Investors Lured to Apartment Buildings
Filed under: Multi-Units, Real Estate Investing, Real Estate Market
One of the leading drivers for the apartment market is job growth, which has been declining for the past nine months. An estimated 2.7 million jobs could be lost in the downturn, similar to the 2001 recession, reported Hessam Nadji, managing director of research services for Marcus & Millichap Real Estate Investment Services, in a recent Webcast.
But over the long term, apartments could become an appealing investment as new apartment development becomes scarcer.
Linwood Thompson, senior vice president & managing director of the multi housing group for Marcus & Millichap, said new apartment development represents only about 1 percent of inventory this year. He predicted that development will be off 30 percent from 2007 and another 50 percent to 70 percent from 2008 to 2009.
Meanwhile, immigration into the United States continues to be strong, and many Echo Boomers, or those born between 1977 and 1994, are entering the apartment rental market.
“Apartments are likely to be worth dramatically more in 2014 than they are in 2009,” Thompson forecasted.
At present, however, deal velocity will likely be weak in 2009 due to capital market dislocation and gaps between buyer and seller expectations.
Source: Commercial Property News, Gilligan, Eugene (11/25/08)
