Residential Apartment Properties in Frederick County, Maryland regain stability which yields higher sale prices.
While other sectors of the local real estate market continue to display shakiness as the U.S. economy creeps back to health, the apartment rental market is leading other sectors with signs of stability.
In the local real estate market, with an inventory of just over 5,000 units of Class A, B and C stock, vacancy rates have fallen to a five year low of 5.3% in 2010 according to a Frederick County Apartment Report – 4th Quarter 2010 (REIS.com). This compares to 2010 year end statistics of 4.9% in the Maryland Suburban market and 6.6% nationally.
The peak vacancy year in Frederick County since 2000 was 2006 at 7.2%, which was nearly twice that of its prior two years.
Between 2006 through 2008 many of the local and national employers were making major strategic decisions by downsizing staff and reducing physical plants. These actions had a significant negative impact on the home ownership market which is still “shivering” today, according to a report by the S&P Case-Shiller home-price index released Tuesday in a recent Wall Street Journal article.
The recently released US Census data reported that the national housing vacancy rate is hovering around 13% in 2010.
With stability in the apartment market comes a strong interest by regional and international investors in multifamily complexes in Frederick County. An international concern acquired the 90 unit Brooklawn Apartments along Baker Park in Frederick City for $8,033,000. The transaction included an unimproved remainder parcel that has potential for additional units.
In addition, Federal Capital Partners of Washington, D.C. announced a few days ago that it purchased the Brookside and Overlook Manor garden apartment complexes in Frederick with a total of 722 units for $50.5 million, as reported by Gazette.net.
I’ve learned from recent multifamily real estate brokerage experience in the sale of Chesterbrook Apartments in Middletown, Maryland, as well as from conversations with other commercial real estate brokers and appraisers, that many investors have begun to reduce the capitalization rates that they are willing to accept in the purchase of such projects from the upper mid eight percents to the mid seven percents.
Another sign that the real estate market is recovering!
The author: Rocky Mackintosh, President, MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He also writes for TheTentacle.com.