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Apartment Opportunities Seen in Secondary Markets

BOCA RATON, FL-A multifamily REIT exec says properties in smaller metros can compete with big cities on returns.

By Carl Cronan | Updated on January 13, 2010

BOCA RATON, FL-Investors in the US apartment sector may fare better looking beyond major markets for potentially profitable buying opportunities, according to REIT executives addressing the National Multi Housing Council’s Apartment Strategies Conference here Wednesday. Large-scale owners say they are focusing more on internal rates of return than cap rates, which are trending downward entering the new year.

“The IRR in Jackson, MS is just as competitive as the IRR in San Francisco,” Eric Bolton, chairman and CEO of Memphis-based Mid-America Apartment Communities Inc., told the audience at the Boca Raton Resort & Club. “You can compete just as well in the Southeast as you can in larger gateway cities.”

Bolton notes that secondary markets appear to have more stable fundamentals over the long term than the nation’s largest cities, many of which were besieged with heavy job losses over the past year. This presents opportunities for apartment investors in local markets to purchase class B and C properties that most REITs might not be interested in pursuing.

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