Apartment Sales Outlook Strong for NE

BOSTON-Commercial real estate sales stumbled to a slow finish last year and have had difficulty gaining traction to begin 2008, but such has not been the case for the multifamily arena, with industry specialists reporting both plentiful capital and product are boosting prospects in the early going. “The forecast is looking very positive,” says Apartment Realty Advisors principal Richard Robinson, a member of the New England office that traded more than 2,000 units last year and has nine deals under contract representing another 1,200 units less than a month into 2008.

“We are very optimistic by what we see,” agrees Cushman & Wakefield principal Biria St. John. “It’s a very deep pipeline.” The multifamily team led by St. John and partner Simon Butler orchestrated $1.27 billion in transactions in 2007—up from $750 million the previous year—capped by the $160.9 million sale of Windsor Gardens in Norwood. Despite that frenetic pace, C&W is already ahead of 2007′s launch with close to $400 million preparing to hit the sales block, relays St. John.

The demise of condo converters that eased multifamily pricing for a time has been overtaken by a cadre of domestic pension funds eager to buy into the rapidly improving apartment market, according to industry observers. “The fundamentals are very strong,” says Robinson, as evidenced by a decline in concessions to lure renters. Robust, supply constrained markets such as Cambridge have almost completely eliminated free rent and other concessions, he says, while St. John attributes the solid showing partly to the subprime mortgage morass that has made home buying more difficult. Income projections for apartments in New England are already being calculated upwards as part of the investment sales process, says St. John. That could cause friction for those capital sources anticipating an adjustment in pricing in light of the commercial real estate slowdown.