The apartment sector continues to bask in a market that’s been heating up during the past year or so.  With accelerating competition and increased development, maybe even getting a bit too hot, according to the 2012 edition of Emerging Trends in Real Estate, a trends and forecasts publication from the Urban Land Institute and PwC. 

Tenant demand, rising rents, declining vacancies and plenty of available financing top the list of factors stoking the growth of this sector.  On the flip side, the market’s attractiveness is creating highly- competitive scenarios (even in secondary markets) where buyers assume higher risk to secure assets.  The apartment supply appears also to be climbing faster than anticipated, which could put a damper on rent growth.

Opportunities abound, especially for existing apartment owners. They are perceived as the best positioned to “reap solid income flows and hold assets long term with little downside risk, or they can cull portfolios of weaker properties by selling into the buying wave.”