Dive Brief:
- Apartment sales fell for the seventh straight quarter in Q1, dropping 25% year over year to $20.6 billion, according to a report that data firm MSCI Real Assets shared with Multifamily Dive.
- The Real Capital Analytics Commercial Property Price Indices dropped 8.4% from a year earlier as price declines continued to moderate. Values had been falling 13.5% as recently as Q3 of last year, according to MSCI. Cap rates increased 50 basis points over the last year to hit 5.7% at the end of Q1.
- Blackstone’s $10 billion acquisition of Denver-based Apartment Income REIT Corp. won’t show up in MSCI’s sales figures for a while, but the transaction will make an impact. If that deal had closed in 2023, it would have represented 8.3% of total sales for the year.
Dive Insight:
It has been 17 months since Blackstone acquired Bluerock Residential Growth REIT — the last major multifamily entity-level transaction recorded in the country, Jim Costello, co-head of MSCI's real-assets research team, told Multifamily Dive.
That 17-month dry spell for entity-level deals in the apartment sector will match the slowdown during the Global Financial Crisis, according to Costello. “Of course, there was a 22-month window of no such deals starting in September of 2019 — before the worst part of the COVID crisis hit and threw so much uncertainty out there,” he said.
Costello wonders if the Blackstone-AIR deal shows the apartment industry is finally moving beyond pandemic struggles.
“The crisis hit around March 13 of 2020, and we have still been dealing with the aftershocks until recently,” Costello said. “To keep the economy from shutting down, unprecedented amounts of liquidity were injected into the global financial system, leading to record-low interest rates and a surge in property values.”
Garden apartment sales dropped 29% to $12.5 billion in Q1, while mid- and high-rise sales declined 19% to $8.1 billion, according to MSCI.
Single-asset sales, considered an indicator of market health, declined 18% in Q1 to $17.8 billion. Portfolio and entity transactions dropped 53% to $2.9 billion.
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