MULTIFAMILY MONDAY: Up and Away
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|There's been an increase in multifamily investment since August, particularly for A and B locations close to the subway system, says Marcus & Millichap regional manager JD Parker, whose firm is marketing over $400M of apartments in the Tri-State area.|
|We sat down with JD, who tells us that one building he put under contract with the firm last week—the 16-unit 516 Eastern Pkwy. in Brooklyn, a stone's throw from the Nostrand Ave. stop on the 2, 3, 4, and 5 trains—has attracted 23 bidders, a mix of local and regional buyers. The building is selling for close to its $1.7M asking price. Investors are notably interested in undervalued assets with low average rents, he says. Another boon to the market: financing. Loans that have been arranged through Marcus & Millichap Capital Corp. are seeing rates from 4-4.5% and LTVs of up to 75% non-recourse, a boost to market activity in the past six months.|
|Another factor that will benefit buildings like 516 Eastern Pkwy. (above) is the estimated 78k jobs that will be created in NYC this year, JD points out. It's giving owners confidence, and rents have turned around and stopped falling, even increased markedly in some cases, he says. Landlords are nixing concessions. Market fundamentals are strong, except for the condo overbuilding that we've seen in markets like Midtown West, Williamsburg, the 4th Ave. corridor of Park Slope, and Greenpoint, where we can expect rents to stay where they are due to the large amount of inventory in the pipeline, JD tells us. We may even see short-term weakness in the near future as banks move forward with foreclosures, he warns. But once the market is cleaned up, expect it to âtake off.â|