Written by Rich Rosfelder, CIRE Magazine Nov-Dec 2012
Apartment investors are on the hunt. And they’re moving beyond trophy properties into unfamiliar territory in hopes of a rare catch.
In 1H2012, secondary markets posted a 38 percent year-over-year increase in multifamily transaction volume, followed by tertiary markets at 23 percent, according to Real Capital Analytics. Major metros saw only a 9 percent increase during that period.
What’s driving this migration? “It’s primarily a search for yield,” says Ben Thypin, RCA’s director of market analysis. Private investors, equity funds, and some institutional investors have tired of the competition driving down multifamily capitalization rates in core markets.
“It’s gotten to the point where inventory and competition is so tight that my San Francisco buyer is willing to look at higher cap markets such as San Diego and Fresno,” says Davide F. Pio, CCIM, CRS, LEED-AP, a broker associate with BCRE in Pinole, Calif.
The search for yield among class B and C multifamily properties in these markets is less common, Thypin says, but it is happening. Just ask the government.
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Larry Dietz, an associate broker with Saurage Rotenberg Commercial Real Estate, has over 30 years of Sales, Marketing and Public Relations experience. He is a Designee member of the Certified Commercial Investment Member Institute (CCIM) and CCIM Louisiana Chapter; a member of the Commercial Investment Division of the Greater Baton Rouge Board of REALTORS® (CID); as well as an affiliate member of the National Association of REALTORS® (NAR). He is a licensed real estate broker in Louisiana and Mississippi.
Saurage Rotenberg Commercial Real Estate is a member of the Baton Rouge Area Chamber of Commerce (BRAC); the West Baton Rouge Chamber of Commerce; the Baton Rouge Better Business Bureau; the Louisiana Commercial Data Base (LACDB); and the International Council of Shopping Centers (ICSC). Several agents, on an individual basis, are members of the Society of Industrial and Office Realtors® (SIOR), the Certified Commercial Investment Member Institute (CCIM); the National Association of REALTORS® (NAR); and the Greater Baton Rouge Association of REALTORS® Commercial Investment Division (CID).