MF Investment Hits 12-Month High

LOS ANGELES—It's official: multifamily investment across the US has reached a new high. CBRE said Tuesday that volume for the sector reached $127 billion for the 12 months ended June 30, exceeding the previous peak of $100 billion attained during the year that ended June 30, 2006. It also represents growth of 36% over the 12-month period.

The past year's deal flow continues a trend seen over the past several years. In the second quarter, investors ponied up $30 billion for apartment properties, a 35% gain from the year-ago period although a slight decline from Q1. Q2's total represented 27% of the $110 billion invested in US commercial real estate during the quarter.

“Drawn in by solid fundamentals, investor interest in the sector remains high, per sales activity and underwriting trends,” says Brian McAuliffe, executive managing director, institutional properties with CBRE Capital Markets. “Equity and debt investment volumes continued to rise, along with transaction sales prices. Cap rate declines have been minimal, which signal total projected investor returns are close to bottom.”

For the first six months of 2015, the Los Angeles/Southern California market saw the highest dollar volume at $5.3 billion ahead, well ahead of second-place Dallas/Fort Worth, where investors spent $3.0 billion during the period. Other leading multifamily markets for year's first half included Washington, DC, also with $3.0 billion; Atlanta  with $2.8 billion and Houston with $2.5 billion.

Cross-border investment in US multifamily totaled $2.1 billion in Q2, a figure that doesn't include properties acquired through entity-level acquisitions. The H1 2015 total of $4.4 billion has already surpassed the full-year 2014 total of $3.7 billion. With a 31% share of cross-border dollar volume, Mexico represented the largest country source of acquisition capital for multifamily investment, due to a significant portfolio transaction, putting it ahead of Canada, which generated 29% of deal volume.