Multifamily demand, both locally and nationally, continues to be extremely strong. Locally in 2019, NAI brokered a 21 unit, 27 unit and 100 unit sale, all to local investors with stabilized CAP rates ranging between 6.5 – 7.25% and 8.5 – 9.5% CAP rates in rural markets. Demand continues to outpace supply and more specifically, quality inventory in the 30+ unit sector.
Recent economic reports published by Green Street Advisors show that national apartment values have increased 3%, total, over the past three years, while apartments are trading at an average capitalization rate of 4.7% nationally, which is the lowest percentage in their
report (spanning back to 1986). Only the industrial and manufactured home property classes are trading at a lower CAP rate (4.6%). Green Street forecasts 2.1% growth in the apartment sector from 2019 to 2023 with risk adjusted expected returns at 5.9%. Based on these national
numbers, Billings apartment CAP rates are still very attractive to investors both locally and nationally.