Expert: Apartment sales to rise 35% this year
- Published on 12/02/2011 - 9:59 am
- Written by Michael Kincheloe
Apartment sales in Central California are staging a slow but somewhat steady rise, continuing last year’s trend in which apartment sales more than doubled their 2009 numbers.
Apartment sales got off to a fast start this year before hitting some rough patches and then picking up steam again. Central California’s 2010 apartment sales were valued at more than $40 million, but the 2011 numbers surpassed that in the first nine months, said Robin Kane, founder of RCK Organization in Fresno and an expert on the multi-family housing market.
“Last year, apartment sales were just above the $40 million mark,” Kane said. “Through September of this year, we were at $43 million, and right now we’re at $47.6 million.”
Kane said that in the wake of the housing bust and the persistent recession, more families are renting apartments rather than buying houses like they would have in years past. He said those interesting in buying apartment complexes do so because they are much easier to manage.
“With apartments, you have a resident manager to oversee things,” he said. “But the same number of houses over three states — or even one city — is much harder to manage.”
While representing United Development in October, Kane was involved in the $3.1 million purchase of the 104-unit Evergreen Terrace Apartments south of Fresno Yosemite International Airport on Olive Avenue.
New apartments are being built in the area as well. Penstar Group, a Fresno-based development group, is overseeing construction of The Shires luxury apartment community near the intersection of Ninth and Cedar avenues in North Fresno. Leta Ciavaglia, corporate president for Penstar and the project executive for The Shires, said the first phase of the 122-unit site should be finished by spring 2012.
“The units are 900, 1,200 and 1,445 square feet; all have garages,” Ciavaglia said, adding that the community should attract a number of families. “People who are not quite ready to buy a home — husband, wife and children.”
Ciavaglia said that the foundations have been poured and the plumbing is being installed. The entire complex should be completed in fall 2012 if the weather cooperates.
“In development, everything is a roll of the dice,” she said.
Apartment sales are not only on the rise in Central California, but all across the country. Kane said that the latest census showed that 4.5 million Americans were added to the renter’s group, and that nationally, multifamily dwellings — most of which are apartments — are selling the best out of all the commercial real estate sections.
“Multifamily is the flavor of the month nationally,” Kane said. “The popularity in apartment sales is due to the [lower] percentage of home ownership.”
Commercial real estate brokers Marcus and Millichap said in their 2011 National Apartment Report that over the next five years, the 20- to 34-year-old age group will grow by 3.2 million individuals. Members of this age group have a higher percentage of renters than any other, and rising interest rates, large down payment requirements and tight lending standards will influence these younger households toward renting.
Kane said that while apartment sales don’t compare to where they were a few years ago, they are headed back in the direction of a much more normal market.
“At the end of this year, we should be at about 35 percent over where we were last year,” he said.
This article originally appeared in the Nov. 18 print edition of The Business Journal. Visit our subscriptions page to receive more premium content.