Transaction volume in the apartment sector continued to grow in the second quarter, pushing past the $26 billion mark, according to New York-based research firm Real Capital Analytics (RCA). That's good for a 39 percent increase compared to the first quarter, the largest jump among all of the commercial property sectors.

“The second quarter was a very good quarter,” says Jeff Day, CEO of Bethesda, Md.-based Berkeley Point Capital. “There’s a tremendous amount of pent-up demand for acquisitions. I think that’s the case even though some of the buyers who were early to the party may be rotating out of the sector.”

Even as the apartment recovery matures, Ben Thypin, director of market analysis at RCA isn’t surprised transaction volume continues to grow compared to other sectors.

“It [the growth versus other sectors] is partly a function of the size of the apartment sector,” he says. “Private investors often view an apartment property as easier to manage than other property types.”

Though the completion of the Palo Alto, Calif.,-based Essex $4.3 billion acquisition of San Francisco-based BRE Properties was a major slice of second quarter transactions, the volume of one-off deals (not including entity- or portfolio-level transactions) rose 25 percent compared to first half of 2013. Student housing also remained strong, totaling $900 million in the first half of 2014.

There have been concerns that the prices on mid- and high-rise apartments were getting a little overheated, but those property types had the biggest jump in the second quarter, hitting 55 percent. Garden properties saw a 31 percent increase in volume.

Garden and High-Rise Sales Trends
Garden and High-Rise Sales Trends Garden and High-Rise Sales Trends

“There is development in all of the urban markets throughout country,” says Richard P. Robinson, the executive director of Boston’s office of Institutional Property Advisors (IPA), a division of Marcus & Millichap, Inc. “In the markets that I’m familiar with, I haven’t seen that much of an impact of the increase of product to investor interest. We’re not seeing any impact whatsoever, especially in a city like Boston where there is not enough volume of product for institutional investors.”

The year-over-year first half numbers were not quite as strong coming in $45.6 billion, which was a nine-percent decrease compared to the first half of 2013. However, there is one major caveat—the mammoth Archstone deal occurred in the first quarter of 2013.

“The BRE transaction was a large deal, but it’s nowhere close to Archstone,” Thypin says.