| If we actually knew how to Photoshop, we'd of course use the apparent green screen behind CoStar's Norm Miller, Jay Spivey, and Michael Cohen for evil. Instead, we'll play it straight: The three enlightened an audience of 600 on the state of the nationwide multi-family market via webinar on Thursday, and the news is mixed. While an increase in echo boomers reaching prime renting age will help fill apartment vacancies, lack of job growth may keep some living with their parents until 2011-2013. Absorption may take time, since 118k units came on the market in 2009 and another 44k will come on in 2010. With about 1/3 of renters occupying a single family house or condo, the return of the for-sale housing market will also reduce vacancy. |
| Areas with the most new job growth, like Atlanta, Dallas and Houston will be the first to see absorption, while New York and Chicago may lag. Sales of apartment buildings will be driven by REITs, which have about $40B to invest in apartments in the coming years. Distressed sales currently make up about 30% of apartment transactions, Jay says. Cap rates should be around 8.5% as apartment vacancy has reached its peak. |
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