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US Multihousing Report

2Q18 United States Multihousing Report

ARA and Berkeley Point Capital present the Second Quarter 2018 United States Multihousing Market Report. The statistics and outlook contained in the report illustrate current trends in the Multihousing sector.

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Executive Overview

Sales Volume 12-month total sales volume accelerated to $158.9 billion, a 7.7% annual growth, while second-quarter investment sales volume totaled $34.5 billion decreasing 6.9% compared with 2Q17. Investors continue to seek out assets in markets such as Atlanta, Dallas and Denver, all of which are benefitting from strong demographics and employment growth.
Cap Rates Yields contracted 10 basis points year-over-year to 5.4% nationally. At the same time, secondary and tertiary markets experienced 20-basis-point contractions year-over-year, partly because of intense competition among investors that continue to chase yield.
Rent Growth Annual effective rent growth increased 10 basis points quarter-over-quarter to 2.4%. Growth was strongest in markets experiencing robust employment growth, such as Orlando, Jacksonville, Las Vegas and Phoenix.
Supply and Demand New supply for the past 12 months nationally totaled 367,765 units, while 341,876 units have been absorbed. Inventory growth and vacancies remained flat. Of the new supply delivered over the past four quarters, the top 10 markets have accounted for nearly 40.0% of all deliveries.
International Capital Acquisitions by international capital sources increased 51.1% year-over-year on the heels of several large-scale portfolio and entity-level transactions involving groups from Canada, the Netherlands and Singapore. Additionally, student housing continues to attract significant interest from international groups.
Debt Markets Multihousing debt outstanding rose to $1.3 trillion, up 1.5% quarter-over-quarter. GSE lenders account for 48.2% of all multihousing debt outstanding and grew their debt outstanding to $616.9 billion, representing 14.3% year-over-year growth.

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