"The ride may not be over yet," says the NAA's Les Shaver in describing the outlook for apartment sales this year. This after a strong first quarter's worth of transactions, with deal volume growing more than 50% year over year, according to Real Capital Analytics.
Of the sectors tracked by RCA, the apartment sector, which saw 27 percent more activity than office, was the “largest, most liquid” commercial group in Q1, RCA reports.
RCA’s findings are supported by observers nationwide.
Brian McAuliffe, President of Institutional Properties and leader of CBRE’s Multifamily Division, speaking in late April, says his “book of business” has been strong in 2018.
“When you compare year-over-year, it’s relatively positive because the market started off so slow in 2017,” he says. “In 2018, everyone has a lot more conviction [about the direction of the market] on the buy side and on the sell side than a year ago.”
Individual-property sales accounted for most of the Q1 growth, notes Shaver, and, in fact, the quarter was the highest ever recorded for such transactions.
While portfolio and entity-level transactions slowed, individual sales skyrocketed 74 percent, according to RCA. Jim Costello, the firm's Senior Vice President, says this first quarter had the most ever individual apartment sales.
“Investors are underwriting individual buildings and not making a bet on a big portfolio play or some financial instrument that they can leverage a little more easily,” Costello says. “They are going after one building, one submarket, one neighborhood at a time, and are underwriting all of the cash flows on that one transaction. That reflects a confidence in apartments as an investment vehicle.”
