In commercical realty, multifamily housing rules

Investment activity involving multifamily properties sizzled in terms of dollars spent and investor interest in 2000, showing the most aggressive capitalization rates of all property types, according to transaction data compiled by the CCIM Institute and Landauer Realty.

Apartment transactions reported to the CCIM/Landauer Investment Trends Quarterly totaled 14 percent of all commercial property investments second only to offices, which captured 27 percent of investment dollars and resulted in an average cap rate of 9.1 percent and a median cap rate of 8.8 percent, according to a recent CCIM release.

Investment was most active in the Pacific states, which garnered 35.9 percent of the deal count and 37.6 percent of the dollars spent on apartments. The fast-growing Southeast region also generated impressive numbers, with 21.9 percent of the transactions and 23.8 percent of the dollar volume.

"The reliable income characteristics of apartments, the favorable demographic forces at play at the present time and evidence of supply-side discipline have made investors highly confident of their purchases in the multifamily arena," said CCIM Institute President Darbin T. Skeans, CCIM. "Other properties, like retail, hotels and land, have seen much more ebb and flow to their market share from quarter to quarter."

Pension funds and real estate investment trusts were the most active players in apartment transactions, with trophy properties highly sought after by the institutional investors. Some deals in the red-hot Bay Area registered sales of $100,000-plus per unit, and two large multifamily properties changed hands along Chicago's posh North Michigan Avenue.

"Even with the robust activity in the apartment sector, this remains a very disparate property category," said Hugh R. Kelly, Landauer Realty chief economist. "One sure indicator of this is that the largest single owner of apartment units, Equity Residential, still has less than a 1 percent share of the market."

The CCIM/Landauer Investment Trends Quarterly represents a broad-based sampling of 3rd quarter 2000 transactions with a total value of $9.4 billion, the majority of which have been reported by certified commercial investment members.

Since the survey was initiated in 1995, more than 9,000 transactions valued at $123 billion have been analyzed.