Multi-Family Forecast for Southern Maine 2016 MEREDA Real Estate Forecast Conference Presented by Brit Vitalius Principal, Designated Broker President, Southern Maine Landlord Association Vitalius Real Estate Group 306 Congress Street, Suite 3 Portland, ME 04101 207.541.3755 brit@vitalius.com www.vitalius.com Sales Volume Properties Sold 250 $80 $70 200 $60 Millions $50 150 $40 100 $30 $20 50 $10 0 $0 05 06 07 08 Portland Saco/Biddeford 2014  2015 2009  2015 09 10 11 South Portland L/A 12 13 14 05 15 Westbrook 06 07 08 09 10 11 12 13 14 Portland Saco/Biddeford South Portland L/A Westbrook 15 Portland South Portland Westbrook Saco Biddeford Lewiston Auburn Volume 26% -16% 27% 21% 44% Sold 7% -15% 30% -1% 24% Volume 177% 147% 97% 145% 27% Sold 83% 100% 79% 82% 4% Note: Portland’s sales volume was 32% higher than the other areas combined *Based on MLS data 12/31/04 – 12/31/15 Median Sale Price $400,000 2005 $350,000 2009 2010 $300,000 2011 $250,000 2012 2013 $200,000 2014 2015 $150,000 $100,000 $50,000 $0 Portland South Portland Westbrook Saco Biddeford Lewiston Auburn ∆ to 2015 Portland SoPo Westbrook Saco/Bidd L/A 2014 8% -7% -1% 27% 14% 2009 24% 19% 49% 41% 39% 2005 1% -13% -18% -18% -36% *Based on MLS data between 12/31/04 – 12/31/15 Days on Market Lewiston Auburn 71 Saco Biddeford 49 Westbrook 46 South Portland 13 Portland 16 0 10 20 30 40 50 60 70 80 *Based on MLS data between 12/31/04 – 12/31/15 Saco/Biddeford • • • • • Sales Volume: +21% from 2014 Up 145% from 2009!! Median price: +27% Cap rate: 9 – 9.5% Average Price/Unit: $49,000 Address 53 Oak 17 Cutts 70 Bacon 44 Jefferson 15 St Mary’s 465 Main 415 Main City Units Biddeford 10 Biddeford 7 Biddeford 6 Biddeford 6 Biddeford 6 Biddeford 5 Biddeford 5 Sale Price Price/Unit $520,000 $52,000 $368,501 $52,640 $305,000 $50,830 $260,000 $42,300 $250,000 $41,670 $300,000 $60,000 $204,900 $40,980 *Based on MLS data between 1/1/14 – 12/27/14 Lewiston/Auburn • • • • • Sales volume: +44% from 2014 Transactions: +24% Median price: +14% Average Cap Rate: 15% Median price/unit - $23,800, up slightly Address 94‐104 Knox 146 Pierce 117  Horton 63‐65 Fifth 128‐130 College 162 College 174 Ash 154 Bartlett Town Lewiston Lewiston Lewiston Lewiston Lewiston Lewiston Lewiston Lewiston Units 21 10 9 6 6 6 6 6 Sold Price Price/Unit $600,000 $28,570 $250,000 $25,000 $214,000 $23,780 $180,000 $30,000 $130,000 $21,670 $110,000 $18,330 $105,000 $17,500 $55,000 $9,170 *Based on MLS data between 1/1/15 – 12/31/15 Portland Multi-Family Market • Many large transactions, the most in recent history • Prices increased • Sales based in part on the opportunity to reposition for higher rents • Influx of new demographic to downtown Portland • Out of state young professionals • Retiring Baby boomers • Young families choosing urban life over the ‘burbs • New construction in the pipeline, ~700 units • Munjoy Hill continues to boom, but all of Portland is HOT Commercial Multi Market – Portland Substantial Number of Major Transfers • Three large local owners took the opportunity to dispose of average units to more aggressive buyers/owners • Port Properties (local) and I-95 (out of state) made multiple acquisitions • Cap rates at 6 - 7% (had historically been 9) • Median Stats • $79,000/Unit • $103/SF Sample of Notable Sales – Portland • • • • Property Units Price Price/Unit Cap(%) East End Corp 125-133 Grant St Deering/High Portfolio Woodfords Portfolio 74 Units 51 Units 37 Units 37 Units $6.97 MM $4.34 MM $3.06 MM $3.2 MM $94,121 $85,000 $82,700 $86,500 7.0 7.4 6.6 7.5 Notable Sale – Greater Portland Largest Residential Sale in Maine History Three Residential Complexes Units: 309 Sale Price: $50.25 MM Tamerlane Portland Foxcroft Scarborough Price/Unit: $162,500 Coach Lantern Scarborough Cap Rate: 6.5% Buyer: Out of state family trust Broker: Joe Porta, CBRE The Boulos Company Portland 2 - 4 Units - Average Price • 2 & 3 Unit Prices up 13% • Low Inventory creates competitive purchasing environment $500,000 $450,000 $400,000 2 Units = $325,000 3 Units = $421,000 4 Units = $453,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 2 Unit 05 3 Unit 06 07 08 09 10 11 4 Unit 12 13 14 15 *Based on MLS data 12/31/04 – 12/31/15 Which Side of Town is Hotter? The West End East End (Munjoy Hill) 2 Unit - $685,000 Renovated 38 Spruce Street 3 Unit - $716,00 Listed for $699,995 50 Montreal Street 4 Unit - $725,000 With large garage 47 West Street 3 Unit - $730,000 Listed for $699,950 42-44 Munjoy Street 3 Unit - $562,500 Large owner’s unit 80 Spruce Street 3 Unit - $655,000 Needed rehab 34 Congress Street Portland – What’s Going On? “INFLUX OF AFFULENCE: A TWO-EDGED SWORD” “LANDLORDS CAPITALIZE ON ‘INSANE’ MARKET” Is the Portland Rental Market in Crisis? • Hot spring rental market created sense of housing crisis • Existing units continued to be repositioned to capture new demographic. This results in a major investment and improvement in the old and neglected housing stock. Average Rents, Heated • Rents up ~ 8-9% • High rents forced tenants to consider purchasing 2014 2015 Studio $750 - $800 $850 1 Bd $925 -$1,000 $1,100 2 Bd 1,100 – 1,400 $1,300 3 Bd $1,400 – 1,600 $1,550 • Subsidized tenants struggled to compete with market rates • 2015-16 winter rental market slow – landlords surprised at the low responses from ads and lower quality of applicants A View of the New Tenants Two surveys done by a local management company of their own units in the Spring of 2015 1) 178 apartments 27% are from “away” 2) 26 renovated units 65% - from out of state 50% - 2 person households 23% - students 29 – average age 77% - annual household income of $58,000+ $1,170* – average rental amount *This rent is 24% or less of the household’s gross income. “Unaffordable” is commonly considered to be higher than 30% of income. The Pipeline – Portland Rentals Anderson Street (East Bayside) 53 Market Rate Apartments construction phase Developer: Redfern 667 Congress St (Joe’s Smoke Shop) 139 Market Rates, demolition phase Developer: Redfern & partners Schlotterbeck & Foss, 117 Preble Street 55 Units Developer: local group, using historic tax credits 101 York St (El Rayo site) 63 Market Rate Apartments Developer: J.B. Brown Midtown (Bayside) New Units = 310 + ~400 Apartments Developer: Federated = 710 Portland Changing Demographic Market Cycle 2005 2016 700 New Units OR Normal Market Cycle ??? 2005 2016 Westbrook – Could it Become Hip? 2014 2015 Change Days on Market 72 46 -63% Sales Volume $7.2MM $9.3MM +29% Transactions 33 43 +30% Median Price $222,000 $220,000 No change Foodie businesses moving in… Multi-Family Forecast for 2016 • Portland Sales will stay strong. Cap rates will stay around 7%. High prices will continue to entice sellers. • Watch out for a slowing of the rental market. This will take the exuberance from the buyers, who are paying prices based largely on the promise of higher rents and low vacancy rates, (plus low energy costs and interest rates). • Prices of 2 – 4 units will increase modestly as buyer demand continues to exceed available supply. • Rents – watch the spring market. Is it as hot as last year? • Westbrook will emerge (no really, this year!) as rent rates increase and new businesses move into the downtown. • Saco and Biddeford will see continued growth and energy from the new developments and continued market strength. Brit Vitalius has been representing buyers and sellers of multi-unit investments since 2004. He founded Vitalius Real Estate Group at the beginning of 2011 to provide a full complement of residential, multi-family and commercial brokerage services to clients. Brit is in his fourth term as President of the Southern Maine Landlord Association. In 2015, he served on Portland’s Fire Safety Task Force formed in the wake of the Noyes Street fire. He personally owns and manages multi unit investments in Portland and Yarmouth. Brit grew up in Yarmouth, before he graduated from Harvard University in 1995. He lives in Yarmouth with his wife, Yasmin, 7-year-old son, Coltrane and 4-year-old daughter, Allegra. He enjoys mountain biking, tennis, and single malt scotch. Vitalius Real Estate Group is a boutique real estate brokerage based in downtown Portland. We believe that our clients benefit from working with a diverse team of intelligent professionals who are dedicated to effectively negotiating the myriad needs of a real estate transaction. Our group is comprised of associates who have complimentary areas of market specializations - multi-family, commercial, condos and residential. Instead of one broker attempting to be all things to all people, we put together a team, which brings the needed area of expertise to a given client and situation. And we have a lot of fun along the way. Vitalius Real Estate Group 306 Congress Street, Suite 3 Portland, ME 04101 207.541.3755 brit@vitalius.com www.vitalius.com