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Multifamily Capital Markets Report

1Q19 UNITED STATES MULTIFAMILY CAPITAL MARKETS REPORT

May 2019
 
Newmark Knight Frank presents the First 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 totaled $36.4 billion in 1Q19, up 1.3% year-over-year, with over 70% invested in non-major markets. Trailing 12-month sales volume rose 8.1% to $175.2 billion. 1Q19 marks the eighth consecutive quarter in which multifamily represented the highest sales volume of all property types.
Cap Rates Nationally, cap rates decreased 2 basis points quarter-over-quarter to 5.39%, with major markets increasing 3 basis points and non-major markets decreasing 7 basis points. Yields between major markets and non-major markets compressed to 85 basis points, representing the tightest spread since 1Q13.
Rent Growth Annual effective rent growth increased 10 basis points to 3.0%, led by above-average growth in Las Vegas, Phoenix, Orlando, Jacksonville and Tampa. Rent growth was particularly strong in the Class B space, which increased 3.4% year-over-year.
Supply and Demand Over the past 12 months, 301,210 new units have been delivered while 299,310 have been absorbed. Dallas, Los Angeles and New York have added the greatest number of new units over the past 12 months, while Nashville and Charlotte have experienced the largest inventory growth rates at 4.2% and 4.0%, respectively.
International Capital Direct acquisitions by international capital sources totaled $14.7 billion over the past 12 months, representing a 3.5% increase year-over-year with increasing international interest in non-major markets. Canada remains the top foreign buyer of US multifamily, accounting for 49.5% of acquisitions by foreign buyers.
Debt Markets Mortgage debt outstanding for multifamily grew $32.2 billion to $1.4 trillion, a 2.4% quarter-over-quarter increase. Debt outstanding for GSE and Life Insurance lenders rose 11.4% and 9.4%, respectively. $124.1 billion of US multifamily mortgage are set to mature in 2019.

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