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Multifamily Capital Markets Report

4Q18 UNITED STATES MULTIFAMILY CAPITAL MARKETS REPORT

February 2019
 
Newmark Knight Frank presents the Fourth Quarter 2018 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 for 2018 totaled $172.6 billion (12.1% year-over-year growth), the highest annual total on record. Volume in major markets surged 24.8% year-over-year, led by increases of more than 40% in New York and San Francisco.
Cap Rates Nationally, cap rates decreased 5 basis points year-over-year to 5.4%. Yields between major markets and non-major markets continued to compress to near cyclical lows of 92 basis points, with capital flow increasingly seeking out value-add and higher yielding assets in non-major markets.
Rent Growth Annual effective rent growth increased 2.8% year-over-year. Las Vegas, Phoenix, Sacramento, Orlando and Tampa have experienced the strongest rental growth in the nation over the past 12 months.
Supply and Demand 287,007 units were delivered in 2018, while inventory growth decreased 20 basis points year-over-year. The wave of new supply is projected to continue in 2019, with more than 318,000 units expected to be delivered nationally.
International Capital Direct acquisitions by international capital sources rose to $15.3 billion, representing a 10.9% year-over-year increase. Non-major markets attracted 53.2% of total transaction volume in 2018.
Debt Markets Mortgage debt outstanding for multifamily grew to $1.3 trillion, a 2.0% quarter-over-quarter growth. Nearly $550 billion of additional mortgages are set to mature between 2019 and 2022, which is expected to support strong levels of refinancing activity.

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