Top markets to buy, sell apartment buildings

Dive Brief:

  • Two Texas metros led the nation in apartment deals in the third quarter of 2022. Dallas posted the most apartment transactions for any metro area with $18.2 billion for the quarter, beating second-place Houston by about $6 billion, according to MSCI, a firm that provides tools and services for the global investment community. 
  • Houston, with $11.8 billion in sales, held the second spot. The two Texas metros were followed by Atlanta ($11.4 billion), Phoenix ($10.8 billion) and Los Angeles ($7.7 billion).
  • Manhattan, which jumped 17 spots to No. 7, posted $6 billion in sales, which is 3% off from its all-time high. It tallied 212% YOY individual asset sales growth from the third quarter of 2021 to the third quarter of 2022. “This jump was not a case of investors suddenly discovering Manhattan — the growth in sales was a rebound after the pandemic pushed buyers to the sidelines,” MSCI said in the report. 

Dive Insight:

Out of the top 25 U.S. apartment markets, 16 set records for transactions in 2022’s third quarter, according to MSCI. The remaining nine posted sales levels within 5% of their all-time high. MSCI noted that the deal volume wasn’t just a result of the massive Blackstone-American Campus Community merger. Seventeen metros would have passed their high-water mark based on single-asset transactions and four more were within 5% of their all-time high.

Markets with the most apartment sales in Q3
City Volume (in billons) YOY change
Dallas $18.2 1%
Houston $11.8 47%
Atlanta $11.4 -3%
Phoenix $10.8 -1%
Los Angeles $7.7 14%

SOURCE: MSCI

Miami-Dade County, Florida, posted price growth of 31.3% YOY, leading the pace among major metros, and a 147% increase in deal volume. Rent growth is driving much of this price appreciation and deal volume.

South Florida has had so much migration, and a lot of those people are high-income. Brickell and Miami Beach — the center of Miami — used to be pretty affordable relative to New York, Los Angeles and San Francisco,” Max Sharkansky, managing partner of Trion Properties, a multifamily investment sponsor and private-equity real estate firm based in West Hollywood, California, and Miami, told Multifamily Dive earlier this year. “Now those rents have effectively doubled through COVID-19.”

Texas deal drivers

Dallas also stood out for claiming the top spot for transaction volume and posting one of the top markets — 24.5% — for price growth. Shakti C’Ganti, founder and CEO of Dallas-based apartment owner and operator Ashland Greene, is a proponent of the area, where he owns roughly 5,300 units.

“We have a very diverse employer base, and we’re not dependent on one specific sector like oil and gas or healthcare,” C’Ganti said. “And we still have companies that are moving here. Goldman Sachs is going to be moving here. Caterpillar just announced a little while ago that they’re moving here. So, we still have to house all these employees.”

These job fundamentals have helped attract apartment firms, like Magma Equities, into the Dallas-Fort Worth area. The Manhattan Beach, California-based firm, in its first joint venture with Walker & Dunlop Investment Partners, recently acquired two properties, totaling 820 units in Houston and the Fort Worth submarket of Roanoke.

“We made a strong push to grow our portfolio in Texas,” Magma Director of Acquisitions Scott Ogilvie told Multifamily Dive. “Historically, Dallas and Fort Worth have proven to be the most resilient markets during economic headwinds. A lot of that has to do with the numerous demand drivers in the market — corporate migration, strong school systems and diversity among the employment base, coupled with the fact that Texas is such a business-friendly environment.”

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