Apartment prices have overtaken industrial as the fastest-growing in May, with increases coming in at 10.1% year-over-year.
Industrial price growth, conversely, grew by 9.5%, according to the most recent data from Real Capital Analytics. The US National All-Property Price Index increased 0.8% over April numbers and 8.9% from a year ago, while office and retail price growth clocked in at 2.9% and 2.3%, respectively. Office growth was driven primarily by suburban properties, which showed a 4.5% year-over-year uptick compared to CBD prices, which declined 5.5% over the same period.
Multifamily deal activity so far this year has eclipsed both Q1 2020 numbers and volume from the years leading up to the pandemic, according to RCA’s Shane Omundsen. Data from Crexi shows that multifamily properties posted the sharpest decline in days-on-market in May, with average close times declining by 16.75% from Q4 2020 to Q1 2021,and a recent analysis by the Urban Land Institute predicts that apartment rent growth will tick up 1.7% this year.
But in light of enduring federal and state eviction moratoriums, some experts are cautioning investors to discount the value of the rent roll more than usual in some acquisitions.
“For investors, it’s just uncertain as to how you can bank on a rent roll or solidify numbers until this [eviction moratoriums] shake out,” Andrew Rosenberg, a partner at Cassin & Cassin LLP, told GlobeSt.com in an earlier interview. “Investors will proceed, but they’ll proceed more carefully, meaning they either have better reserves or they pay a higher rate.”
Overall CRE transaction volume is expected to continue along a steady path to recovery through 2023, to $590 billion versus $500 billion in 2021, according to ULI.