WORLD PROPERTY CHANNEL ®

(NEW YORK, NY)--The nation's continuing loss of jobs, accompanied by higher vacancies in many regions, has dented the national multifamily market but investors with cash in hand are ready to re-enter the arena in many locales as prices dip even further.

That's the consensus of brokers polled in 34 markets by Marcus & Millichap Real Estate Investment Services.  The Encino, CA-based brokerage periodically completes similar surveys for its clients.

Regional Highlights:

NORTHEAST

New York City Sales Chart

New York City--"While local transaction velocity will remain modest in 2009, the buyer pool should change significantly," says Edward Jordan, regional manager of Marcus & Millichap's Manhattan office.  "Experienced New York property owners who have waited on the sidelines for the froth in the investment market to dissipate are poised to re-enter the market."

Boston--"Investment trends in the Boston apartment market will likely diverge in 2009," says Boston office regional manager Gary Lucas.  "Demand for stable assets in close-in submarkets will remain strong, supporting current values, while properties in tertiary areas will face challenges."

 

Edward Jordan

New Haven--"Following a steady decline in 2008, investment activity in New Haven could gain some momentum this year," believes Edward Jordan, who manages the New York and New Haven offices for Marcus & Millichap.

Spencer Yablon

Philadelphia--"Sales activity in Philadelphia may increase as investors adjust to the current climate," says Philadelphia office regional manager Spencer Yablon.  "While the performance of Class A and Class B apartments in Philadelphia is expected to remain fairly strong this year due to a soft single-family housing market, Class C fundamentals will weaken."


Washington, DC--"Encouraged by some of the strongest operating fundamentals in the country, national investors will increasingly look to establish or expand portfolios in the region over the next 12 months," predicts Ramon Kochavi, regional manager of Marcus & Millichap's DC office.

MIDWEST

Milwaukee Employ Chart 2-7-09

Milwaukee--"The expectations gap continues to affect transaction velocity in Milwaukee," says Matthew Fitzgerald, Milwaukee office regional manager.  "However, unlike other Midwestern markets, buyers will likely have to increase offers to obtain properties."

Cincinnati--"Transaction velocity will continue to be subdued in 2009, with investors targeting Class B and Class C properties in Northern Kentucky and Downtown Cincinnati," observes Steven Weinstock, sales manager at Marcus & Millichap's Cincinnati office. "Above-average Class A rent growth over the past several quarters has priced some renters out of these areas, buttressing lower-tier demand."

Columbus--"...Cap rates for stabilized product in the metro area vary from the low-7 percent range for Class A or top Class B properties to approximately 9 percent for Class C assets," says Weinstock, who manages the Cincinnati and Columbus, OH offices.

Gary R. Lucas

Kansas City--"The pricing disconnect between buyers and sellers should narrow this year, as regional buyers will likely re-enter the market, enticed by elevated cap rates and attractive pricing," says Gary Lucas, Kansas City office regional manager.

Indianapolis--"Interest from out-of-state buyers will remain elevated in 2009, as the local apartment market offers a fairly bright long-term outlook and attractive initial yields," notes Joshua Caruana, regional office manager.

Detroit--"Investor sentiment will remain mixed for Detroit's apartment properties in 2009, with yield-seeking buyers staying the most active," notes Detroit office regional manager Steve Chaben.  "Cap rates, which are approaching 9 percent, are among the highest in the country, attracting buyers but also illustrating the long-term uncertainty in the market."

Denver--"A positive investment outlook is expected for Denver this year, despite a modest vacancy rise," says Adam Christofferson, Denver office regional manager.

Chicago--"Solid fundamentals in suburban Class B and Class C apartments will likely attract investors in 2009," believes Greg LaBerge, regional manager of Marcus & Millichap's Chicago office. "Demand for well-located, lower-tier properties in the Downers Grove and Woodrige/Lisle submarkets is anticipated to increase, with traffic congestion luring renters closer to employment and transportation corridors."Cleveland--"Investment activity in Cleveland will continue to be dominated by buyers seeking above-average yields," says Michael Glass, Cleveland office regional manager.  "The absence of competition from speculative out-of-market investors has driven a modest rise in cap rates."

St. Louis--"Transaction velocity in St. Louis should pick up late in 2009, assuming the expectations gap narrows," says Stephen Maulden, St. Louis office regional manager.

Minneapolis-St. Paul--"While construction activity will slow and population growth is expected to remain healthy, weakening local employment prospects will be a drag on the Twin Cities' apartment market this year," says Solomon Poretsky, Minneapolis regional manager.

SOUTHEAST

Tampa--".,,Class A complexes are currently trading at cap rates of approximately 7 percent, with Class B and Class C assets pricing in the 7.2 percent to 8.0 percent ranges," notes Bryn Merrey, Tampa regional manager.

Jacksonville--"The local apartment market will continue to present opportunities for investors," says David Bradley, sales manager in Marcus & Millichap's Jacksonville, FL office.  "While the performance of Jacksonville's apartment market will moderate through 2009, the extended outlook remains fairly bright."

Fort Lauderdale--"Transaction velocity will likely remain subdued in the first part of 2009," expects Greg Matus, regional manager in the Fort Lauderdale office.  "Velocity declined last year, and the limited number of deals has made it difficult to discern values and pricing trends, especially for stabilized rental assets."

John Leonard

Charlotte--"Investment activity is expected to pick up during the latter half of 2009, as more conservative underwriting pushes cap rates higher, attracting investors who are waiting to enter the market," says Gary Lucas, who also manages Marcus & Millichap's Kansas City and Boston offices.

Atlanta--"Asset performance within Atlanta's apartment market will run counter to the national trend," says John Leonard, Atlanta office regional manager.  "Despite the challenges facing the Atlanta apartment market in the near term, investment opportunities will persist."

Orlando Sales Trends 2-7-09

Orlando--"Investment activity is expected to remain slow in the early part of 2009," says Bryn Merrey, Orlando office regional manager.  "Despite the effects of weakening economic growth, investors are optimistic about the area's long-term prospects and more robust apartment fundamentals in the quarters ahead." 

SOUTHWEST

Tucson--"Fundamentals in the Tucson apartment market are expected to adjust further this year as a result of a soft economy, competition from shadow stock and new legislation," notes David Guido, regional office manager. "Sales velocity will likely remain subdued."

San Antonio--"While the local economy in San Antonio is one of the most stable in Texas, cap rates have been the highest in the state for the last several years," says J. Michael Watson, regional manager in the San Antonio office.  "Employers will continue to add jobs in 2009, which should alleviate some pressure on apartment fundamentals."

Salt Lake City--"Owners who participated in Salt Lake City's investment boom in recent years will find the climate more conservative in 2009," says Richard Bird, regional office manager.

Phoenix--"Following years of robust investment activity from California buyers,, velocity is now returning to more sustainable levels," says David Guido, who also manages Marcus & Millichap's Tucson office.  "The Phoenix apartment market is expected to remain in a state of transition in 2009 due to a considerable supply and demand imbalance."

Dallas-Fort Worth--"Apartment investment activity in Dallas/Fort Worth will remain more brisk than in much of the nation due to health, long-term growth prospects and cap rates in the mid-7 percent to low-8 percent range," says Tim Speck, regional manager in the Dallas office.

FAR WEST

San Diego--"Solid underlying fundamentals will capture the attention of major buyers seeking stability," believes Ken Williams, regional manager in the San Diego office.  "Apartment operations in San Diego will stay healthy in 2009, supported by high barriers to new construction and low housing affordability."

Sacramento--"Investors will remain selective when pursuing apartment properties in the Sacramento market this year, but opportunities will emerge," notes Robert Hicks, Sacramento office regional manager.  "Apartment construction is expected to come to a near standstill this year, easing overbuilding concerns..."

San Jose--"Investment activity this year will be driven by the South Bay's prospects for sustainable, long-term growth, though a wide expectations gap between buyers and sellers will continue to slow transaction velocity," says Steven Seligman, regional manager in the Palo Alto, CA office.

Oakland--"While transaction velocity in the East Bay apartment market is expected to be modest in 2009, area fundamentals will continue to support investor optimism," says Jerry Smith, Oakland office regional manager.

Los Angeles--"The Los Angeles apartment market will remain one of the nation's top performers in 2009, though a softer local economy will result in rising vacancy," says Scott Lamontagne, regional manager in the Los Angeles office.  "Despite the uptick, the gap between rent and owning is significant, allowing for reasonable rent gains this year."

San Francisco--"Despite some short-term concerns regarding the market's employment forecast, investors will continue to target apartment properties in San Francisco, driven by the healthy extended outlook," says Jeffrey Mishkin, San Francisco office regional manager.

Portland--"Investment activity is expected to remain measured in the first half of 2009, as many sellers maintain unrealistic expectations about pricing and buyers continue to find access to debt capital a challenge," notes Tony Cassie, regional manager in Marcus & Millichap's Portland, OR office.

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