Metro Volume and Pricing
The strength of the market aside, investment sales meeting Reis’ criteria have been few.* Only six were completed through the first half of 2012 for a combined total of $67.2 million, well off the pace set in 2011, when $670.2 million were exchanged in 16 trades. The average selling price of sales to date in 2012 was just $49,000 per unit. Only one property, meanwhile, traded during the latest quarter—for $22.5 million ($55,000 per unit).
Since the quarter ended, Camden Property Trust of Houston purchased the 465-unit Belmont apartments from UDR Inc., TREC reported in July. The price was not disclosed. “Last year, the company picked up apartment complexes in Frisco, Grapevine and the Dallas Design District. Camden’s largest property in the Dallas area is the 904-unit Camden Farmers Market apartments on the southeast side of downtown.”
With 983 units selling for $74 million, the Far North submarket led all others in property volume exchanged over the past four quarters. The mean selling price was $75,483 per unit. The leader in dollar volume by far was the Richardson submarket, where $302 million changed hands for 623 units at a reported per-unit average price of $484,751. Central Dallas followed in “average” price at $213,656 per unit for 227 units—all in a single sale in December. The 835 units transacted in NW Denton County fetched $59 million at an average of $70,120.
Cap Rate Comparisons and Forecasts
The average cap rate for first half 2012’s six reported sales was 7.6%. While the previous trend for the 12-month rolling cap rate has been downward, increases are indicated for each of the past three reporting periods. At 7.0%, the 12-month rolling cap was up from 6.9% and 5.6% one and three quarters prior, but was down from the 7.2% rate cited a year earlier. The 12-month rolling caps for the Southwest region and the U.S. as a whole, as of second quarter, were 7.0% and 6.5%, down and up from 7.1% and 6.4% the quarter before.