Sacramento, CA – As one of the hardest hit regions in the country, due the housing meltdown, Sacramento area apartment owners have been welcoming displaced homeowners in droves. Apartment communities have long been the safest commercial real estate investment class, since people always need a place to live no matter how bad the economy…. but consider this next fact for even more emphasis. As of 3Q11, Sacramento metro vacancies were reported at 12.4% (retail), 12.9% (industrial), and 19.8% (office). On the other hand, Sacramento metro apartments were reported at only 5.4% vacancy during the same period… after falling from 7.1% a year prior (3Q10). Plus, due to the compressing vacancy rates, apartment owners have been able to increase rents an average of 2.2% over the past year. With all this positive news, which asset class would you prefer to own right now?
On top of all this great news, would you believe the median price of apartment properties in the Sacramento metro area has decreased by 22% over the past 12 months? This is directly attributed to the surge of distressed REO apartments flooding the market by struggling banks trying to unload non-performing assets. Increased availability of apartment properties has pushed cap rates up to the mid-7% range for apartments totaling less than 50 units in high-density neighborhoods. Higher quality apartments with units in suburban communities totaling more than 50 units are selling in the range of 6% cap rates, while lower quality apartments in less densely populated areas can sell for as high as 8.5% cap rates or more.The availability of Sacramento apartment financing has improved dramatically, as indicated by a 40% increase in new apartment loans funded during the 2nd and 3rd quarters of 2011 (as compared to the prior period). This improved accessibility of apartment mortgage capital has been encouraged by higher occupancy levels and strong rent growth, resulting in origination gains by nearly all lending sources.Bottom line… it’s a great time to become an investor in Sacramento apartments or add to your holdings. Immediate cash flow, plus the opportunity for real property appreciation once the market fully improves. Don’t delay. Buy apartments for sale in Sacramento right now!
Article contributed by Brian Jacks http://www.linkedin.com/in/bjacks, Vice President & Regional Director of East West Commercial Real Estate. Brian specializes in representing buyers and sellers for the sale of apartments throughout the greater Sacramento area.
East West Commercial Real Estate (Sacramento)services investors who buy and sell commercial real estate properties. Clients utilize our unique relationships and depth of market knowledge to purchase assets in this opportunistic environment.Our Focused ApproachWe focus on what we do best – bringing or identifying well priced quality assets to the market and closing deals. East West Commercial Real Estate (Sacramento) expends a great amount of effort and resources toward research, our brokerage services systems, property acquisition, financial and investment analysis, and client relations.
Asset Management / REO Brokerage Services
For more than two decades we have provided extraordinary service to assist our clients in disposing of and purchasing real estate assets in the California marketplace. East West Commercial Real Estate specializes in assisting lenders sell their special assets / ORE across multiple asset classes: apartments, retail, office and industrial.
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