At this point in the market, the private buyers are winning apartments. 

Last month’s Real Capital Analytics analysis of 2015 apartment sales data showed that private investors account for 69% of deal volume in the garden segment. International investors pulled about 9% of these transactions, while institutional investors captured about 10% of all market share.

In the mid- and high-rise segment, which tends to attract more professionally managed capital, private investors secured 49% of all transactions. Institutional investors have captured 22% of that deal flow so far in 2015, while cross-border investors garnered 10%.

It’s a stark contrast from investment trends in 2009 and 2010, when REITs seemed to be the only ones making big buys.

“Investment activity has been dominated by REITs and pension funds in the past, but private buyers—both individuals and smaller operators who have raised investment funds—are flocking to the multifamily space and often divesting of alternative real estate investments in office, retail, and hotels,” says Christine Espenshade, managing director of Capital Markets for JLL.

Espenshade sees a number of factors behind their increase in investment. “These individuals and funds are very attracted to the steady cash flow, stable returns, and minimal ongoing capital required to maintain a multifamily asset,” she says. “We're seeing private buyers who are tired of leasing and building out office and retail space only to get to do it again when a lease expires in five to 10 years. The returns just aren't there for some office and retail locations, but multifamily can stay full and generate great stable cash flow.”


REITs have used the strong appetite of private investors to sell assets and reconfigure their portfolios. “We see a window of opportunity right now to harvest capital out of a lot of older assets that we've owned for a long time that we feel offers a great value opportunity,” MAA CFO Albert Campbell said in the company’s February earnings call.