Multifamily Investment Market News from Around the US
All around the US, the multifamily investment market continues to impress. Multifmaily investments have remained the darling of the commercial real estate market due to their strong market fundamentals. Most cities are seeing lower multifamily vacancies, few new properties coming on the market, and rising rental rates.
Lets take a quick look at the multifamily investment market around the US:
Houston Multifamily Market is On Fire
- Annual rent increases of 7 to 8 percent are not unusual for Class-A units, with some submarkets seeing more than 10 percent increases.
- Citywide multifamily occupancy increased 100 basis points to 89.4 percent and should reach 90 percent by year-end, a rare event in Houston’s multifamily sector.
Source: http://blog.recenter.tamu.edu/2012/07/houston-multifamily/
Denver’s Multifamily Market is Robust, Keeps Pace with Country
Activity in the multifamily sector will remain strong as long as the cost of capital stays low and institutional investors continue to see high returns.
How long will this trend in multifamily real estate last? Will this level of activity continue in Denver and other markets nationwide? The general consensus is that activity in the multifamily sector will remain strong as long as the cost of capital stays low and institutional investors continue to see high returns. In Denver specifically, the market fundamentals are strong. Denver has a stable employment base, relatively high wages and an educated workforce.
Kansas City Multifamily – Perfect Storm is Brewing
There is almost a perfect storm gathering in the multifamily markets in Kansas City. Rents are rising, vacancy is decreasing, cap rates have compressed and valuations are up for sellers.
The fundamentals of the Kansas City multifamily market continued to show strength through the first quarter of 2012. At the end of 2011, the average rent was $727 and is forecast by credible sources to grow in excess of 4 percent in 2012. Kansas City’s vacancy has decreased by 50 basis points. Overall vacancy in the marketplace stood at 5.6 percent at the end of the first quarter, according to New York-based real estate research firm Reis.
Source: http://www.rebusinessonline.com/main.cfm?id=25243
Tucson Multifamily Market: Accelerating Job Growth and Returning Students Support an Optimistic Second-Half Outlook
“The Tucson multifamily market has weathered the storm and is poised for somewhat of a turnaround in the second half of 2012,” said Pete O’Neil, research manager for Colliers International in Greater Phoenix.
“While vacancy rates pushed higher as students left town for the summer, the rate did not go as high as we would typically expect in the second quarter. As the new school year starts, apartment units will begin to fill up once again.” O’Neil added that one thing to keep an eye on is concessions, which have hit a four year low. Operators are offering fewer concessions as the market comes back—the next step is for meaningful growth in asking rents. “We should begin to see meaningful asking rent growth
Florida Multifamily Markets Hotter Than Most
Miami—Most multifamily rental markets are tight these days, but the metro markets of Florida have been doing especially well, according to the most recent report on the state by Apartment Realty Advisors Florida. Throughout 2011 and the first quarter of 2012, ARA notes, Florida remained a top-performing state for multifamily properties, seeing both strong occupancy and rent growth.
“Demand resulting from the healthy recovery of jobs, along with the fundamental shift toward rentals, helped to reduce vacancies in the state’s major metro areas, leading to robust revenue growth in Florida’s apartment sector. Continuing employment growth, declining homeownership rates and an increasing 20-34 year old age cohort will drive the multifamily fundamentals throughout 2012 and into 2013.”
Source: http://www.multihousingnews.com/news/florida-multifamily-markets-hotter-than-most/1004059722.html
Multifamily Market Continues to Tighten
For the sixth quarter in a row, the apartment industry improved across all indexes in the National Multi Housing Council’s (NMHC) Quarterly Survey of Apartment Market Conditions.
“The apartment sector’s strength continues unabated,” said NMHC Chief Economist Mark Obrinsky. “Even as new construction ramps up, higher demand for apartment residences still outstrips new supply with no letup in sight. Despite the need for new apartments, acquisition and construction finance remains constrained in all but the best properties in the top markets.”
Source: http://sbcmag.info/news/2012/aug/multifamily-markets-continue-tighten
Apartment Market Hot Streak Continues
Key findings include:
- Financing is available, but only for top markets. Only 16 percent reported acquisition capital being available in all markets at all times. Even fewer (10 percent) stated that construction capital was available across markets. The majority reported that acquisition financing (65 percent) and construction financing (52 percent) was only available in top-tier markets.
- Majority report increased market tightness. The Market Tightness Index edged up to 76 from 74. For the first time in a year, more than half (55 percent) of respondents said that markets were tighter. By contrast, only 2 percent reported the markets as loosening and 43 percent reported no change over the past three months.
- The Sales Volume Index dipped slightly to 54 from 57. Nearly one quarter (24 percent) of respondents reported increased sales volume, compared to 16 percent who indicated decreased volume and 55 percent who reported conditions as unchanged since the last quarter.
- Equity financing continues three years of growth. The Equity Financing Index shrank slightly to 58 from 62; this marked 12 straight quarters of the index at or above 50, indicating positive activity in the equity market.
- Debt financing highest in two years. The Debt Financing Index jumped to 77 from 65, with only 2 percent reporting borrowing conditions as being worse from the previous quarter. This reflects the sixth quarter in a row that the share of respondents who thought the availability and terms of debt financing had worsened was in the single digits.
Source: http://www.nmhc.org/PressRelease.cfm?ItemNumber=60894