This year, the multifamily buyer profile shifted from distressed investors to the second generation—those looking for stabilized returns. It's Multifamily: The Next Generation. What's a second-gen asset? Essex Realty Group principal Doug Fisher says these are properties that were liquidated by banks via foreclosure or note sale and picked up by opportunistic investors. Now stabilized, they're brought to market, and investors (individuals, syndications, funds) are clamoring for low-risk and good cash flow with today's low interest rates. (If the buildings become any more popular, their egos will match that of the Millennials living inside them.) Exhibit A: Essex just brokered the $4.9M sale of a renovated 33-unit courtyard building in Albany Park.

Doug says it's the highest sale price for similar product in the submarket—evidence that values are benefiting from appreciation in hot neighboring submarkets like Lincoln Square. Potential stumbling blocks: rising interest rates affecting pricing, and the gradual return of the for-sale market. Though rents have seen tremendous jumps, Doug doesn't expect neighborhood investors to cry condo conversion for a while, except for maybe in Class-A neighborhoods. On the financing side, he notices agency lenders and national banks such as Chase used most for second-generation, stabilized properties, while regional and local banks are more comfortable providing short-term money for value-add plays.