Dive Brief:
- Though the apartment sector remained the most liquid segment of commercial real estate in the first quarter of 2026, sales only increased 1% year over year to $32 billion, according to a report that data firm MSCI Real Assets shared with Multifamily Dive. Only $1 billion in transactions separated the multifamily and industrial sectors.
- Individual asset sales, the bedrock of the apartment transaction market, increased 3% to $27.6 billion year over year in Q1. However, in the five years before 2020, individual properties increased 17% year over year on average in Q1. Portfolio sales dropped 13% year over year to $4.4 billion in Q1, according to MSCI.
- Apartment prices were essentially flat in Q1, marking the first quarter since late 2022 that they had not fallen, according to the RCA CPPI, a measure of apartment prices. Apartment cap rates rose 10 basis points to 5.8% in Q1. They sat at 5.6% for mid- and high-rise properties and 5.9% for garden assets.
Dive Insight:
Apartment sales activity wasn’t uniform across the country in Q1.
In what MSCI refers to as the six major metros — New York City, Washington, D.C., Boston, Los Angeles, San Francisco and Chicago — sales jumped 29% year over year to $10.1 billion. In its non-major metros, trades fell 9% to $21.9 billion.
Garden assets in major metros increased 27% YOY to $3.7 billion, while mid- and high-rise trades jumped 30% YOY to $6.4 billion, according to MSCI.
In non-major metros, garden sales fell only 1% YOY to $16.1 billion. However, the real weakness in the market was mid- and high-rise trades in non-major-metro markets. They dropped 26% YOY to $5.8 billion, per MSCI. Through 2021, 72% of mid- and high-rise deals were concentrated in smaller markets. In Q1 2026, that share fell to 47%.
In an April 22 research report summarizing the MSCI results, Anthony Paolone, executive director at JPMorgan, noted that the increase in the 10-year Treasury yield in the last couple of months amounts to about 30 to 40 bps, which could introduce more risk to the market.
During the process, the increased borrowing costs could eat “into the cushion investors may have had in their underwriting” across commercial real estate assets.
“Sponsors can take on shorter-term debt to mitigate the longer-term rate increases, but we wouldn’t want to gloss over the rate moves too much here,” Paolone wrote. “In addition, any impact or uncertainty from the war in Iran likely had minimal impact on 1Q data given the timing of transactions.”
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