Top 5 Western Markets for Multifamily Transactions
- Jun 15, 2020
The first four months of 2020 saw substantial activity from multifamily investors in the Western region, with almost $4.2 billion of deals closed, according to Yardi Matrix data. Although the overall investment volume has slightly dropped from the $4.9 billion recorded for the same period in 2019, some markets with value-add investment opportunities saw an uptick in buyer interest. Despite good performance for the interval, overall sales activity visibly slowed down in March, due to the coronavirus outbreak. Because of the severe shelter-in-place orders, this trend continued in April, when less than 10 properties traded in the entire region.
The table below ranks the region’s metros with the highest transaction volumes in the first four months of the year, based on Yardi Matrix data. The top five markets combined represent almost all the transaction activity in the Western region.
5. Colorado Springs
Transaction volume in Colorado Springs totaled more than $254 million through the first four months of 2020. Despite the distress caused by the COVID-19 crisis, sales activity was significantly higher than the $87 million closed during the same time last year. The effects of the health crisis, however, were more visible in April, when no sales were registered in the metro. In total, seven properties totaling 1,207 units changed hands.
The largest deal in the metro closed in March. Benedict Canyon Equities acquired a 332-unit property in the East Norwood submarket for nearly $87 million. UBS Realty Investors traded the class A building after almost 16 years of ownership.
After a mediocre $569 million in transactions closed in 2019, multifamily investment picked up the pace in Tucson; more than $483 million in assets traded in just the first four months of 2020. Buyers mostly pursued value-add opportunities, while only two of the properties traded were Class A assets.
GMH Capital Partners’ $195 million sale of Sol Y Luna—a 342-unit Class B asset located in the University submarket—was the largest deal closed in the metro. Nelson Partners acquired the student housing asset, linked to the nearby University of Arizona.
3. Las Vegas
Transaction activity in Las Vegas marked a new cycle high in 2019, with more than $2.9 billion in assets changing hands. The coronavirus outbreak, however, put a damper on this trend, as Las Vegas’ economic profile means that a high number of its jobs are in at-risk sectors. Transaction volume in Las Vegas totaled nearly $516 million in the first four months of the year—an 11 percent drop compared to the same period in 2019.
The highest influx of capital was recorded in the Henderson West submarket, with some $149 million in apartment assets changing hands. The largest deal, however, closed in the Las Vegas Strip submarket—Waterton purchased Vegas Towers, a 456-unit property, from Millennium Management for $104 million.
Denver saw nearly $1.3 billion in closed multifamily deals in the first four months of the year. Although the metro started the year on a strong note, the COVID-19 outbreak put investment activity on hold in March and no deals were closed until mid-April. In line with other Western metros, buyer interest revolved around Class B and C properties—of the 26 rental assets sold, only five were Class A assets.
The biggest buyer in the metro was Harbor Group International. The company paid $505 million to Aragon Holdings for an eight-property portfolio encompassing 2,500 units. The submarket with the highest transaction volume was Broomfield/Todd Creek, with a total of $270 million in assets changing hands.
Phoenix tops our list, with more than $1.3 billion in multifamily deals closing through the first four months of the year. Although investors continued to push through during the lockdown, investment this year has been substantially lower than 2019, when $2.2 billion closed during the same time frame. The decline comes as no surprise, considering the pressure the global health crisis put on Phoenix’s economy.
Investors closed 41 deals throughout the first four months of the year and focused increasingly on Class B and C properties during January and February. Since the start of the crisis, however, buyer interest has shifted to Class A assets. The largest investment in Phoenix was FSC Realty’s $78.5 million acquisition of the 306-unit Parc Midtown, located at 240 W. Osborn Road in the Uptown submarket.