In past posts I have discussed how and why the
Jacksonville apartment market is exceeding analysts’ expectations. The result
has been $388.8 million of apartment sales transactions ($1 million plus per
transaction) in the first seven months of 2013. Current apartment performance
and the expectations for future performance are driving a relatively active
market.
According to REIS, for transactions during 2013Q2 the
median cap rate was 7.2% and the mean was 7.8%. Those numbers are up from the
12-month rolling averages of a 6.8% median and a 7.3% mean. The respective 40
BPS and 50 BPS increases are largely due to rising interest rates. Thus,
sellers are motivated to take advantage of current conditions with improving
NOI's avoiding the risks of new construction entering the market and rising
interest rates pushing cap rates up further. Inventory is being made available
across a broad range of apartment class types, and property ages and
situations.
So multifamily sales ($1,000,000+) during the first seven
months of this year have been a combination of opportunistic purchases (about
40%) and asset lifecycle transactions. Transactions of both types have been
across all asset classes. Most of the transactions have been in Jacksonville's
Southeast quadrant where most of the employment growth is occurring. However, a
number of the opportunistic purchases occurred on Jacksonville's Westside where
older properties had been sold or refinanced prior to the recession and then
ran into difficulties when vacancies rose and rents remained flat. Purchasers’
plans for their acquisitions will be discussed in a future post.
If you would like to discuss these thoughts in more detail,
please contact me:
Paul B.
HazlettMultifamily Investment Advisor
Coldwell Banker Commercial - Benchmark
904.421.8523
PHazlett@CBCBenchmark.com
