NEW YORK CITY-Multifamily values will stop declining in the short term and stabilize within six months, predicts valuation firm Integra Realty Resources. The apartment sector is leading the way back, Integra says in its quarterly survey, although asset classes across the board are projected to decline only 2% in the next six months.

“The main driver for multifamily is really job growth,” Jeffrey Rogers, president and COO of locally based Integra, tells “While we don’t have growth right now, we have the next big thing, which is stabilization in the unemployment rate. Some firms are still shedding jobs, but some are actually adding people now.”

Stabilization, Rogers points out, means just that: “we’re losing some, we’re adding some, but month over month, we’re not really going positive,” he says. Even so, Rogers notes that the general business climate is better, especially as compared to a year ago. “Consumer spending is up and people have been able to hoard a lot of cash; we’re beginning to work our way out of this.”

Integra’s survey, released earlier this week, was conducted in April among 59 of its managing directors in local markets across the US. It disputes the federal government’s characterization of current economic activity as actual growth.

“We are still in recessionary/recovery mode,” Rogers says. “But during that recovery period, you begin to see positive trends toward hiring and spending and investment.” This more positive climate helps encourage multifamily tenants—who may now be getting jobs after being out of work for a year or more—to reverse the patterns that began when the downturn started, namely “doubling up” or giving up their apartments to move back in with their parents.

In fact, multifamily in the Eastern and Central regions has already stabilized in the past three months, according to the survey. Nationally, office, industrial, and retail all have seen only a 2% decline in values over the past three months, with the lodging sector experiencing a 4% drop. It’s a big improvement on the 7% to 15% declines experienced across asset classes in the past 12 months.

The office sector is starting to stabilize in terms of price, although Rogers says it “still has a long way to go” because of all the supply that must be absorbed. “You have to start bringing the unemployment rate down a few hundred basis points,”he says. “That’s not going to happen this year.”

After office, retail will be next to stabilize. However, Rogers notes that industrial values will lag retail for a little while, especially in secondary markets, because “retailers have learned to live without inventory. If you’re not a near a port city, you’re going to have some trouble.”

Industrial values may be last to rebound, aside from the lodging sector, says Rogers. “Until the travel comes back, that’s really far off,” he says.

One quarterly improvement has been in the percentage of Integra’s assignments that are classified as distressed assets; this quarter, it’s significantly less than the percentage reflected in Integra’s Q4 2009 survey. Fifty-one percent of Integra’s assignments in the South are distressed, while the tally is 48% in the West.

The Eastern and Central regions are doing better, with 36% and 33%, respectively. Rogers chalks the disparity up to the regional hot spots in the West and South, including Las Vegas and much of Florida, and says the lower percentage of distressed assets this quarter is due to the better-quality, untroubled properties that are beginning to come to market. However, he says, the dip in distressed assignments is only temporary.

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