The Calculated Risk blog provides insight on the apartment market. It makes this statement:
This favorable demographic (the number 20 - 34 year old people (prime renters) is expected to stay high through 2030) is a key reason I've been positive on the apartment sector for the last several years - and I expect new apartment construction to stay strong for several more years.The construction of new apartments, as well as seeing vacancy rates close to the bottom, may mean cap rates are near a low, as multifamily buyers have more options. This may be one reason Blackstone, which has been a big seller of various real estate asset classes this year, is looking to buy apartments. Here is a Bloomberg article on Blackstone's new apartment venture, LivCor. Apparently, Blackstone sees the growing demand and the new supply as opportunities.
New supply will probably increase by 250,000 to 260,000 units this year - and increase further in 2015 since it can take over a year from start to completion for large complexes. Note: This doesn't include houses converted to rentals - and that is a substantial number in recent years.
This suggests new supply will probably balance demand soon, and that means vacancy rates are probably close to a bottom.
New
supply will probably increase by 250,000 to 260,000 units this year -
and increase further in 2015 since it can take over a year from start to
completion for large complexes. Note: This doesn't include houses converted to rentals - and that is a substantial number in recent years.
This suggests new supply will probably balance demand soon, and that means vacancy rates are probably close to a bottom.
Read more at http://www.calculatedriskblog.com/2014/05/apartments-supply-and-demand.html#rdH8T3zHEXDyhmaf.99
This suggests new supply will probably balance demand soon, and that means vacancy rates are probably close to a bottom.
Read more at http://www.calculatedriskblog.com/2014/05/apartments-supply-and-demand.html#rdH8T3zHEXDyhmaf.99
New
supply will probably increase by 250,000 to 260,000 units this year -
and increase further in 2015 since it can take over a year from start to
completion for large complexes. Note: This doesn't include houses converted to rentals - and that is a substantial number in recent years.
This suggests new supply will probably balance demand soon, and that means vacancy rates are probably close to a bottom.
Read more at http://www.calculatedriskblog.com/2014/05/apartments-supply-and-demand.html#rdH8T3zHEXDyhmaf.99
This suggests new supply will probably balance demand soon, and that means vacancy rates are probably close to a bottom.
Read more at http://www.calculatedriskblog.com/2014/05/apartments-supply-and-demand.html#rdH8T3zHEXDyhmaf.99
New
supply will probably increase by 250,000 to 260,000 units this year -
and increase further in 2015 since it can take over a year from start to
completion for large complexes. Note: This doesn't include houses converted to rentals - and that is a substantial number in recent years.
Read more at http://www.calculatedriskblog.com/2014/05/apartments-supply-and-demand.html#rdH8T3zHEXDyhmaf.99
Read more at http://www.calculatedriskblog.com/2014/05/apartments-supply-and-demand.html#rdH8T3zHEXDyhmaf.99
2 comments:
"...may mean cap rates are near a low, as multifamily buyers have more options. This may be one reason Blackstone, which has been a big seller of various real estate asset classes this year, is looking to buy apartments." This is a little confusing to me. Cap rates are near a low (and therefore, pricing is near a high), so Blackstone wants to buy at the top?
You're right the way I wrote the passage was confusing. I meant that one reason Blackstone may be looking at apartments now is that the new supply may cause cap rates to increase in the future, so it's putting the mechanisms in place now to take advantage in the future. I have heard another multifamily real estate investor echo the same sentiments: Long-term demand trend is good, but short term supply increase may present buying opportunities.
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