Deal flow for the multifamily asset class has officially hit record levels, as increased competition for assets is pushing investors into smaller markets.
New research from Marcus & Millichap notes a "historic level of trading activity" in 2021 after a 22% contraction the year before. Deal velocity for apartments at $1 million and above rocketed up 50% in 2021, while rents grew by double digits.
Deal flow was also influenced by investor concerns over possible changes to the capital gains tax, according to Marcus & Millichap analysts. And "abundant investor demand has translated into higher sales prices as a result," they note. "The U.S. average price per unit rose nearly 9 percent in 2021 to over $180,000. Cap rates have compressed as a result, with the national mean dropping to 5 percent."
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