Apartments Feel the Love: But How Long Will This Romance with Investors Endure?
Commercial real estate investors are loving apartments. In this article, we assess the potential for this love affair to endure. We identify several factors that suggest it might be transitory including cyclically slow apartment construction, tight home mortgage credit availability, and persistent high unemployment. But, as these transitory factors fade, the favorable demographics for apartments should prevail and prolong the positive prospects for the sector. The key for apartment prospects is the very sizable generation Y cohort that is inching toward independence in these difficult times.
“… interviewees go totally gaga over apartments …,” according to the 2012 edition of Emerging Trends in Real Estate.And why not, after the 15.5 percent total return for 2011 reported in the NCREIF Property Index (NPI), which made the apartment sector the top performer for the year. E