Where Multifamily Investors Are Seeking Opportunities

Over the last three years, a portion of the multifamily investment community has begun to look beyond urban centers like New York, Boston, and San Francisco. It is not that the fundamentals in these markets haven’t held up. If anything, they are continuing to flourish — and the consensus is that whatever oversupply exists is inevitably temporary. Rather, for these investors, the primary markets have become a bit too competitive and too pricy. With cap rates nearing 3 percent, there is precious little room for error. Initially, these investors began looking to markets on the periphery of cities and in the suburbs, especially in areas served by urban and suburban rail systems.

Increasingly, however, a growing group of multifamily investors is now looking farther afield, entertaining transactions in secondary and tertiary markets. As Capital One’s annual RealShare Apartments survey suggests, this trend is likely to continue through 2019.