Portland Multifamily Update from Rose City Commercial Real Estate

In order to put our local multifamily market in perspective I performed my own analysis of the data.  The headlines about big REIT players and  Class A assets?  Absolutely true.  But under reported is the way that all segments of the multifamily market have picked up.  The average age of multifamily investment closed in the last 12 months?  36+ years!  That suggests that repositioning opportunities and value add plays are as important as the flagship pride of ownership assets.

Apartment investments continue to be the preferred commercial real estate niche both locally and nationally.  CoStar reports  multi family volume jumped 80% in the second quarter over

For additional information on my study, contact me at 503.577.1034 or email me: rick@rosecitycre.com.

the same period last year.  Nationally almost $15 billion in  sales closed in the second quarter this year along with $9.5 billion in the first quarter for a $24.5 billion start to the year.  While that is less than the peak market, (mid 2007) it is still quite robust.  REITs are a major factor in this story…but acquisistions are also being made by individual portfolio owners large and small.  Nationally the average cost per unit is up to $88,500.  There’s been lots of press about all the deals in Phoenix ($1.3 B first half  2011) but during that same time period San Francisco ($2.1 B); Los Angeles ($2.3 B) and Washington DC ($2.6B) have actually had higher sales. It should be noted that the price per door in Phoenix is much lower.

So how is Portland doing?  Well…sales have been robust here…REITs have actually been net sellers…although all that I have talked to are still in buy mode.  I ran a list of all activity of $1 million and up  multifamily sales in a 25 mile diameter area roughly equal to the Greater Portland Metropolitan for the last calendar year.  Here are some of the highs and lows:

  • Total number of multifamily sales in excess of $1 million: 94. Greater than $5 million: 20;  Greater than $10 million: 12; Greater than $20 million: 7; Greater than $30 million: 3.
  • Highest sale price:  $36,875,000 for Kearney Plaza in NW Portland.
  • Busiest area: East side of town.  Only two of the 7 largest assets sold were on the West side of town (Kearney Plaza and Park 19). The remaining 5 were on the East side (Russellville Commons, Orchard Pointe, 2121 Belmont, and Kemton Downs).
  • Lowest Cap Rate (Actual): 2121 Belmont at 4.4% (Kearney Plaza was second lowest at 4.75%
  • Highest Cap Rate (Actual):  Heather Glenn 10% .  Honorable mentions: Burnside Station 9.32% and Pioneer Plaza Manor: 9.99%
  • Average Cap Rate:  6.91
  • Average per unit: $82,650
  • Newest 1 year old
  • Oldest: 108 yrs old
  • Average age of property sold: 36 years

Other articles you may like:

 

The Importance of Due Diligence in Multifamily Profits – Phase II – Books and Records | Rose City Commercial Real Estate

Demystifying multifamily cap rates, NOI, and investing basics | Rose City Commercial Real Estate

Multifamily real estate investment basics – part 1 of a series | Rose City Commercial Real Estate

Attractive cap rates attract investors to multifamily properties in Portland | Rose City Commercial Real Estate

Prospects for multifamily sector improve greatly | Rose City Commercial Real Estate

 

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