Multifamily Production Index posts gain for Q4
There is good news for multifamily production, according to the National Association of Home Builders (NAHB).
The Multifamily Production Index (MPI), issued today by the NAHB, posted a gain of seven points to 53 in the fourth quarter of 2017.
The MPI measures builder and developer sentiment about current conditions in the apartment and condominium market on a scale of 0 to 100. The index and all of its components are scaled so that a number above 50 indicates that more respondents report conditions are improving than report conditions are getting worse.
The MPI provides a composite measure of three key elements of the multifamily housing market: construction of low-rent units, market-rate rental units and “for-sale" units, or condominiums. All three components increased in the fourth quarter: low-rent units rose two points to 56, market-rate rental units climbed 11 points to 54 and for-sale units increased nine points to 49.
The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry's perception of vacancies, remained even at 41, with lower numbers indicating fewer vacancies. The MVI has been fairly stable since 2013, after peaking at 70 in the second quarter of 2009.
“Multifamily developers continue to see solid demand in many parts of the country,” said Steven Lawson, president of The Lawson Companies in Virginia Beach, Va., and chairman of NAHB’s Multifamily Council. “However, developers need to be careful to manage costs as prices of land, labor and some building materials continue to rise."
“The positive MPI reading is consistent with builder sentiment readings in other segments of the housing industry,” said NAHB Chief Economist Robert Dietz. "Continued job growth and increasing household formation are key drivers for the multifamily market moving forward.”
More corporate expansion at Milwaukee Tool
Milwaukee Tool is on the precipice of another expansion project at its Brookfield, Wis. headquarters.
The company has planned a new 114,500 square-foot, multi-story building that would be placed on an existing 3.5 acre lot owned by the power tool manufacturer. The move would bring the company’s global headquarter space from 190,000 square feet to a proposed total of 504,000 square feet.
In recent years Milwaukee Tool has been vibrantly expanding its Brookfield headquarters with more than 300 jobs added in 2011 and nearly 1,300 positions this year. The latest announced expansion would create another 350 positions in the next 5 years with an average annual salary of $75,000.
“We must grow or die. We are committed to delivering a world-class work environment to attract, retain, and recruit the best talent in the world.” said Steve Richman, Milwaukee Tool Group president. “This investment is necessary for Milwaukee Tool to continue to deliver disruptive innovation and deliver on our commitment to users and distribution partners in driving productivity on the jobsite.”
The City of Brookfield is proposing a Tax Increment Financing (TIF) district, which would provide $3.5 million in TIF assistance to project costs estimated at over $32 million. The Wisconsin Economic Development Corporation is also working with Milwaukee Tool on possible incentives for the project.
This past December, Milwaukee Tool announced that it was expanding operations at three Mississippi locations, investing $33.4 million and creating 660 jobs.
Tax reform hurts Toro earnings
The Toro Company reported first quarter 2018 net sales increased 6.3% to $548.2 million from net sales of $515.8 million in the first quarter of 2017.
The Bloomington, Minn.-based outdoor power equipment manufacturer also reported first quarter net earnings of $22.6 million, significantly down from first quarter 2017 net earnings of $45 million. Toro reported that net earnings for the quarter include one-time charges from U.S. tax reform and adjusted net earnings were $52.1 million. The reported tax rate for the first quarter was 66% percent compared to 24.5% last year, according to Toro.
Professional segment net sales for the first quarter were $403.7 million, up 8.6% from $371.8 million last year. Toro said sales of zero-turn riding mowers in its landscape business increased as the channel prepares for the spring selling season.
Residential segment net sales for the first quarter were $142.5 million, up 1.5% from $140.4 million last year. Below average snowfall early in the season, combined with below average snow events in the Midwest, negatively impacted sales of Toro’s residential snow thrower products, the company said.