Mid Atlantic Real Estate Journal — Pennsylvania — March 16 - 29, 2012 — 7B



By Zachary Pierce, Marcus & Millichap Taylor-Zang For Central PA’s multi-family owners, it’s shaping up to be a profitable year!


to lower cost of land and less expensive construction costs, Central Pennsylvania is see- ing more development that other markets including the immediate suburbs outside of Philadelphia The improvements in multi- family fundamentals in com- bination with historically low interest rates have led to an increase in transactional ve- locity. Government sponsored enterprises (GSE’s) or agency lenders including Freddie Mac and Fannie Mae are currently offering interest rates in the 4 percent range with attractive terms. Local commercial banks have typically offered loans

f the first quarter of 2012 is an indicator of what lies ahead for Central Penn-

approximately 50 basis points higher. This has led to a com- pression of capitalization rates and an increase in achievable sale prices for apartment as- sets. Many investors that felt they missed the opportunity to achieve the higher sale prices of 2006 and 2007 are now realizing this opportunity has returned. Combined with a surplus of capital and pent up buyer demand, 2012 is proving to be a fruitful year for buyers and sellers alike. The investors that are poised to capitalize on the opportuni- ties of an improving market are those that are the most prepared and educated about

trends in their marketplace. Investment brokers are report- ing a rapid increase in property evaluations. Investors want to know what their properties are worth and how they are positioned in the competitive marketplace. They want to know how much equity they have tied up in their proper- ties. They want to see oppor- tunities and be poised to take advantage of them. The biggest risk to any investor is not hav- ing a strategy. Whether inves- tors have strategy of growth, value add strategy or disposi- tion strategy, it is imperative that they know the current value of their assets and how

they sit in the competitive set. Far too many investors don’t understand their own assets. Many more see great oppor- tunities that they aren’t in a position to take advantage of. The key today is to understand your asset(s), understand your marketplace, have a strategy, and be prepared to act quickly when the right opportunity presents itself. Zachary Pierce is an as- sociate director of Mar- cus & Millichap’s National Multi-Housing Group and specializes in the sale of apartments in Philadelphia Metro and Central Pennsyl- vania markets. ■

s y l v a n i a multi-family owners, it is shaping up to be a prof- itable year for operators who are well positioned. Likewise, op-

Zachary Pierce

portunities to make new in- vestments continue to surface for those investors who know where to look. At this time last year, multi- family investors were cau- tiously optimistic having just weathered the storm of “The Great Recession.” It is appar- ent that, although challenges remain in the economy, we are unlikely to slip back into re- cession. Operators a year ago were reporting a significant decrease in concessions being offered to maintain stable oc- cupancy rates and some were even boasting a modicum of rent growth. Employment numbers have begun to slowly improve despite election year mudslinging, and those opera- tors who raised the sail last year have found that there is a full on tail wind for multi- family operations, with rising rents and occupancies. Now that the dazzling light of new homeownership has been eclipsed by the reality of the worst foreclosure market in history, the rental market has once again emerged as a cost effective and convenient housing solution for all so- cial demographics. Many of the apartments in Central Pennsylvania were built be- tween 1960 and 1975. In this category there is an array of options for potential renters across all income levels. Some of these complexes remain outdated and appeal to a lower income class while others have undergone significant renovations and are achieving the higher end of mid-market rents. The highest end of the market is being dictated by new construction projects that boast a full amenity package and offer luxuries that would be expected at a five star resort. Still, all of these op- tions has seen an increase in renter activity over the past six months and there are quite a few new projects expected to break ground in Central Penn- sylvania markets in 2012. Due


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