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Multifamily Capital Markets Report

2Q19 UNITED STATES MULTIFAMILY CAPITAL MARKETS REPORT

August 2019
 
Newmark Knight Frank presents the Second 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 Quarterly sales volume totaled $43.2 billion, representing a 15.9% quarter-over-quarter increase and an 18.5% year-over-year increase compared with second quarter of 2018. Additionally, this marks the ninth consecutive quarter in which the multifamily sector has been the top recipient of sales volume of all major property types.
Cap Rates Cap rates compressed 3 basis points year-over-year to 5.39% nationally. Over the past 12 months, cap rates in non-major markets have compressed 6 basis points as investors chase value-add product in well-positioned suburban markets.
Rent Growth Annual effective rental growth accelerated to 3.2% nationally, while markets such as Las Vegas and Phoenix experienced rental growth of 7.8% and 7.5% respectively.
Supply and Demand Demand remains remarkably strong as 196,847 units have been absorbed year-to-date, compared with 135,710 new units delivered nationally. Charlotte and Nashville experienced inventory expansion of 4.2% and 3.6%, respectively. Despite the uptick in inventory, absorption remained strong over the past year, as demand outpaced new supply in emerging markets such as Charlotte and Nashville.
International Capital Direct acquisitions by international capital sources totaled $15.7 billion over the past 12 months, representing a 7.5% increase year-over-year. Canada remains the top buyer of US multifamily, accounting for 58.3% of acquisitions.
Debt Markets Mortgage debt outstanding for multifamily grew to $1.4 trillion, a 1.3% quarter-over-quarter increase as debt capital remains plentiful. Debt outstanding for GSE lenders experienced the largest nominal change on a quarterly basis, increasing $12.3 billion.

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