NORMAN — Investors seeking deals means demand is outstripping supply in the current apartment real estate scene, according to one industry expert.
“There are simply not enough apartments for sale to satisfy the over-abundance of investors searching for deals,” said Mike L. Buhl of CRRC Multifamily Investment Services. Buhl released his mid-year report earlier this month.
“Has the optimism that closed out 2012 carried forward to 2013? Not only do we think it has, but we think it is gaining momentum in all facets of the market — occupancy, rental rates, sales and development,” Buhl said.
Buhl pointed to Oklahoma’s low unemployment rate, existing and emerging technologies, and the low cost of living as propellants fueling the apartment industry to “all-time highs.”
In April, the state unemployment rate was at 4.9 percent, according to U.S. Bureau of Labor statistics, keeping the Sooner state below Texas and on par with Arkansas at 5.2 percent and Kansas at 4.1 percent. That number jumped to 5.2 percent in June but is below the national average, according to the Oklahoma Employment Security Commission.
Cleveland County unemployment is at 4.6 percent, and Norman’s unemployment rate runs even lower. The Bureau of Labor Statistics put Norman at 3.3 percent unemployment in April.
“Investors will have to look beyond core assets to find opportunity,” Buhl reports. “Class B and C properties (broadly) represent a good investment opportunity.”
Buhl said that multi-family rental and occupancies rates are keeping apartments at the top of the investment desired list.
Pre-1980s properties selling this year include Sooner Crossing Apartments in Norman. Built in 1972, the 118-unit property sold for $32,610 per unit. Buhl describes it as “typical 1970s vintage with flat mansard roofs with limited amenities.”
“Expect to see more stabilized properties sell in the second half of the year that will generate prices in the upper $20s to $30,000 per unit for this category,” he said.