News
SHANAHAN'S TAKE
November 28, 2011
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| Multifamily’s terrific across the US, but there’s particular pressure in Manhattan for homeownership, CBRE investment guru Bill Shanahan tells us. Couple that with a younger workforce in areas like Silicon Alley and Wall Street (who aren’t buyers) and you’ve gotvery low vacancy—some submarkets are at nearly 1% or 2%. There haven't been a lot of deliveries either, so supply is constrained; only21,000 new rental units will be added to the inventory over the next five years. |
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| The investment side has prime rentals ($2,500/month and up) and workforce housing. Bill's team recently brokered the sale of The Corner at 200 W 72nd St (above), which sold for $1M per unit, or $1,000/SF. They also sold two portfolios in the outer boroughs consisting of 15 buildings that only went for $140k per unit. But on both sides, there’s not enough product to satisfy investors, from institutional capital to family-dominated businesses. Add to that more new domestic funds and players returning to the market, like GID Investment Managers, UDR, and TIAA-CREF. (Reminds us of that Black Friday line for the cheap Xbox. We're still rinsing our eyes.) |
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| Expect this market to continue through 2012, Bill says. Investors still want in, especially while the stock market is a roller coaster. Rental rates have already recovered to their pre-Lehman highs (can we agree on the abbreviations B.L. and A.L?); Q3 multifamily effective rents per unit surpassed the previous high reached in Q4 ’08 ($3,662). And rents are predicted to increase at an annualized average rate of 3.6% over the next five years. Freddie and Fannieare still opening their wallets, and low mortgage rates aren’t expected to run away from us either, he points out. |
