GlobeSt.com BIG PICTURE: Investors Take Second Look at B and C Multifamily Product

ORLANDO-Demand for all classes of apartment properties across the country remains high as supply remains low in many markets. New construction has slowed. Against this backdrop, owners are hanging onto their multifamily assets as a sound hedge against a volatile stock market, brokers, investors and analysts tell GlobeSt.com. Dallas-Ft. Worth, Orlando and Tampa are a few of the markets where class B and class C product are moving strongly, while Chicago remains a hot sector for class A properties. In the Northeast, Connecticut is vibrant, particularly in lower Fairfield County.

“We literally have 50 buyers for class A properties and maybe five to 10 for class C multifamily product when they come up,” says Steven H. Rubin, managing broker for Oak Brook, IL-based Inland Real Estate Sales Inc. “Everybody’s buying and not too many people are selling.”

Capitalization rates for class A in the strongest sectors such as Lincoln Park are often down to 6%, as apartment operators compete with condominium converters, Rubin tells Midwest bureau chief Mark Ruda. Cap rates in other neighborhoods are 8% to 9%.