The Masters The Masters Apartments, a 144-unit garden-style property, was built in 1996.

ALOHA, OR—An elevated level of supply is being delivered to the Portland apartment market with about 20,000 units delivered since 2012 alone, representing a 12% increase in inventory. Although there has been strong job and population growth resulting in a solid household formation rate, the cumulative effect of such rapid growth in stock is causing rents to slow substantially as existing units compete with new units for tenants, according to a winter multifamily metro outlook by Fannie Mae.

While Portland’s job growth projection remains healthy and is likely to produce demand for about 6,000 new apartments in 2018, in the near-term new supply is expected to continue to outpace demand. Demographics are in Portland’s favor with the population forecast to grow by 1.3% on average annually

through 2021, almost double the national average. The proportion of the population aged 21 to 34 is above average at 21.1%, compared to 20.7% for the US. This group, attracted by the natural amenities, hip lifestyle and job opportunities, is expected to grow at a rate twice the national average through 2021, according to Fannie Mae.

While supply is outpacing demand in many areas, the suburban garden apartment market continues to reign supreme due to lack of buildable land, according to Peter Norrie, managing director of Cohen Financial’s Portland office. Norrie closed a $12 million loan with Fannie Mae to refinance the Masters Apartments, a multifamily property located in Aloha, a western suburb of Portland.

Norrie arranged the fixed-rate 15-year term loan with 30-year amortization schedule at 62% loan-to-value. The 144-unit garden-style property was built in 1996. The Masters Apartments features a swimming pool, clubhouse and fitness center and is located in a residential neighborhood in close proximity to the Aloha Intel campus.

“Rent levels for suburban garden apartments are more affordable than multifamily projects located close to the city,” said Norrie. “Rent growth and occupancy rates remain positive for suburban landlords. Obviously, land to build additional suburban apartments is a plus as well.”

The borrower is a local multifamily investor and long-time Cohen Financial client. The well-located market-rate property was 100% occupied at the time of closing.

“The suburban areas have an edge because of the increased employment found there, which of course, means that vacancies are very low,” Norrie tells “Urban growth boundaries are such that there are only opportunities to tear down, which is happening with single-family homes that are turned into 24-unit multifamily with no parking. Rents are higher there than in the suburbs and incentives are being offered as a result.”

In addition, Norrie recently closed a Fannie Mae loan for Hampton Ridge Apartments in Tigard, OR, a Southwest suburb of Portland. On this loan transaction, Norrie arranged a 60-day forward rate lock with Fannie Mae, securing an attractive interest rate in front of the rising rate environment.

Cohen Financial is a division of SunTrust Bank and a national real estate capital services firm.