Rent Inflation Highest at the Lower End

Good article on CNBC this morning which underscores a trend that we at PGP have been thinking about for the past year or so: almost ALL of the new inventory coming online in the multi-family space is aimed solidly at the high end of the market. This makes sense - it is more profitable for everyone involved to build the $150,000+ per door buildings. However, there is strong demographic growth amongst the working class, sub-$60,000 household income bracket. And there is little or no new supply in that category. Therefore, a well-managed portfolio of Class B and C+ properties should out-perform over time - at least on a cash-on-cash distribution basis. Plus, there is much less sensitivity to

Investors Moving Back Into Retail

At PGP, we have been talking about the "rotation" out of multi-family assets - at least those Class-A properties that have seen cap-rates compress to the 5% levels - and into better priced retail and office assets (see this blog post here from back in June). There is a story out from CoStar talking again about the flow of investor money into retail, and this seems to be underscored by the improving economy and retail demand that we are starting to see. Granted, most of the appetite has been in the higher-end mall category and is being dominated by the larger institutional buyers, but we are willing to be patient as we accumulate a portfolio of solid neighborhood centers at excellent values.

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