Apartment transactions jump 13% in Q3
Overall, mid- and high-rise sales in Q3 rose 16% to $19.5 billion. Garden property sales increased 10% YOY to $24.3 billion.
Robert Jue, CEO of an apartment and industrial property owner, told Multifamily Dive he has seen capital move from other sectors into multifamily since President Donald Trump’s tariff announcements earlier this year.
“It’s tangential, but there was a lot of money that was going into industrial that, post tariffs, turned off on industrial and has been flowing into multifamily,” Jue said.
That trend may have helped support multifamily transaction volume that was on par with the third quarters from 2013 to 2019 — before the pandemic and interest rate hikes upended the market.
Jue told Multifamily Dive that recent declines in borrowing costs should help further open the market. For instance, Standard secured a Freddie Mac loan at a sub-5% interest rate for the recent purchase of Fox Valley Villages, a 420-unit community in the Naperville/Aurora submarket of the Chicago metro area.
With borrowing rates now below cap rates in many instances, buyers can take advantage of positive leverage, making deals more likely to pencil out, according to Jue.
“In a lot of instances [over the last couple of years], it was hard to get positive leverage,” Jue said. “If you were doing a value-add deal, you were buying at negative leverage and trying to grow your way out of it. But now cap rates are the same — say, 5.25% to 6.25% — and you’re starting to go in at neutral leverage. So I think that’s starting to make sense to some investors.”