Extremely low-priced floating rate money for larger, low leverage transactions has enabled larger funds to purchase portfolios of industrial and multifamily properties at going in cap rates of 3% and still have positive leverage.
The volume of investment sales in the Richmond area has bucked the national trend somewhat, according to commercial real estate analytics and research firm CoStar Group.
Despite record breaking per-unit sale numbers, recent research indicated that the number of multifamily sales in the first three quarters of 2021 were much lower than any similar period since 2014. So far this year, only 30 transactions have closed.
This is not to say that the apartment market isn’t red hot.
Rents grew nationally at a double-digit annual pace in September for the second month in a row — up 13.6% compared with the same month a year ago, according to Realtor.com.
Rental growth in Richmond continues to be record-breaking strong with various research indicating year-over-year gains in October of over 13%. While this is close to the national average, what makes it almost unbelievable is the fact that rents grew in 2020 year-over-year by over 4%, where rents in many larger markets are just now getting back to pre-COVID levels
According to CoStar, the strongest gains have been in western Henrico County and Midlothian areas where year-over-year rents grew 14.9% and 14.7% in September, respectively. Developers have taken notice and the construction pipeline for apartments is higher than it has ever been with more than 5,000 units under construction.