Top 5 Markets for Multifamily Transactions in 2019
- Jan 29, 2020
The nation’s transactions volume for multifamily assets reached $92.5 billion in 2019, almost on par with the 2018 level of $95 billion, according to Yardi Matrix data. The deals closed in the five markets on this list accounted for a combined total of $28.8 billion, about a third of the nation’s sales volume.
Employment growth in Dallas was among the strongest in the country, with some 120,000 positions added in the 12 months ending in November, a 2.9 percent increase. During the same period, the metro’s unemployment rate declined by 30 basis points, to 3.0 percent, 30 basis points below the national average. The metro gained 131,800 residents in the 12 months ending in December 2018, or 1.8 percent, and almost 1.1 million (16.9 percent) since December 2010. This continued to sustain the expansion of the rental market, which added almost 25,000 units in 2019, 3.2 percent of existing stock. A total of 273 assets traded last year in Dallas for $4.8 billion, a 7.5 percent slide from the previous year, as the average price per unit rose by more than 18 percent.
In three separate deals, Ashcroft Capital expanded its Dallas portfolio by almost 1,500 units. In Irving, the New York-based company purchased the 548-unit MacArthur Place at 183 from Wilkinson Corp. Cortland closed the biggest multifamily deal in Dallas last year with the acquisition of Bella Vida Estates in Plano. The Atlanta-based firm purchased the 548-unit asset from Atlas Real Estate Partners for more than $100 million.
Thanks to good demographic gains, Seattle’s employment market continues to expand rapidly, with 53,200 positions added in the 12 months ending in November, a 3.0 percent uptick. The metro had a 2.9 percent unemployment rate in November, down 100 basis points year-over-year. As a result, demand remained strong, with some 11,000 units delivered in 2019, 4.1 percent of stock, almost double the national average share of 2.1 percent. In 2019, 97 communities changed hands for $4.9 billion. This represents a 65 percent increase in the metro’s transactions volume from the previous year, as investors closed 45 percent more deals and the average price per unit saw a 9.0 percent increase.
Last year, RISE Properties Trust grew its presence in Seattle by 2,089 units. The firm closed nine deals totaling $588.2 million, including the $101.5 million acquisition of the 211-apartment Salix Juanita Village in Kirkland, Wash., and the $74.4 million purchase of the 131-unit Joseph Arnold Lofts in Seattle. Meanwhile, the metro’s largest transaction of 2019 was Continental Properties’ deal with CBRE Global Investors for the 366-unit Met Tower. The 24-story building traded for $215.8 million, in a sale subject to a $139.5 million acquisition loan from Wells Fargo Bank.
3. Washington, D.C.
Employment growth in Washington, D.C., was moderate in the 12 months ending in November, when 61,300 positions were added, a 1.8 percent increase. Job growth was led by professional and business services, which gained 24,800 positions, a 3.3 percent uptick, and leisure and hospitality, which saw a 6.1 percent increase, with 20,400 positions added. Meanwhile, the metro’s unemployment rate declined by 10 basis points year-over-year through November, to 2.8 percent, 50 basis points below the national average. Last year, investors closed 100 deals totaling $5.5 billion, an 8.4 percent decline in sales volume from 2018, as the total number of properties sold decreased by 12.3 percent.
In separate deals, Wood Partners sold two communities for a combined total of $191.1 million. In the College Park submarket, Hines acquired the recently completed, 275-unit Alloy by Alta for $98 million. Meanwhile, in Laurel, Md., The Duffie Cos. purchased Evolution at Towne Centre. The Silver Spring-based firm paid $93.1 million for the 340-apartment, partially affordable community. The sale was subject to a $55 million acquisition loan from Aegon Insurance Co.
Bolstered by its relatively low cost of living, Atlanta’s demographic and employment expansions show no sign of slowing down. The metro added 61,200 positions in the 12 months ending in November, a 2.2 percent uptick. Gains were strongest in education and health services (14,900 jobs) and leisure and hospitality (12,600 jobs), sectors with a growth rate almost double the metro average. Atlanta’s average rent rose 3.1 percent year-over-year through December, to $1,310, slightly outperforming the national average of 3.0 percent. The metro’s total transaction volume for last year, at $6.3 billion, was down 3.3 percent from the previous year.
Last year, Bridge Investment Group expanded its Atlanta portfolio by some 2,000 units with the acquisition of four communities, in separate deals. These include one of the market’s largest transaction of 2019—the $101.3 million acquisition of The Edgewater at Sandy Springs. Highland Capital Management sold the 760-unit asset in a transaction subject to a $72.5 million Freddie Mac loan from Wells Fargo Bank. Meanwhile, the largest multifamily transaction in Atlanta was Black Creek Group’s $117 million purchase of Hanover Perimeter. The Hanover Co. sold the 384-unit community, a year after it came online.
Phoenix is one of the more affordable multifamily markets on this list, with an average rent of $1,217 at the end of 2019, more than 20 percent below the national average of $1,474. Rents rose 7.7 percent year-over-year, more than double the national average growth rate of 3.0 percent. And thanks to its demographic expansion, Phoenix employment market remained fast-paced in the 12 months ending in November, when employers added 56,500 jobs, representing a 2.6 percent uptick, 100 basis points above the national average growth rate of 1.6 percent. In contrast to national trends, the metro’s transactions volume increased in 2019 by almost a quarter compared to the previous year, to $7.2 billion, as investors closed 18.9 percent more deals.
In two separate deals, LivCor sold 1,232 units of its Phoenix portfolio for a combined total of $217.9 million. BH Equities acquired Aventerra at Dobson Ranch, a 576-apartment community in Mesa, Ariz., for $85.8 million—45 percent more than the seller had paid in 2016 for the 53-building asset. NexPoint Residential Trust acquired a three-asset, 656-unit portfolio for $132.1 million. The sale was subject to three acquisition loans totaling $79 million. Meanwhile, Bluerock Real Estate closed the market’s largest deal last year, with the $141.3 million acquisition of the 644-unit Denim Scottsdale from TruAmerica Multifamily.
Yardi Matrix covers all multifamily properties of 50+ units in size across 133 markets in the United States. This ranking reflects transactions completed for properties within that sample group.