While many commercial sectors struggled through the pandemic, apartments, specifically those in the suburbs, held up relatively well.
Now that a recovery seems to be underway, the urban apartment market is picking up steam. JLL reports that apartment asking rents increased 1.1% month-over-month in April, their strongest growth since the pandemic began.
As rents rise, more capital is flooding into the apartment sector. The sector’s strength was apparent in the first quarter when U.S. multi-housing transaction volume hit $32.0 billion after tallying $138.0 billion in 2020. JLL, which published the numbers, said the volume represented “a widening proportion of liquidity as investors continue to increase their allocations to the sector, a trend which has grown further since the onset of COVID-19.”
JLL says there are “record levels of dry powder targeting the sector.” For example, in the first quarter, multifamily claimed 45% of all commercial real estate transactions. By comparison, it accounted for 34% in Q1 2020.
JLL says that closed-end funds will continue to provide liquidity to the sector. While pricing discovery provided opportunities for private capital in 2020, expect to see more activity from institutions as the year progresses.
CGI+ took advantage of this interest in the sector this month when it sold Astoria at Celebration, a 306-unit luxury multifamily community in Celebration, FL, to Versity Investments for $74.5 million. In 2017, CGI+ acquired the vacant community, which had been plagued by construction defects, for $43 million. The company tapped into its extensive development experience to rebuild the community. By the time of the sale, the property had been renovated and rebranded and was 99% leased.
As the apartment market continues to reach full steam, look for CGI+ to find attractive acquisition and disposition opportunities.