Dive Brief:

• Dallas had the most apartment sales in the first half of 2022, tallying $12.6 billion in transactions, according to MSCI Real Assets, a firm that provides tools and services for the global investment community. 
• The Sun Belt had strong representation in the top five cities. Phoenix ($8.1 billion) came in second, followed by Houston ($8 billion), Atlanta ($7.8 billion) and Los Angeles ($5.4 billion). Los Angeles, which tallied more total transactions than Dallas, posted the largest individual deal in the first half — the $330 million sale of 1221 Ocean Avenue in Santa Monica, California. Manhattan in New York City, which came in at No. 6, saw its ranking jump 15 spots from the end of 2021 and claimed its highest position on the sales list in the first half of a year since 2016.
• But other metros around the country also posted strong first-half numbers. Even in a national environment where transactions are reportedly slowing, 20 of the top 25 markets set records for transaction activity for the first half of the year, according to MSCI. 

Dive Insight:

Dallas’ first half total is the highest for any market in the first half of the year and outpaced what the city recorded in the first half of 2021 by 45%. Overall, the metro recorded nearly 250 transactions in the first half of the year, according to MSCI. The remaining top 35 markets averaged 91 transactions.

Manhattan Beach, California-based Magma Equities is among the buyers in Dallas. “We've really made a push into Texas, including Dallas, the Ft. Worth area and Houston,” said Chris Herrlinger, Magma director of asset management. 

Herrlinger sees strong demand in these markets, driven by job growth. “We feel very strongly about the long-term prospects of Raleigh and Charlotte in North Carolina and Dallas,” he said.

While rising interest rates may be putting pressure on cap rates in many markets, Otto Ozen, executive vice president of Costa Mesa, California-based brokerage firm The Mogharebi Group, told Multifamily Dive that buyers were still interested in Dallas and other Sun Belt metros.

“If you're in Dallas, Fort Worth, Phoenix and Atlanta, the demand is still far outstripping supply and the impact on cap rates is not as visible,” Ozen said.

However, others see potential supply issues in Dallas. Over the past five years, 80,000 new apartments have been delivered in the market, according to RealPage.

“Houston would be a great example of a market that does concern us in terms of oversupply,” Mike Campbell,  associate vice president of investments at Newton, Massachusetts-based national real estate private equity firm Northland, told Multifamily Dive. “In Dallas, we have similar beliefs.”

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