Apartment Cap Rates at Historic Lows in H2’14


Multifamily Executive reports: Cap rates in the U.S. apartment sector reached historic lows in H1’14 as competition fueled the major markets, specifically in New York, Boston, Washington, Los Angeles, Northern California, and Seattle.

“There is so much capital pouring into those big six markets that even if many investors are concerned about valuations, there are plenty of investors still competing fiercely for those properties that the investors with concerns have passed on,” says Ben Thypin, Director of Market Analysis at Real Capital Analytics (RCA), a global data and analytics firm focused exclusively on commercial real estate.

Cap rates fell to 4.4% in H2’14, a percentage that equaled the historic low established in H2’06, RCA reported in US Capital Trends – Apartment 2014 Mid-Year Review. Yields for mid/high-rise properties reached 3.9%, surpassing 2013 lows. Overall, cap rates for garden and mid/high-rise properties were below 6.5% and 5%, respectively.


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