Unique Market Conditions Fueling Multifamily Investor Interest
New York Times reports: The multifamily sector has become the preferred destination for investment capital into commercial real estate as of late. Sales of significant apartment properties rose by 63 percent between the second and third quarters of this year, to reach $8.5 billion. In a recent article, the New York Times recognized that “low interest rates, a lack of new construction and falling vacancy rates have swelled the ranks of buyers…” and chronicled the purchases of public-REIT Equity Residential to illustrate the return of the apartment buyer. “Equity Residential, the top apartment buyer this year, according to the research firm Real Capital Analytics, joins a list of institutional, public and private investors that are plowing money into apartments at a time when the market for most commercial real estate is flat,” said the Times. The article also noted that Equity intended to invest $1.0 billion in the multifamily sector during 2010, but wound up purchasing 15 properties for a total of $1.4 billion, because of the value and unique investment opportunities currently present in apartment sales.
The Times acknowledged that these opportunities may not be available for every investor. “Competition is strong for the few properties that reach the market…Class A properties, or properties in good locations, selling for more than $20 million in cities with little development and strong demand are the most wanted.” And investors themselves must have their houses in order before being able – or desiring – to purchase: “Real estate companies with new multifamily investment funds that do not have any properties underwater or carrying heavy debt loads have moved the swiftest.” These include some of the largest REITs and institutional players at the moment.
For more on the state of the multifamily sector, please see the entire article on the New York Times’ website, or read in depth analysis on apartment property trends in Real Capital Analytic’s weekly US Capital Trends.
View the full article on New York Times: Unique Market Conditions Fueling Multifamily Investor Interest
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Posted by: Nina Turner