Search
 

Multifamily Market Could See 7% Cap Rates, Bidding Wars

CHICAGO-Multifamily sales prices producing capitalization rates below the cost of mortgage money could happen here, one expert tells the Real Estate Investment Association/Society for Industrial and Office Realtors' Summit 2001.

By Mark Ruda | Updated on January 19, 2001

CHICAGO-Although the market here is hardly known for irrational exuberance or even volatility, one expert says capitalization rates on multifamily properties may drop into the 7% range this year. “In California, you’re seeing cap rates below 7%,” says Robert Wolkoff, a principal with Group One Investments. “I think in Chicago, you’ll see the same thing.”

Cap rates below the cost of money already is happening in some of the hottest areas of the city, such as the Lincoln Park and Lakeview neighborhoods, where multifamily buildings used as rental properties have been bought for conversion to condominiums. However, cap rates remain in high single digits to double digits in most city neighborhoods, as well as the suburbs.

Regardless, owners of multifamily properties are enjoying low vacancy rates as well as healthy rent increases above the rate of inflation, real estate professionals were told at the Real Estate Investment Association’s/Society for Industrial and Office Realtors’ Summit 2001 here. Vacancy rates were around 2% in Lakeview and Lincoln Park on the city’s North Side, around 3% in the northwest suburbs and DuPage County, says Alon Yonatan, research services manager for Marcus & Millichap–Chicago.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.