5 Hot Cities for Multifamily Commercial Investing

Posted: 23 May 2011 10:25 AM PDT

According to a report from CoStar Group (a commercial real estate research firm), the investment in U.S. multifamily properties jumped 40% from January through March. That’s more deals than any three-month period since 2005.

Investors conducted nearly 4,000 deals in this space, which generated $9.4 billion in sales. That’s money you should be part of if you are interested in commercial investing.

Top 5 Multifamily Cities for Distressed Properties

Renter demand is high and prices for multifamily properties are still low, especially in these five cities: Tuscon, AZ, Fresno, CA, Jacksonville, Las Vegas and Atlanta. CoStar reports that the properties sold in these markets were mostly distressed trades at 60% of all transactions.

Values Are Rising, But Commercial Prices Have Long Way to Go

Another interesting note from their report is that the economic recovery and renter demand for apartment units were strong in the first quarter. The report would lead you to believe that it’s getting harder to find quality properties, but they are still out there.

Even though prices have risen 15% in Washington, D.C., CoStar says that investors are still buying (D.C. took the top spot in multifamily transactions last quarter) because “core investors are still very interested in paying up for stability and low volatility.”

So, property values are rising – that’s a good thing – it means return on your investment. However, the distressed properties are still out there; they did account for 21% of all multifamily sales volume in the first quarter.