Multifamily Still The King Of Investment Volume, But This Year Could Be Different

Investors haven't lost their appetite for U.S. apartment properties, with investment sales up 15.1% to $167.5B in 2018 compared with the year before, according to a new report by JLL.

Multifamily was the most actively traded U.S. real estate asset class for the third consecutive year, as investors continue to be wooed by multifamily's strong performance in occupancy and rent growth.

But 2019 might be different.

Big money is still pouring into the sector. Transactions of $100M and above totaled $48.8B in 2018, a 21.3% increase over 2017. So is foreign capital. Foreign investment volumes increased by 29.3% in 2018, the report notes.

Canadian investors alone deployed $9.8B over the year, 31.5% more than the previous high in 2015. Beginning early last year, for example, the Canadian Pension Plan Investment Board and GIC, an organization that manages Singapore's foreign reserves, partnered with Atlanta-based Cortland to buy up to 10,000 Class-B apartment units across the U.S. and remake them into Class-A units.

The sector's continued attractiveness this year is an open question. 

For one thing, economic growth is expected to slow in 2019, if not fall into an outright recession. February's employment report, which the Bureau of Labor Statistics said reflected the creation of only 20,000 net new jobs nationwide, might be a hint of trouble to come.

Other events might also test investor resolve this year, such as increased volatility in equity markets, trade disputes and political and economic uncertainty in Europe.

Still, JLL said the multifamily sector is expected to see favorable year-over-year investment trends in 2019, underpinned by solid wage growth and what continues to be an undersupplied housing market at the national level.