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Strong Rent Growth and Occupancy Rates Fuel Investor Interest in Apartment Communities

Digested from “What’s Behind Multifamily Investors’ Renewed Activity”
National Real Estate Investor (12/8/15) Anderson, Bendix

Investor activity in apartment communities surged in October, with $19.6 billion in transactions — a 65 percent increase year over year. This followed a temporary slowdown in September, which was down 7 percent over 2014.

The Federal Reserve’s delayed decision to raise interest rates helped fuel concerns over the summer about the certainty of the real estate market. But investors are encouraged by strong rent growth and occupancy rates, which remain steady even as new supply comes online, and they resumed transactions heartily this fall.

Growing interest in apartment communities is also causing property prices to rise relative to property income. Cap rates dipped from 6 percent to 5.8 percent year over year. Garden apartments have seen the largest increase in prices, with cap rates dropping to 6 percent, from 6.2 percent last October, while high- and midrise apartment communities remained flat over 2014. 

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