In the current uncertain environment, even the multifamily sector is being viewed with more caution by investors reluctant to overpay for their acquisitions. According to a new report from Crexi, a national commercial real estate exchange, in the third quarter, the average asking price for multifamily properties dropped more than for any other property sector the exchange tracks with a decline of more than 11 percent quarter-over-quarter. The change was likely driven by a combination of higher interest rates and a slightly less rosy outlook for rent growth in the coming year. Crexi estimates that as a result, in addition to the drop in asking prices, average cap rates on new multifamily listings rose to 7 percent.
Yet investors do continue to trade multifamily properties, and right now, they seem to be particularly keen on secondary and tertiary markets, which offer higher potential rent growth. In the following gallery, we look at where investors were paying the highest price per sq. ft. for multifamily assets in the third quarter, according to Crexi research. Crexi’s figures are based on data from the Crexi marketplace.