Light of day
Apartment transactions ramped up slightly in the second half of 2009, after falling to an all-time low in the first two quarters. The increase in transactions could be a sign that apartment investors are beginning to see a welcome light at the end of the Great Recession's long dark tunnel.
While year-end upticks in sales volume are seasonally typical, the first quarter of 2009 likely will be considered the bottom of the downturn in apartment sales volume, Marcus & Millichap predicted in a recent report, The Apartment Outlook 2010.
The apartment industry may have reached the bottom in terms of sales velocity last year, but downside risk to apartment rents and occupancies still exists due to weak employment conditions. The good news: While industry experts still foresee another 1.7 percent decline in asking rents and more job losses, albeit at a lesser pace, the research team at Marcus & Millichap predicts an upside surprise in the second half of 2010 and 2011.
Dean Zander, a partner in the Los Angeles office of Hendricks & Partners, believes a market upswing is on the way and rents will begin to improve in the next 18 to 24 months.
The Emerging Trends in Real Estate, an annual report released by Pricewaterhouse-Coopers and the Urban Land Institute, calls 2010 a testing ground for survival of the fittest that will give way to the distressed assets that the real estate industry has been bracing for over the past several years, but at much lower levels than were originally anticipated. As that trickle of distress comes to market, the
