Distressed Sales To Pull Investors from Sidelines

ATLANTA-The local apartment market is expected to see an increased amount of distressed deals in upcoming months, according to Marcus & Millichap’s national multihousing group. Foreclosed product in the market could cause the number of transactions in 2009 to increase year over year, but still remain below the number of deals completed two years ago, says Andrew Mays, director of Marcus & Millichap’s national multihousing group based in Atlanta.

“Distressed deals are definitely increasing in the market,” Mays tells GlobeSt.com. “Moving forward in 2009 and 2010 those transactions will have a larger presence as far as market share goes, and buyers are coming off the sidelines to take a look at the properties.”

The attention distressed and foreclosed deals are expected to get in the upcoming year will have much to do with pricing, according to Mays. Traditional market pricing has dropped only about 10%, but distressed or foreclosed properties have dropped 20% to 30%, he says. Experienced investors will look to acquire underperforming or value-add properties at those prices, according to Marcus & Millichap’s latest apartment research. Increased renter demand in more affluent areas will also draw investors to the market, the brokerage reports.