I hate negative news. But facts is facts. When it comes to the sale of apartment properties in the Des Moines market, there's not a lot of positive news right now. If you only want positive news, skip to the last paragraph and I'll give you the best spin I can come up with.
According to Rick Krause, Senior Associate with CBRE Richard Ellis/Hubbell Commercial, sales transactions 
involving apartment buildings in Polk County were down 48% in 2008 compared to 2007. Dollar volume was down an even higher percentage: 62%. This information comes from Rick's self-published monthly newsletter, the Central Iowa Income Property Newsletter, which he has produced for over six years. It is a short, informative newsletter that reaches over 90% of apartment owners in nine central Iowa counties. (Email Rick if you would like to be added to his mailing list.)
Transactions considered include garden-style apartments, apartment conversions, and apartments with elevators. The raw numbers show that there were a total of 72 transactions in 2008 versus 139 in 2007. The overall sales volume for these properties in 2007 was $81 million; in 2008 it dropped to $31 million.
Comparing 2008 numbers to two years ago is even more bleak. Total transactions went from 146 in 2006 to the 72 mentioned above in 2008 (down 51%), while dollar volume plummeted from $145 million in 2006 to 2008's total of $31 million mentioned above (down 79%!).
Breaking things down another way, high dollar transactions were down, too. In 2008, the sale price of only five transactions exceeded $1 million, compared to 18 in 2007 and 19 in 2008. Ave
raging the transactions for the three years shows the following:
- 2008 average transaction = $431,000
- 2007 average transaction = $583,000
- 2006 average transaction = $986,000
The positive spin to all of this negativity is that things can't get much worse. Rick believes that commercial real estate transactions will increase in 2009. Reality is setting in for many investors who are considering the sale of their properties. Reality has already set in for some who, for one reason or another, must sell in the near future. Those who have the ability to purchase in this market stand to benefit from these newly-realistic sellers.
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