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Multifamily Capital Markets Report

4Q19 UNITED STATES MULTIFAMILY CAPITAL MARKETS REPORT

February 2020
 
Newmark Knight Frank presents the Fourth Quarter 2019 United States Multifamily Capital Markets Report. The statistics and in-depth market perspective contained in the report illustrate current multifamily trends.

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Executive Overview

Sales Volume Investment sales volume rose to an all-time high of $183.5 billion, increasing 4.4% year over year. Fourth-quarter volume totaled $50.5 billion, up 4.3% quarter-over-quarter. Non-major markets accounted for 72.1% of investment in 2019, as investors gravitated toward markets with a strong combination of yield and growth prospects.
Cap Rates National multifamily cap rates compressed 8 basis points year-over-year. Although cap rates increased 16 basis points year-over-year in major markets, a surge of investment activity in non-majors caused yields to fall 12 basis points.
Rent Growth Annual effective rent growth climbed 30 basis points year-over-year to 3.1% nationally in 2019. After dipping slightly in 2017, rent growth rose 60 basis points above the long-term average, led by Sunbelt markets such as Atlanta, Charlotte and Phoenix, which are experiencing positive demographic and economic trends.
Supply and Demand High levels of new supply were met with robust demand in 2019, as absorption outpaced units delivered. Although Dallas added the largest number of units over the past 12 months, Charlotte saw the largest inventory increase on a percentage basis at 3.3%, compared with 1.1% nationally.
International Capital Direct international capital sources invested $12.1 billion over the past 12 months. Canada led all countries in acquisitions in 2019, accounting for 52.2% of all international capital investment. Non-major markets accounted for 74.9% of international capital volume, a substantial increase from 53.2% in 2018.
Debt Markets Mortgage debt outstanding grew by $40.6 billion to $1.5 trillion, a 2.8% quarter-over-quarter increase. GSEs, banks, life insurance companies and CMBS all saw their debt outstanding increase for the quarter, led by CMBS, which grew 4.4%.

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