APARTMENT SALES
Apartment sales price rise predates coronavirus
Apartment sale prices surged the first half of the year, urged on by persistent demand, untouched by the coronavirus, unemployment, unemployed renters, business closures and other economic disruption
Apartment sale prices surged the first half of the year, urged on by persistent demand, untouched by the coronavirus, unemployment, unemployed renters, business closures and other economic disruption — but it was all due to timing.
The deals were underwritten based on rental income in place before COVID-19, said Mike Buhl, owner and managing broker of Commercial Realty Resources Co. in Norman.
What the future holds for multifamily real estate investment depends on how the outbreak continues to unfold.
"In the early stages of the pandemic, being the last 90 to 120 days, property operations have not had a setback in terms of income collections," said Buhl, who just released his midyear Apartment Report. "Much of that has been due to the CARES Act and its supplemental unemployment
payments, which has been credited to keeping rent payments as high as they have been. The supplemental payments have put people in as good, if not better, positions than when they were working.
"Remember though, this is the early stages. There is still a lot of uncertainty going forward with the Oklahoma economy and on the spread of the virus and its impact," Buhl said. "From that perspective, underwriting and prices and what the parties rely on to determine that pricing may have to change going forward. But we are just going to have to wait to see what happens."
Prices firm, sales off
Prices remained strong but the number of transactions was off 41% and sales volume fell 20% to $171.7 million, according to Buhl's report, which tracks apartment complexes with more than25 units. The report is available at www. crrc.us.
Nationally, many multifamily owners turned from listings to off- market sales,meaning they stopped publicly marketing properties, lest asking prices be docked by perceived distress, and relied on sustained investor demand to move assets.
The multifamily sector gained stability as it closed out the first half of the year due to job gains and "generous unemployment insurance," although "pressure remains on the senior and student housing subsectors," Los Angeles-based CBRE Group Inc. said in its most recent monthly U.S. Marketflash Report on July 2. "The disease's continued significant toll on the older population and uncertainty about college and university reopenings remain significant clouds on these sectors."
Generally, however, the federal Paycheck
Protection Program — now extended through August — and unemployment insurance helped keep renters paying their rent, CBRE said. Continued economic recovery will depend on continued government fiscal stimulus, which is uncertain.
CBRE added: "This month's report must be viewed cautiously, as most data was collected prior to the late-June spike in COVID-19 cases in Texas, Florida and elsewhere. Jobs gains and losses likely will be highly volatile in coming months."
Metro area sales
In the Oklahoma City metro area, Buhl reported seven transactions involving 1,640 individual apartments. Three complexes sold were built before 1980, and four were built after 1990.
The overall average price per unit was $ 104,732, up 35% compared with $ 77,312 at midyear 2019, according to the report. Higher prices fetched by the newer properties took the average up.
The older vintage sales were 328 unit City Heights North Apartments, since rebranded as
The Restoration at Candlewood, built in 1971 at 8557 Candlewood Drive, which sold for $16.5 million, or $ 50,305 per unit; 223 unit Seminole Ridge Apartments, built in 1970 at 125 W Interstate 240 Service Road, which sold for $ 10.75 million, or $ 48,206 per unit; and 98 unit Villas on Meridian Apartments, built in 1975 at 5418 N Meridian Ave. which sold for $4,560,000, or $46,530.
Post-1990 sales were 303 unit Avana Arts District Apartments, since renamed Aviare Arts District Apartments, built in 2007 at 301 N Walker Ave. in downtown Oklahoma City, whichsold for $58.9 million, or $194,389 per unit, and includeda 108,952-squarefoot parking garage;82 unit Del Norte at Surrey Hills, a 2018 duplex development in Yukon, which sold for $14.3 million, or $ 174,390 per unit; 398 unit Sycamore Farms Apartments, built in 1997 at 14900 N Pennsylvania Ave., which sold for $44 million, or $ 110,552 per unit; and 208 unit Legacy Trail Apartments, built in 2016 at 2501 Pendleton Drive in Norman, which sold for $19,337,500, or $92,968 per unit.