PHILADELPHIA-Despite a modest uptick in supply, demand for rental housing in the Philadelphia market will hold steady in 2008, boding well for investment sales in this sector, says a report from Marcus & Millichap. “In the investment market, institutions remain active, drawn to the market’s consistently stable fundamentals,” according to the report. “Private buyers, relatively quiet now, are positioned to become active once uncertainty in the credit markets clears.”

Donald MacLaren, a Philadelphia-based senior director in Marcus & Millichap’s national multihousing group, tells that “debt certainly is a driver of deals. Since 70% to 80% of the deal cost is involved with debt, as the debt market goes, so goes your deal. As the debt market gets a little looser and as more money comes back into the market and it gets a little cheaper, you’ll see a pickup in the number of deals that get done.”

As an indication of the low profile would-be investors are keeping lately, the first two quarters of ’08 have seen just eight rental apartment property sales in Philadelphia of $5 million or more, compared with 12 during the first two quarters of 2007, according to data from Real Capital Analytics. “You’re going to see a slowdown,” MacLaren says. “Before you would see nine or 10 bidders on a property, and now you’re seeing five or six bidders. Deals are taking longer. If you did 100 deals last year, you might do 90 this year.”

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