The multifamily market is incredibly hot – all over the country! So why is it that 2018 was the slowest transaction year since the great recession in Northern Colorado. Larimer and Weld Counties combined for only 46 transactions of properties 4 units and up. Only one property with more than 100 units sold all year, and that property had only 102 units – the Stadium Apartments across from CSU. Sales volume totaled $150,000,000 which was also a low since the recession. If you remove the Stadium Apartments transaction, sales volume would have been $100,000,000 !!!
As the marketplace grapples with significant construction of new units and increasing interest rates, will we see some owners decide that now is the right time to sell? Is now the right time to shift from multifamily to some other investment vehicle? Cap rates for apartments continue to be very aggressive, hovering between 4.5% and 6.5% depending on quality, location and performance. Investors are still offering sellers a very good return for the current performance of their apartment properties. When retail, office and industrial investments are commanding 6.0% to 8.0% cap rates it’s logical that savvy owners are looking to move their equity from a 5.0% cap rate property into a 7.0% cap rate property and potentially relieve themselves of some management headache.
2018 was a difficult year for investors looking for apartment opportunities in Larimer and Weld Counties. It was frustrating and deals were hard to come by. The anticipation is that 2019 will begin to loosen up as apartment owners start to feel the pressure of softening market dynamics.
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