Apartment sales prices aren't on rockets like the past few years, but they're still sky high — and the sky is higher than it used to be.
That's one way to read the midyear multifamily report from Norman-based Commercial Realty Resources Co.: Demand from investors, mostly from out of state, is keeping prices strong.
The first half of 2013 marked the $38.2-million purchase of 294-unit Deep Deuce Apartments downtown and the $25.2-million acquisition of Watermark at Quail North, near NW 150 and May Avenue, both by Steadfast Income REIT Inc. of Irvine, Calif., Commercial Realty Resources Co. noted.
Charleston, S.C.-based Greystar Real Estate Partners's more recent $71 million combined acquisition of 396-unit Legacy Crossing, 3131 SW 89, and 328-unit Legacy Woods, 1919 E Second St. in Edmond, fit the trend, said Commercial Realty Resources owner Mike Buhl.
The metro-area multifamily investment market, he said, is seeing sustained high prices because investors just keep coming “and buyers are becoming more comfortable paying these prices because so many other people are paying them.”
It has put developers in the unusual position of being able to build new apartments for less than it would cost to buy comparable properties, he said — and so they are. Buhl said he expected to see continued strong construction of new apartment complexes for the next 12 to 18 months, at least.
“Clearly, supply and demand have reached disproportionate levels. There are simply not enough apartments for sale to satisfy the overabundance of investors searching for deals,” Buhl wrote in the report. “What is happening with a lot of groups that can't get their hands on the property they want at the yield they want, they are turning to development. ... And I think that demonstrates the progression of our markets over the past decade or so: Investors really want to be in Oklahoma.”
CB Richard Ellis-Oklahoma also noted the strength of construction in its midyear apartment market overview by brokers William T. Forrest and Eva M. Wills. They counted 10 complexes, totaling 2,525 units, underway in the metro area.
“Unlike other surveys, the current activity in new construction is very spread out between northwest Oklahoma City, Edmond, Yukon, to downtown Oklahoma City, southeast near Tinker Air Force Base, to Norman,” Forrest and Wills reported.
Transaction volume — that is, the total amount of money invested — was down the first half of the year compared to midyear 2012 because of a few unusually sizable transactions in early 2012, Commercial Realty Resources reported.
Commercial Realty Resources tracked sales of complexes with 25 or more units and counted 16 sales totaling 2,696 units, at an average of $39,926, in the first half of the year.
Twelve sales of pre-1980s properties involved 1,946 units at an average unit price of $17,508, counting distressed assets; two sales of 1980s-vintage properties involved 216 units at an average unit price of $46,750; and two sales of post-1990 properties involved 534 units at an average unit price of $118,858, according to Commercial Realty Resources.
CB Richard Ellis reported average occupancy, across all classes of properties, at 93 percent with all areas of the metro stable or improving, ranging from 90 percent in Midwest City-Del City to 96 percent in Edmond.
By age, CB Richard Ellis calculated pre-1980 average occupancy at 90 percent, 1980s occupancy at 94 percent, and post-1995 occupancy averaging 95 percent.