News & Research

Transaction volume continues to reflect significant declines, decreasing by 76% year over year. The drop off in sales activity has been fueled by a record runup in borrowing costs which are nearing 20 year highs. In addition, there has been a market disconnect between the ask-bid pricing because cap rates have only risen by 60 basis points as compared to the 200 basis point increase in borrowing costs. However, with strong operating fundamentals we are not seeing much in the way of distress opportunities or panic selling.

Transaction volume is down through the first quarter of 2023 as an unclear outlook on economic fundamentals. However, occupancy and rent growth trends, although not at the historical highs seen during 2021 are still excellent and multifamily investment continues to be an wise choice between investment alternatives. Operationally, multifamily fundamentals are sound and have a positive runway except in very select sub-markets where overbuilding (or excess supply) exists.

The Cooper Multifamily Team attended the 2023 NMHC Annual Meeting in Las Vegas from January 31st through February 2, 2023. The general sentiment was more positive than attendees were expecting, which was a pleasant surprise to many. There are lots of investors looking to buy, but mostly reluctant sellers due to the pricing reset and realities of the capital markets. However, investors are expecting a strong second half of the year and deal flow to significantly increase and we are already seeing that translate to activity.

As economic headwinds impact investor activity the apartment sector has once again been resilient. Continued demand, steadily rising rent levels and high occupancy keep the Cleveland market on par with national trends.