Multifamily Sector Pulls Ahead of the Pack
Wall Street Journal reports: The multifamily property sector is heating up, according to Real Capital Analytics’. Closed apartment property sales totaled $2.6 billion for the month ending August 31, which was the largest one-month volume reported in 2010 and “the most active month since August 2008.” Responding to these figures, in a recent Wall Street Journal article Real Capital’s managing director Dan Fasulo stated on behalf of the firm that, “We see prices rising rapidly for apartment communities all around the country, even in some of those secondary markets…”
There were several reasons provided, that made Real Capital’s robust multifamily forecast appropriate and timely. In addition to sales hitting a two-year high in August, new apartments coming to market totaled $3.3 billion – this was after $3.5 billion more in July. Mortgage rates for multifamily properties are at their lowest rates in over 50 years, prompting many to favor the apartment sector over less certain yields with higher lending rates for other property types. The multifamily sector’s pricing has been rising as well, reflecting higher demand, falling vacancy rates, and increasing rents - especially in the highest-quality markets.
Mr Fasulo was able to cite several examples that illustrated the recent and pending success of the multifamily sector. While Real Capital has stated the average apartment cap rate to be 6.7% in August, there have been plenty of properties transacting with yields below that mean. All of this will be “…more fuel, basically, for a fire that’s going to continue into the fall,” according to Mr Fasulo.
View the full article on Wall Street Journal: Multifamily Sector Pulls Ahead of the Pack
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Posted by: Nina Turner