Urban Multifamily Bounces Back
In urban core counties, revenue per available square foot has recovered most on B and C apartments in the South, Midwest and in secondary and tertiary markets.
Multifamily rents and occupancies are rising across the country. While that trend is still strongest in suburban counties, it has also taken hold in the nation’s urban core counties, according to a new report from Cushman & Wakefield.
In urban core counties, revenue per available square foot has recovered most on B and C apartments in the South, Midwest and in secondary and tertiary markets. But in the last couple of months, class A properties and major markets have experienced the most significant improvement. For instance, Boston, Chicago and San Francisco have had a strong rebound this year.
Revenue per available square foot increased year-to-date in every market in C&W’s data set, but the Sunbelt markets have the most substantial growth. In Chicago, it is back to its pre-pandemic levels. Soon it will also surpass those levels in Boston, Los Angeles and Washington, DC. San Francisco and New York have a ways to go before turning the corner.
“Liquidity has followed the same patterns as operating fundamentals, with suburban markets, sunbelt regions and workforce product attracting more capital both in terms of share of transactions and in total dollar values,” C&W writes.
Absolute volumes are up 6% from pre-pandemic averages in urban core counties. C&W expects liquidity to surpass pre-pandemic heights as institutions become more active in urban cores. Yields are continuing to compress with the drops most apparent among class A and mid- and high-rise transaction yields.
The investment sales community has taken note of these improving fundamentals. For instance, Berkadia’s mortgage bankers and investment sales advisors are quite bullish on the multifamily market.
The company’s midyear poll of almost 180 of its investment sales advisors and mortgage bankers across 60 offices shows that 78% are optimistic that the number of multifamily transactions in 2021 will exceed those in 2020.
“On our investment sales side, we’ve never been so busy,” Ernie Katai, executive vice president and head of production, tells GlobeSt.com. “We’re setting records pretty much every quarter, and we’ve already passed our 2020 production volume.” Meaning that the prediction already seems conservative.