Equity Residential, a real estate investment trust, has brought three Manhattan rental apartment buildings this year, according to an article by Kristina Shevory in today's edition of The New York Times.
The buildings at the 38-story River Tower at 420 East 54th Street, tghe 32-story 777 Sixth Avenue and the 26-story Longacre House at 305 West 50th Street.
According to the article, "competition is strong for the few properties that reach the market" as "many owners are loath to sell unless they can reap a large profit" and "Class A properties in good locations, selling for more than $20 million in cities with little development and strong demand are the most wanted."
"Equity Residential, which was sitting on $1 billion in cash at the start of last year, bought only two properties in 2008. Rental rates and occupancies had improved enough by the second quarter that many real estate investment trusts were able to raise enough money to return to the market," the article continued, adding that "real estate companies with new multifamily investment funds that do not have any properties underwater or carrying heavy debt loads have moved the swiftest. Last year, Behringer Harvard became the year's most active buyer after purchasing 14 apartments buildings, many all-cash deals, for$765 million. This year, the company, based outside Dallas, has already spent $740.6 million on multi-family properties."
"Investors have grown more confident about the market and are paying higher prices for a promise of future growth. As prices have escalated, capitalization rates, or the initial return on a building, have dropped to 6.7 percent in the third quarter nationwide.
This year, 99,000 units are expected to open," the article said, "40,000 fewer than in 2009. Just 50,000 apartments are projected for next year. It will probably be the end of 2012 before a large number of new properties open. A smaller inventory should help drive vacancy rates even lower....In the first quarter, the national vacancy rate dropped to 7.1 percent from 7.8 percent, the real state research firm Reis said, the lowest number since Reis started publishing quarterly figures in 1999."
The buildings at the 38-story River Tower at 420 East 54th Street, tghe 32-story 777 Sixth Avenue and the 26-story Longacre House at 305 West 50th Street.
According to the article, "competition is strong for the few properties that reach the market" as "many owners are loath to sell unless they can reap a large profit" and "Class A properties in good locations, selling for more than $20 million in cities with little development and strong demand are the most wanted."
"Equity Residential, which was sitting on $1 billion in cash at the start of last year, bought only two properties in 2008. Rental rates and occupancies had improved enough by the second quarter that many real estate investment trusts were able to raise enough money to return to the market," the article continued, adding that "real estate companies with new multifamily investment funds that do not have any properties underwater or carrying heavy debt loads have moved the swiftest. Last year, Behringer Harvard became the year's most active buyer after purchasing 14 apartments buildings, many all-cash deals, for$765 million. This year, the company, based outside Dallas, has already spent $740.6 million on multi-family properties."
"Investors have grown more confident about the market and are paying higher prices for a promise of future growth. As prices have escalated, capitalization rates, or the initial return on a building, have dropped to 6.7 percent in the third quarter nationwide.
This year, 99,000 units are expected to open," the article said, "40,000 fewer than in 2009. Just 50,000 apartments are projected for next year. It will probably be the end of 2012 before a large number of new properties open. A smaller inventory should help drive vacancy rates even lower....In the first quarter, the national vacancy rate dropped to 7.1 percent from 7.8 percent, the real state research firm Reis said, the lowest number since Reis started publishing quarterly figures in 1999."
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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