Research - FEBRUARY 24, 2014

Portland multifamily continues to shine

by Reg Clodfelter

After 2013 ended with the best quarter since the global financial crisis for multifamily transactions in Portland, Ore., transaction totals (including pending deals) in first quarter 2014 have already surpassed the year-over-year totals from first quarter 2013 by nearly $10 million with nearly half the quarter to go, according to data from Real Capital Analytics. This is further evidence that capital is slowly making its way out of the primary markets and into secondary metropolitan areas. This move can be especially important for multifamily investors, as many experts think that the sector is fully priced in the United States, forcing investors to find capital in value-add plays and secondary markets.

Fourth quarter 2013 saw more than $448 million in multifamily transactions in the Portland area — the highest total since the GFC and a year over year increase of  $87 million. The total was divided across 28 transactions, with the largest being the $61.4 million acquisition of Savier Street Flats by TIAA-CREF.

2014 has seen a continuation of the year-over-year improvement, with $148.9 million in current and pending transactions, already surpassing the $139 million in transactions from first quarter 2013 with nearly half of the quarter to go.

The largest of the 2014 deals has been the $19.5 million acquisition of The Gables, a 129-unit multifamily property in Lake Oswego, Ore., 8 miles from downtown Portland. The property was acquired by the SARES-REGIS Group on behalf of the SARE-REGIS Multifamily Fund. This was the second acquisition by the fund in the Pacific Northwest, after acquiring the Sammamish Ridge Apartments in Redmond, Wash., for $20.9 million.

“While investor interest in multifamily properties has been strong over the past two years, it has been predominantly focused on core class A properties and new development,” says Ken Gladstein, co-chief investment officer with SARES-REGIS. “This has created even better opportunities — and risk-adjusted returns — for skilled operators like SARES-REGIS who focus on identifying and creating value in well=located B properties that do not have to compete on price with class A assets.”

The SARES-REGIS Multifamily Fund closed in March 2013 after raising $114.25 million. Its capital is approximately 70 percent deployed, and is anticipated to be fully invested by the end of second quarter 2014, after acquiring two or three additional properties.

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