Friday, May 28, 2010

Multifamily Only Commercial Real Estate Sector on Upswing: Vacancies Down 1% Nationwide in Past Year

The multifamily sector is the bright light of hope in the commercial real estate sector according to a recent report by the National Association of Realtors.

"The multifamily sector can expect increased demand as the economy creates jobs and new households are formed, likely in the second half of this year,” says Lawrence Yun, NAR chief economist.

Nationwide, vacancy rates are predicted to fall to 6.4% by Q3 2010, from 7.3% in Q3 2009.

In Los Angeles, investors are eying the 6%-range cap rates which haven't been around for a few years, and are considering this a generous return compared to the 1%-range returns on CDs. With volatility's recent return to the stock market (including a nausea-inducing one-day Dow drop of 1,000), the idea of a "safe haven" on known ground is also appealing. Also reassuring investors is the stabilization of vacancy rates and the lack of distressed properties on the market.

Although vultures have been seen swooping around many a vacant office tower or unoccupied warehouse, nary one is to be seen hovering over your local twelve-plex.