RubinBrown Apartment Stats 2012

Executive Summary

Fueled by investor need and demand for investment, sales activity for 2011 was equally strong, with transactions growing approximately 30% from 2010 to 2011. Garden style properties have contributed to most of the volume. And, as expected, pricing per unit continues to rise as cap rates have steadily fallen since 2010. Of course, now analysts are questioning just how low cap rates can drop. Most believe the trend will not last. However, given the current industry trends involving rental growth, falling vacancies, rising demand and overall investor need, the environment points to low cap rates into the near future. Conclusion 2011’s robust industry performance has left market analysts, apartment owners and other stakeholders optimistic for 2012 performance. With sustained rent increases, lower vacancies and rising permits, this year is expected to experience continued success and end on an even higher note than the previous year. The continued recession felt in the single family housing market as well as the current shift in the rent versus buy perspective remain impactful on the industry’s recovery. With rising demand and a sustained need for multifamily housing on the table, apartment owners have found themselves in prosperous position during 2011 and for the next few years. Dubbed “the Year of the Landlord”, many will find 2012 to be successful, as the multifamily housing market is the apparent place to be.

However, the industry does have some hazards looming on the horizon. Besides the potential threat of oversupply in the coming years, pending legislation could have a substantial effect on the industry’s turnaround–namely in the affordable housing and tax credit arenas. With tax reform imminent, probabilities are high that all multifamily stakeholders will feel the impact to some degree, whether through reduced credits, subsidies or deductions. Many proponents of the affordable housing market have continued to promote the strengths of the industry’s mission and overall community impact. Nonetheless, time will tell as future legislation and its effects lie in the hands of our Congressional leaders. RubinBrown invites you to utilize this study as a development and management tool to compare your financial operations to the operating results of your peers. This study also provides sound comparable data to utilize in formulating an acquisition model. Like all compilations of data, it will be most useful when carefully and properly interpreted. We sincerely thank everyone who took time to participate in RubinBrown’s survey.

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