Preliminary first quarter 2012 multifamily property sales data indicate that transaction velocity decelerated from the rapid pace observed during the fourth quarter of 2011.
After recording more than 360 U.S. apartment sales valued at $10 million or more during the fourth quarter of 2011, total sales closed during January, February and March probably declined by one-third or more. The average price of a unit traded in the first quarter of 2012, increased, however, rising 5 percent from $122,400 in the fourth quarter of 2011 to $128,600 during the first quarter of 2012.
Properties located in the primary coastal gateway markets (Boston, New York, Washington, D.C., Southeast Florida, Southern California, the San Francisco Bay Area and Seattle) and in Atlanta, Charlotte, Chicago, Dallas, Denver, Houston, Phoenix and Raleigh accounted for 55 percent of all transactions. About 32 percent of these sales were class-A properties. Top-tier assets traded at cap rates within a 3.4 percent to 7.0 percent range and averaged 4.5 percent. Class-B properties represented nearly 40 percent of sales and traded at cap rates ranging from 3.5 percent to 7.8 percent. The class-B average was 5.2 percent. Going-in yields for class-C assets (properties built before 1985 with asking rents materially below respective market norms), ranged from 4.0 percent to 9.0 percent and averaged 6.9 percent.