According to the 2013 mid-year report from US Capital Trends (a division of REAL Capital Analytics) on the apartment market, the commercial real estate apartment market is doing well as of the end of Q2 2013, with strong sales, including fewer distressed properties on the market.
Apartment sales are strong—$17 billion in Q2—but slowing in comparison to the steep rise experienced since Q4 2009. Transaction volume has moderated due in part to interest rate hikes that started in May. Mid/high-rise properties are appreciating at a slightly higher rate than garden properties.
Sales of distressed properties fell below $1 billion for the first time in more than three years. Because of improving prices, lenders have less pressure to liquidate troubled properties. More than a quarter of distressed properties are located in the Southeast (Miami, Atlanta) and in tertiary markets.
Investors are looking to lagging markets “where fundamentals may outperform over the near term” such as Orlando, Northern New Jersey, Minneapolis and Jacksonville. Volume in major metropolitan areas declined by 6% and grew by 12% in non-major markets. Secondary and tertiary markets are experiencing activity spikes whereas primary markets such as Manhattan and Houston have seen flat or declining volumes. A very active area appears to be the Washington, DC suburbs, where activity increased 118% in the first half of 2013, making it second only to Manhattan.
The top apartment buyers buy investment volume are Equity Residential and Avalon Bay Communities. The top apartment brokers (for all types of apartments) are CBRE and HFF.
To read the complete report, including breakdowns by region, selected sales transactions, sales summaries by type, please download the US Capital Trends Apartment 2013 Mid-Year Review.
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