"We haven't seen this amount of buyer interest in a long time," Tyler Anderson, executive vice president with CB Richard Ellis Inc. told about 300 real estate professionals at the firm's MarketWatch 2003 seminar, held yesterday at the Scottsdale Center for the Arts.
Anderson said multifamily properties that are debt free with stabilized rent rolls are garnering the most interest from investors, most of whom are eager to move their money out of a flailing stock market and take advantage of the lowest mortgage rates in 40 years. "It's not unusual to see seven to 10 offers" on those units, Anderson said.
But a hesitancy to sell by owners with strong rental properties coupled with a high debt on some complexes is pushing the number of transactions down, Anderson noted. "The velocity of sales would be higher if we could deliver the product," he predicted, adding that despite the soft economy, the influx of new residents has kept buyer confidence strong in the Valley's multifamily housing market.
Still, building owners are feeling the pinch. High vacancy rates are forcing concessions which, in some submarkets, amount to two or more months of free rent. Low interest rates on single-family homes aren't helping fill those units either as renters look to buy rather than rent.
But there are better times ahead for multifamily owners, Anderson predicted. Development of new multifamily units, which declined 4% between 1991 and 2002, will continue to drop next year. A projected increase of 40,000 new jobs in 2003 and an increase in mortgage rates over the next two years should lead to stabilized occupancy and revenue growth in the multifamily market.
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