The Disappointment of Smaller Multifamily Sales

The Disappointment of Smaller Multifamily Sales

By Erik Sherman

Green Street last month reported that overall smaller sales in various markets were showing greater strength than larger ones. They’ve lost sales volume, but at a much smaller rate than larger properties. 

Multifamily was one of the two stars of the pandemic in sales, values, and increasing rents. (Industrial was the other.) But how is it doing now?

If you think about the smaller sales as more representative of the volume of multifamily units, the performance should give a greater sense of how the industry is doing.

In the $5 million to $25 million market, the answer is not that great. Overall, sales in the first half of 2023 were down by more than a third (33.9%) than the same period in 2022.

In the 20 metro areas that had the highest dollar sales, there were only seven that saw a positive change, though the growth ranks in percentage didn’t necessarily match the size of the dollar sales. 

An example is Milwaukee, which came in the twentieth position with $115.5 million and 10 properties, but whose growth was 42.8%, putting it in the top percentage spot.

Next was Minneapolis, which had a 35.4% increase between last year and this and came in tenth in dollar sales: $157.8 million across 14 properties.

Atlanta’s 27.9% increase was third highest and fifth place in dollars: $285.8 million and 21 properties sold.

Portland, Oregon’s $252.6 million and 22 properties were worth sixth place on that end and a fifth in year-over-year percentages at 27.1%. Northern New Jersey was seventh in dollars ($231.8 million and 27 properties) and at 23.2% was fourth.

Sixth in percentages was Sacramento’s 14.6%, fourteenth in dollars with 11 properties and $126.6 million. Closing up the positive growth set: 13.1% (seventh) and $292.4 million across 33 properties (fourth) was Chicago.

But the metros past the top 20 were down 41.3%, so given the 33.9% with the top 20, much of the country was doing a lot worse. 

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