Mike Eppli’s Talk To NAIOP: Apartments Look Healthy In 2012

Mike Eppli, Ph.D. Addresses NAIOP

In his “2012 Economic Forecast…The Road To Recovery” Mike Eppli, Professor of Finance and Robert B. Bell Sr. Chair in Real Estate at Marquette University made a key assumption about the future, charted out the recent past and put it together to conclude “Real estate is the best relative investment for 2012”.

To a standing-room-only Riverway Auditorium in Rosemont, Eppli set down one ground rule – that for the predictions to hold, short term interest rates would need to remain low, such as what the Fed policy appears to be.

“For the foreseeable short term future, that’s what the Fed keeps saying.  There’s not a lot of inflation pressure in the market today.”

Eppli’s preferred commercial real estate sectors for 2012 are apartments and retail.  We’ll take a look at retail and other sectors in later posts.  For now: apartments.

Apartments

Even though growth of households (household defined as that population unit required for rental occupation or home ownership) slowed in the 2000s, current research suggests a nationwide bump in households amounting near 350,000. Against a backdrop of a base 35 million apartments in the US, a pent-up demand for apartment housing is stemming from an oft-discussed trend: After completing school, college students are coming home and staying there – approximately 1.6 million young adults in this situation currently that would under different economic circumstances be in apartments.  As jobs return – and the latest numbers show some recovery there – this demand will hit the apartment market.  What will further stimulate demand, Eppli said, is the fact that the average age of marriage is on the rise in the US, which means that adults are staying in rental units longer than they have historically.  Delayed entries into apartments by students plus delayed exits from apartments into single family homes by marrieds equals heightened demand for rental units.

Professor Eppli had a lot to say about the entire commercial real estate universe.  Stay tuned for more gazing into the tea leaves — as well as some tips on how to put the info to work —  here at The Source.

Enhanced by Zemanta

Leave a Reply