that people always have a place to go when they decide they want to start utilizing it."

Bier said she has made two personal investments in residential deals in Chicago with people she met through Clubhouse, and she has heard many other people tell stories about securing deals through the app. 

"I've engaged in two different investment opportunities with relationships I've built via Clubhouse in three months, and I would never have met those people it if wasn't for Clubhouse," Bier said. "Every time I mention that in these rooms, there's always people that chime in and say they have, too."

Courtesy of Natalie Wainwright

Natalie Wainwright is vice president at Logic Commercial Real Estate and spearheads the firm’s Office Tenant Representation Division.

Wainwright, a former Cushman & Wakefield broker now with Logic Commercial Real Estate, has 1,500 Clubhouse followers and leads a club called #CREFAM. She said she uses Clubhouse to share experiences with other commercial real estate professionals, and also to meet executives in other sectors, such as technology, who need real estate brokers. 

She said she has landed three new clients through the app, including two that are looking to relocate from Los Angeles to southern Nevada. One of them flew to Las Vegas in late February to tour the market with her, she said, just nine days after they had met on Clubhouse. 

When she downloaded the app in January, she never expected it would land her new business.  

"I didn't think that I would have such meaningful connections, and I didn't think it would actually impact my real world," Wainwright said. "Somebody bought an airline ticket to my city because of Clubhouse, because of a friggin' app. That's crazy to me."

All of the real estate professionals Bisnow spoke with for this story said they see Clubhouse as a valuable tool to build their networks, but some noted that it can be distracting and time-consuming.

Courtesy of Andrea Himmel

Director of Acquisitions at Himmel + Meringoff Properties Andrea Himmel

Himmel + Meringoff Properties Director of Acquisitions Andrea Himmel said that a majority of the conversations she sees on the app aren't relevant to her day-to-day business, so she tries to be judicious about how she uses her time on Clubhouse. 

"My thoughts are 99% of it is noise," Himmel said. "The remaining 1% of people that's not promotional, self-appointed gurus — call it 10 people I've connected with since I joined three weeks ago — of those 10 people, I guarantee you I will do a deal with at least one of them."

Colliers Senior Vice President Coy Davidson, a Houston-based broker who amassed a 32,000-person following on Twitter before joining Clubhouse in January, said it is important for users to be careful with their time on the app.

"It can be such a time-consuming thing because it's audio, people are taking turns talking, so you can get on there and next thing you know you eat up an hour quickly," Davidson said. 

Davidson said he has been impressed with how many high-level executives he has seen on Clubhouse. 

"It's definitely growing, and there are a lot of people in CRE that are active on Clubhouse that I don't see active on Twitter and LinkedIn," Davidson said. "There's been a lot of principals of major shopping center developers or REITs, some people you have an opportunity to network with that you might not get an opportunity to on another social platform."

Prominent executives who have participated on Clubhouse, according to people Bisnow spoke with and a review of public accounts, include Cardone Capital CEO Grant Cardone, Starwood Capital CEO Barry Sternlicht, Massimo Group founder Rod Santomassimo, Invictus Development Group President Christopher Senegal and Avison Young principal James Nelson.

Miami Mayor Francis Suarez participated in a Clubhouse room Monday in an effort to attract investors and businesses to the city. 

Blackwell said she has participated in rooms with Josh Childress, a former NBA player who now leads a Los Angeles real estate company, and Tobias Harris, a current Philadelphia 76ers player whose brother invests in real estate. 

Ackman-Ziff President Simon Ziff, a prominent New York broker who joined Clubhouse in January, told Bisnow in an email he thinks it has the potential to become a valuable tool for the industry.

“I think it could be helpful for the commercial real estate industry if enough relevant people use it, but that hasn't happened yet, perhaps if LinkedIn buys them or develops a comparable feature," Ziff wrote. "My most interesting experience so far was when I was stuck in traffic last week after 11 p.m., and I had a 'place to go' to hang out. You’re never alone anymore."

Part of what has made Clubhouse a valuable networking tool for the commercial real estate professionals Bisnow spoke with was the intimacy of having a relatively small number of people on the app, and some worry about what could happen when it becomes flooded with millions more users. 

Yoni Miller, co-founder of South Florida-based commercial real estate lender QuickLiquidity, hosts a clubhouse room every weekday at noon that often runs more than two hours. He said some of his rooms have garnered over 200 listeners, and they allow him to meet people with whom he otherwise would have trouble connecting.

"Especially right now because it's early on, it's an amazing time to be a host," Miller said. "I don't have a big following on LinkedIn, but I can still get people to show up. I think that's because Clubhouse is newer and there's so much demand for content ... I do believe over time, as you get more audience you are going to see more rooms dominated by people with bigger followings."

Blackwell said it is easier to network in smaller rooms, and she thinks that could be more difficult as the app grows. 

"I do believe that what has made the app valuable, your ability to network, is hindered when a room is too big and not enough people get to speak," she said. 

Sibblies said she thinks the app is more valuable to her now than it will be next year. 

"The reason that people who have become early adopters spend so much time on it is because the return on time is likely to be greater in the first quarter of 2021 than the first quarter of 2022," Sibblies said. "The perception is that there's going to be an exponential increase in usership, so the ability to make contacts will be more difficult a year from now."

https://www.bisnow.com/national/news/technology/clubhouse-app-becoming-a-new-dealmaking-tool-for-cre-professionals-108253

WeWork to Become Public Company in $9B SPAC Merger

 WeWork and special acquisition company BowX Acquisition Corp., have agreed to merge in a transaction that will take WeWork public and value the flex office provider at $9 billion. 

The transaction will provide WeWork with approximately $1.3 billion in cash to fund its growth plans into the future.

It is a heady comeback for the company, following its failed IPO in 2019 and more recently, a year of struggle during the pandemic. But the company also took the opportunity of the last twelve months to refocus its core, according to CEO Sandeep Mathrani. “As a result, WeWork has emerged as the global leader in flexible space with a value proposition that is stronger than ever.”

Over the course of 2020, WeWork improved its free cash flow by $1.6 billion through cost cutting measures including reducing SG&A expenses by $1.1 billion and trimming building operating expenses by $400 million. The company also exited all of its non-core ventures and streamlined headcount by 67% from its peak in September 2019. It also executed over 100 lease amendments for rent reductions, deferrals, or tenant improvement allowances resulting in an estimated $4 billion reduction in future lease payments. 

Today the company has 851 locations in 152 cities, totaling more than one million workstations. Enterprise companies now make up more than 50% of WeWork’s memberships, up from just 10% in 2015. Only 10% of WeWork’s members have month-to-month commitments, while more than 50% have commitments longer than 12 months.

Going forward, WeWork intends to expand beyond its core business through its On Demand, All Access, and Platform offerings. The company maintains that demand from landlords and members remains strong, and it has a $4 billion total sales pipeline and an estimated $1.5 billion in committed 2021 revenue.

Marcelo Claure and Mathrani will continue to lead WeWork as executive chairman and CEO, respectively, along with the rest of the company’s leadership team. Following the closing, Vivek Ranadivé of BowX and Deven Parekh of Insight Partners will join the company’s Board of Directors.

https://www.globest.com/2021/03/26/wework-to-become-public-company-in-9b-spac-merger/

Best Counties for Buying Single-Family Rentals in 2021

 

 
 
 

Highest Potential SFR Returns in Schuylkill, Bibb, Baltimore, LaSalle, Chautauqua Counties; Best Returns Concentrated in Midwest, Worst in West; Rental Returns Decrease from a Year Ago in 87 Percent of Counties Analyzed

IRVINE, Calif. – March 25, 2021 — ATTOM Data Solutions, curator of the nation’s premier property database, today released its Q1 2021 Single Family Rental Market report, which ranks the best U.S. markets for buying single-family rental properties in 2021.

The report analyzed single family rental returns in 495 U.S. counties, each with a population of at least 100,000 and sufficient rental and home price data. Rental data came from the U.S. Department of Housing and Urban Development, and home price data from publicly recorded sales deed data collected and licensed by ATTOM Data Solutions (see full methodology below).

 

The average annual gross rental yield (annualized gross rent income divided by median purchase price of single-family homes) among the 495 counties is 7.7 percent for 2021, down from an average of 8.4 percent in 2020. Within that group of counties, the yield declined from 2020 to 2021 in 87 percent of counties. However, it’s not all bad news for rental property investors.

“Offsetting the declining yields are improved financing terms for such rental properties and portfolios”, said Maksim Stavinsky, co-founder of Roc360, a FinTech platform that is parent to Roc Capital and Haus Lending, both companies specializing in loans to real-estate investors nationwide. “Across our platform, rates that we are quoting to borrowers have more than offset the waning cap rates on a YoY basis, with the highest-tier rental loan borrowers seeing terms in the low 4% range. This is happening despite a yield curve that has been steepening of late.”

At the same time, home prices are rising faster than rents in most of the country, which could start making home ownership less affordable and put upward pressure on rents.

“The single-family home rental business is less profitable this year compared to last year across most of country, with yields on the average deals decreasing. That’s happening as home prices on properties that investors are paying for, in most areas, are rising considerably faster than rents, which is cutting into their profit margins,” said Todd Teta, chief product officer at ATTOM Data Solutions. “Nevertheless, returns on single-family rentals still generally remain strong and there are pockets, especially in the Midwest, where yields top 10 percent. There also are some signs that things could improve this year given that home prices are increasing faster than rents.”

Top rental returns in Pottsville, Macon, Baltimore, Ottawa and Jamestown areas, as well as Midwest region

Counties with the highest potential annual gross rental yields for 2021 are Schuylkill County, PA, in the Pottsville metro area (26.1 percent); Bibb County, GA, in the Macon metro area (18.1 percent); Baltimore City/County, MD (16.2 percent); La Salle County, IL, in the Ottawa metro area (14.1 percent) and Chautauqua County, NY, in the Jamestown metro area (13.7 percent).

The highest potential annual gross rental yields in 2021 among counties with a population of at least 1 million are Cuyahoga County (Cleveland), OH (9.9 percent); Dallas County, TX (8 percent); Tarrant County (Fort Worth), TX, (8 percent); Franklin County (Columbus), OH (7.9 percent) and Bexar County (San Antonio), TX (7.9 percent).

Among the top 50 rental returns for counties analyzed in 2021, 25 are in the Midwest, 15 in the South and 10 in the Northeast.

Rental returns decrease from a year ago in almost 90 percent of counties analyzed

Potential annual gross rental yields for 2021 decreased compared to 2020 in 430 of the 495 counties analyzed in the report (86.9 percent), led by Baltimore City/County, MD (yield down 43.9 percent); St. Louis City/County, MO (down 35.5 percent); St. Louis County, MO (down 29.3 percent); Bonneville County (Idaho Falls), ID (down 26.7 percent) and Fairfield County (Stamford), CT (down 24 percent).

Among counties with a population of at least 1 million, those with the biggest decreases in potential annual gross rental yields from 2020 to 2021include Miami-Date County, FL (down 19.9 percent); Oakland County, MI, in the Detroit metro area (down 18.6 percent); King County (Seattle), WA (down 17.4 percent); Palm Beach County, FL, in the Miami metro area (down 14.2 percent) and Fulton County (Atlanta), GA (down 13.3 percent).

Counties in San Francisco, San Jose, Nashville and Maui metros and others in the West post lowest rental returns

Counties with the lowest potential annual gross rental yields for 2021 are Williamson County, TN, in the Nashville metro area (3.7 percent); Santa Clara County, CA, in the San Jose metro area (3.8 percent); San Mateo County, CA, in the San Francisco metro area (3.8 percent); San Francisco County, CA (3.9 percent) and Maui County, HI (3.9 percent).

Among counties with a population of at least 1 mission, along with Santa Clara County, those with the lowest potential annual gross rental yields in 2021include Kings County (Brooklyn), NY, (4.3 percent); Orange County, CA, in the Los Angeles metro area (4.6 percent); Los Angeles County, CA (4.7 percent) and King County (Seattle), WA (4.8 percent).

In the bottom 50 rental returns, among counties analyzed for 2021, 30 are in the West, 10 are in the South, seven are in the Northeast, and three are in the Midwest.

Wages rising faster than rents in 77 percent of markets

Wages are rising faster than rents in 379 of the 495 counties analyzed (76.6 percent), including Los Angeles County, CA; Cook County (Chicago), IL; Maricopa County (Phoenix), AZ; San Diego County, CA; and Orange County, CA, in the Los Angeles metro area.

Rents rose faster than wages in 116 of the 495 counties analyzed (23.4 percent), including Harris County (Houston), TX; Tarrant County (Fort Worth), TX; Sacramento County, CA; Bronx County, NY and Mecklenburg County (Charlotte), NC.

Home prices rising faster than rents in 87 percent of markets

Single-family home prices are rising faster than rents in 430 of the 495 counties analyzed (86.9 percent), including Los Angeles County, CA; Cook County (Chicago), IL; Harris County (Houston), TX; Maricopa County (Phoenix), AZ and San Diego County, CA.

Rents rose faster than single-family home prices in 65 of the counties analyzed (13.1 percent), including Duval County (Jacksonville), FL; San Francisco County, CA; San Mateo County, CA, in the San Francisco metro area; Fort Bend County, TX, in the Houston metro area and Kane County, IL, in the Chicago metro area.

Prices rising faster than wages in 79 percent of markets

Prices are rising faster than wages in 391 of the 495 counties analyzed (79 percent), including Los Angeles County, CA; Cook County (Chicago), IL; Harris County (Houston), TX; Maricopa County (Phoenix), AZ and San Diego County, CA.

Wages rose faster than prices in 104 of the counties analyzed (21 percent), including Orange County, CA, in the Los Angeles metro area; King County (Seattle), WA; Santa Clara County, CA, in the San Jose metro area; Middlesex County, MA, in the Boston metro area and Hennepin County (Minneapolis), MN.

Best SFR growth markets include Milwaukee, Memphis, Rochester and Birmingham

The report identified 61 “SFR Growth” counties where average wages grew over the past year and the potential 2021 annual gross rental yields are 10 percent or higher.

The 61 SFR Growth markets include Milwaukee County, WI; Shelby County (Memphis), TN; Monroe County (Rochester), NY; Jefferson County (Birmingham), AL; and Baltimore City/County, MD.

Methodology

For this report, ATTOM Data Solutions looked at all U.S. counties with a population of 100,000 or more and with sufficient home price and rental rate data. Rental returns were calculated using annual gross rental yields: the 2021 50th percentile rent estimates for three-bedroom homes in each county from the U.S. Department of Housing and Urban Development (HUD), annualized, and divided by the median sales price of residential properties in each county.

ATTOM Data Solutions also incorporated weekly wage data from the Bureau of Labor Statistics and demographic data from the U.S. Census into the report.

https://www.attomdata.com/news/market-trends/single-family-rental/attom-data-solutions-q1-2021-single-family-rental-market-report/