Multifamily property reports reflect struggling Oklahoma markets

Journal Record, The (Oklahoma City), Aug 18, 2009 by Kelley Chambers

Transaction volume for multifamily properties in the first half of 2009 was nothing to write home about in Oklahoma City or Tulsa, but the markets do seem to be faring better than other areas of the country.

For the first half of 2009 in Oklahoma City, Andy Burnett, with Sperry Van Ness William T. Strange and Associates, reported transaction volume was down 31 percent from the first half of 2008. Eleven multifamily properties were sold during the first half of 2009, down from 16 sold in the first half of 2008. Total sales volume for the first half of 2009 was more than $58 million, or an average of $26,284 per unit.

Much of the activity early this year was for distressed 1970s vintage properties.

Additional reports by CB Richard Ellis Oklahoma, Commercial Realty Resources Co. and Price Edwards & Co. released this summer reflected a similar assessment of the market.

"Transaction volume is down due to the lack of available credit and the disconnect between buyers and sellers in terms of pricing," Burnett said.

One distressed property deal completed earlier this month was the sale of the Wentwood at MacArthur apartments, at 5001 NW 10th St., for $1.85 million. William Forrest, David Forrest and Eva Wills with the CB office handled the transaction.

William Forrest said that property had the additional burden of being in the Low Income Housing Tax Credit Program for low-income housing. Fortunately the buyer from Florida had experience dealing with similar properties.

Lack of available credit also has curtailed sales activity on all multifamily assets. Burnett said the deals that are getting done are often due to local lenders.

"Local lenders are the ones saving the day on transactions that are closing," Burnett said. Most local lenders avoided being caught up in the no-money-down, non-recourse loans and therefore continue to have strong balance sheets.

"We project the local banks will continue to be the primary source for multifamily financing in 2009," he said.

For Tulsa, David Burnett, also with SVN, found that 1,071 units sold in the first half of 2009, compared to 857 in 2008, a 25- percent increase, but the price-per-unit was down 15 percent from $31,822 in the first half of 2008.

David Burnett's assessment is that 2009 will continue to pose challenges to the market.

"As we pass the halfway point of 2009, there is an increasing amount of tension that currently exists in the commercial real estate sector," he said. "Most buyers and sellers remain in a stalemate over price, and loan defaults are expected to rise as 2009 progresses."

Andy Burnett said Oklahoma City is no longer immune from the national economic downturn, but the market is performing better than many areas of the country.

"With rental rates holding steady and occupancy slipping slightly, it could be said that Oklahoma City is one of the healthiest rental markets in the country," he said.