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Top 10 U.S. CRE Markets for Multifamily Acquisitions

Okay. Today we’re looking at another ranking of CRE markets to see which are most popular for the acquisition of a particular asset class, based on data from PwC/ULI’s Emerging Trends in Real Estate 2014 report (here’s the link). This time we’re looking at that perennial rock star of the commercial real estate world: multifamily! Here are the Top 10 U.S. CRE Markets for Multifamily Acquisitions:

 

478px Houston montage Top 10 U.S. CRE Markets for Multifamily Acquisitions

10. Denver (% of poll respondents who want to buy here: 45.3)

9. San Diego (46.3%)

8. Dallas (48.9%)

7. San Francisco (49%)

6. Miami (49.5%)

5. Seattle (50.4%)

4. Boston (53.1%)

3. New York City (55.6%)

2. Los Angeles (55.7)

1. Houston (57.0)

As I said, multifamily is the undisputed star of the real estate recovery, having gained value and demand more rapidly than any of the CRE world’s other asset classes and sub-classes.Thanks to the nation’s trends of increased urbanization, the increased appeal of densely built live-work-play communities, and the decreased accessibility of single-family home ownership for many Americans, apartments have become hot in both cities and suburbs. In 2012, it seemed like apartment real estate opportunities were all anybody talked about.

Last year, on the other hand, the industry’s attention began to branch out. The retail and office markets became more active, the hospitality market bounced back, and niche assets like self-storage and data centers and skilled nursing facilities gained greater prominence. None of this was because multifamily had lost value–far from it–but as competition in this arena became more fierce and multifamily developments were completed and filled, the sector began to show less value-add potential in comparison to other previously neglected asset classes.

But the ranking above shows there is still tenant demand and opportunity for developers/investors to create value through multifamily projects–though it’s clear that America’s major cities are where all the action is. Quite simply, this is because such major cities are already densely developed, offering too little multifamily supply for their growing populations. In markets such as those listed above, multifamily remains a vital asset class, and one with significant opportunity in coming years.

Of course, multifamily projects and appetite vary from city to city. In the ranking above, we can draw a distinction between older, more densely developed cities like New York City and Boston and comparatively “younger” cities like Houston and Seattle. In the former, we will likely see more conversions of aging assets (e.g. office assets) into multifamily properties (here in Philadelphia, we’re seeing tons of these projects). In newly growing markets, ground-up multifamily developments will likely be the norm.

Reprint from Llenrock.com         by

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Categories: multifamily, Uncategorized
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