The per-unit price of apartment buildings sold last year in Fairfield County increased 47 percent to $566,000, a new study shows, despite sales transactions dropping by 20 percent from 2006.
Buildings containing some 800 apartment units changed hands in the county last year, according to the New Haven office of Marcus & Millichap, with many originally slated for conversion to condominiums.
Those units generated a sale price of $494 per square foot, up 61 percent from 2006.
With recent softness in condo sales, the new building owners instead will maintain many of those units as apartments. The housing market woes should benefit apartment building owners this year, as would-be homebuyers have a harder time landing loans, and as foreclosures force some recent buyers back into apartments.
Marcus & Millichap expects builders to add 900 apartment units in Fairfield County this year, up 29 percent from 2006. Along with slowing hiring, that should increase the apartment vacancy rate from 4.1 percent to 4.6 percent this year.
Statewide in Connecticut, Marcus & Millichap reported, 6,250 apartment units traded owners in 2007, up from 11 percent from 2006. Those apartments fetched $892 million, a 29 percent increase.
The more immediate question is what is happening in 2008. Manhattan apartment rents fell 7 percent in January, according to estimates by Real Estate Group New York RE, which indicated it is receiving many inquiries from landlords on how to price their properties in an increasingly unstable housing market.
“The combination of these factors reinforces our sentiment that the market has, in fact, turned,” stated Daniel Baum, chief operating officer of Real Estate New York Group, in the report. “Going forward, worsening economic worries and subsequent conservative spending may continue to push the rental market downward through the first ”“ if not second ”“ quarter.”
Fairfield County is home to the eighth and 10th largest apartment building owners in the nation, according to National Real Estate Investor magazine. Greenwich-based Richman Group Affordable Capital Corp. owned 74,500 units as of a year ago, while the Norwalk-based GE Real Estate division of General Electric Co. had more than 67,500.
Denver-based AIMCO Properties L.P. had the most in the nation with nearly 212,000.
Nationally, loans for multifamily residential buildings were down 7 percent in the fourth quarter from a year earlier, according to the Mortgage Bankers Association of Washington, D.C.
