According to a report published by JLL, we saw some interesting trends last quarter in the multifamily investment market. Across the United States, we saw continued historic investment levels in the multifamily sector. This is evidenced by a 45% annual investment sale growth and $61.3 Billion in investment dollars year-to-date. This puts the market on track for a record high for 2015.
Some Key Points:
- As seen in the report and in homeownership data, “millennial” and “gen x” sectors of the market make increasingly more careful rent vs own decisions, causing a less elastic demand for housing.
- The three largest markets showing an increase in spending in the CBD especially were Washington DC, New York, and Los Angeles. These accounted for 47% of activity in the 2nd Quarter.
- Investment opportunities are rising for Class A product, especially in markets like Boston where this inventory is scarce. Compared to all its peer markets, there is a substantial premium for Class A investment opportunities in Boston.
Notable Boston Transactions
2 Transactions from last quarter made the list of Notable Single Asset Transactions. These were:
- 315 on A by Equity Residential which comprised of 202 units at almost $645,000 a unit.
- Atmark Apartments by AEW Capital Management which was 428 units at $485,00 per unit.
“My take on the market is that the past scarcity of Class A assets lead to an overbuilding of them as of late and we are seeing evidence of tough competition for tenants in that space. I see the multifamily market staying very active over the next year, however with a fed rate hike all but a foregone conclusion and the massive amount of Class A inventory coming to market, I would advise my clients to consider Class B and C work force and student housing with long term value add potential,” says Bobby Quinn of Charlesgate Multifamily.