AVR Realty Co. sells multifamily portfolio for $510m
A venture of David Werner and Carlton Associates has purchased a multifamily portfolio from AVR Realty Co. for $510 million, according to The Real Deal.
The 11-property portfolio spans across four southern states, specifically South Carolina, Tennessee, Louisiana and Georgia. The properties have a combined 3,600 apartments and 3.6 million square feet.
The national apartment vacancy rate increased in the first quarter 2016 due to a combination of high class A construction deliveries and historic fourth quarter absorption weakness being pushed into the first quarter, according to Marcus & Millichap’s The Mutlifamily Spotlight June 2017 report. However, a 4.1 percent rise in the overall average rent and 242,000 units absorbed over the past year point to the underlying strong demand drivers for multifamily.
Negative net absorption of 11,000 units and 77,000 apartment deliveries raised the national vacancy rate to 4.4 percent from 4.2 percent a year ago. The new units contributed to a 120 basis point jump in the class A vacancy rate to 6.6 percent. Some of the largest increases in class A vacancy occurred in Atlanta, Chicago, Denver and Los Angeles, metros with elevated completions.
A slight class B vacancy uptick was caused by a jump in the South region of the country. The delta between class A and class B property rents is the smallest in the South. With select newly delivered units offering concessions to aid lease-up, some class B tenants have been able to make the jump to class A units with only a small increase in their monthly rent. The class C vacancy rate decreased over the past year, reflecting the strong demand for affordable rentals.
Apartment construction is expected to peak in 2017 with the delivery of 370,000 units. Nearly half of the total, however, will be delivered in 10 markets, potentially creating pockets of elevated vacancy rates in metros including Dallas/Fort Worth, Houston and New York City. Economic drivers support the absorption of more than 290,000 units this year and a rise in the national vacancy rate to the low 4 percent range. Following an advance in the first quarter, the average national rent remains on track to rise 3.8 percent this year.