Top 5 Western Markets for Multifamily Transactions

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While volume has yet to fully rebound, buyers continue to seek out stable investment opportunities in the Western region, according to Yardi Matrix.

Multifamily investment stayed moderate into the new year. According to Yardi Matrix data, in the first two months of 2021, transaction volume nationwide hit $16.9 billion. While a far cry from the $38.6 billion in deals closed in the fourth quarter of last year, investors are continuing to seek out deals even amid ongoing economic uncertainty.

In Yardi Matrix’s Western region, this trend is apparent. In January and February, the region clocked nearly $2.7 billion in multifamily deals, compared to $6.6 billion the previous quarter. Sale volume has been a relatively even split between asset classes, with communities targeting Lifestyle renters netting $1.5 billion in transactions, or 56.1 percent of the volume this year. Utilizing Yardi Matrix data, the table below highlights the top five markets for multifamily transactions in the Western region.

Rank Market Units Transaction Volume ($MM) Price Per Unit
1 Phoenix 6,433 $1,436.07 $223,235
2 Denver 1,861 $517.10 $277,859
3 Tucson, Ariz. 1,045 $131.95 $126,268
4 Las Vegas 636 $77.65 $122,091
5 Albuquerque, N.M. 855 $53.85 $62,986

5. Albuquerque, N.M.

Arioso. Image courtesy of NorthMarq

Nearly $54 million in multifamily properties transacted in Albuquerque, N.M., in the first two months of 2021, well above the $15.1 million in deals closed in January and February the previous year. Albuquerque has performed well over the past year, with rent growth at 6.1 percent year-over-year through February, higher than in most U.S. markets.

The market’s four transactions this year included 855 units, and the overwhelming majority of apartments—92 percent—were listed as affordable. PacifiCap Properties was the seller in three of the four deals, encompassing 735 units. The buyer, Laguna Point Properties, financed the fully affordable acquisitions with three Freddie Mac loans from NorthMarq Capital totaling $36.6 million.

4. Las Vegas

Spanish Oaks

Four multifamily transactions totaling $77.7 million closed in Las Vegas in January and February, averaging just north of $122,000 per unit. Although this marked a steep decline from the same period last year, when $405 million in sales closed, this is hardly surprising, given the severe and lasting impacts the pandemic has had on the metro’s gaming industry. Even with the wider-scale economic challenges facing the metro, rent growth has been strong, clocking in at 5.1 percent year-over-year through February.

Next Wave Investors’ $28.5 million February acquisition of Spanish Oaks Apartments in South Las Vegas was the market’s largest deal. Bridge Investment Group financed the purchase with a  $24.3 million loan. Seller Shulgin Acquisition Group had held the 1976-built property for nearly five years, purchasing it in mid-2016 from ConAm for $14.7 million.

3. Tucson, Ariz.

Catalina Ridge

Boasting rent growth of 7.3 percent year-over-year through February, Tucson, Ariz.’s multifamily market has remained strong. Although the metro takes third place on our list, with $132 million in deals closed in the first two months of 2021, the number is a notable decline compared to the same period in 2020, when transaction volume crossed $450 million.

One of the largest multifamily owners in the market, Bridge Investment Group acquired two assets in January totaling 626 units. In the larger of the two deals, the Salt Lake City-based investor paid Greenwater Investments $34.8 million for the 360-unit Catalina Ridge at 7400 E. Golf Links Road. KeyBank provided $26 million in Freddie Mac acquisition financing for the purchase.

2. Denver

Gateway Arvada Ridge

Following a tough 2020 with largely plateauing rent growth, Denver’s multifamily market appears to be on the road to recovery. The metro’s diversified economy and rapid population growth will keep it on a strong footing through 2021 as the broader, national recovery begins to take hold. Multifamily transactions exceeded half a billion dollars in January and February. This is a major downshift from the $1.2 billion traded during the same window in 2020, though deal velocity is likely to pick up speed as investor confidence builds through the year.

The metro’s largest transaction through February was Praedium Group’s $101.6 million purchase of Gateway Arvada Ridge in the northwest suburb of Arvada, Colo. New York Life financed the 296-unit buy with $61 million in acquisition financing. The seller, Embrey Partners, had delivered the community only a year earlier, in February 2020, following a little more than two years of construction.

1. Phoenix

Heritage at Deer Valley

The top metro on our list, Phoenix logged more than $1.4 billion in multifamily deals in the first two months of the year, a 66 percent increase compared to the $864 million transacted during the same period last year. The market has also set itself apart nationally in other respects, with annual rent growth hitting 6 percent through February, bolstered by strong population growth and corporate migrations.

Phoenix’s largest multifamily deal through February was Millburn & Co.’s $178.5 million acquisition of the 832-unit Heritage at Deer Valley from Priderock Capital Partners. Located at 3010 W. Yorkshire Drive some 15 miles north of central Phoenix, the property was completed in phases in 1997 and 2001. The community last changed hands in late 2017 for $125.5 million, then the highest price ever paid for a single multifamily asset in the market.

Yardi Matrix covers all multifamily properties of 50+ units across 133 markets in the United States. This ranking reflects transactions for properties within that sample group.

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