Dive Brief

• Dallas and Atlanta remained the top markets for apartment sales in 2023 after also posting the most transactions in 2021 and 2022, according to a report that data firm MSCI Real Assets shared with Multifamily Dive.
• Despite topping MSCI’s sales list, both metros saw transaction declines of more than 50% in 2023, which isn’t surprising considering that sales slid 61% to $119 billion nationwide during the year. 
• Chicago and New York City’s boroughs jumped into the top five markets for sales in 2023, with $4 billion and $3.8 billion in sales, respectively. Orlando, Florida, and Charlotte, North Carolina, fell out of the top 10 in 2023, with volume declines of more than 70% year over year and only four properties trading for more than $100 million. 

Dive Insight:

With transaction volume down in many markets, large individual deals and portfolio trades moved the needle more than in years past.

In Atlanta, where 10% of the trades were in student housing, Student Quarters’ purchase of Here Atlanta for $181 million was the year's largest sale. In New York City, where portfolio deals constituted 57% of volume, TIAA Cref’s acquisition of 24 properties from Omni NY for $1.6 billion paced the market.

Erik Yankelovich, principal and founding partner at Atlas Realty Group Partners, a Manhattan-based investment brokerage and advisory firm, expects sales to increase next year in New York City. But, he thinks they’ll be driven by distress. 

“Loan maturities are driving a lot of sales now,” Yankelovich said. “Investors are making calls, in many cases, saying, ‘Look, we have no opportunity to raise more equity. We’re going to take a loss and be lucky to pay off the debt on it instead of having more money at risk.’ Unfortunately, that’s happening a lot across the board.”

San Francisco, which appeared on the top market list for the first time since 2019, saw 65% of its volume from Carmel Partners’s purchase of seven properties from Gerson Bakar & Associates. With the transaction, the city was the only market on the list to post a YOY increase in sales at 12%.

But despite the CarmeI transaction, some observers say the downtown sales market has stalled in San Francisco. “I think the story is yet to be told on the West Coast markets because there's just no one selling in the urban centers,” said Mark J. Parrell, CEO of Chicago-based Equity Residential, on the REIT’s recent fourth-quarter earnings call. He also noted that rents are down 20% in the city despite incomes rising more than 10%.

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