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Portland’s booming multifamily market isn’t profitable only for developers, but also for investors and property owners through sales.

Though the number of apartment buildings sold in the Portland area is down from this time last year, the total amount investors have paid for them is higher.

Through September of this year 187 apartment buildings with five or more units have sold in the Portland market, according to data reported by Greg Frick of HFO Investment Real Estate. Those sales totaled more than $984 million. If sales continue at the same pace through the end of the year, Frick predicts more than $1.3 billion in transactions, which is a record dollar amount for the Portland market.

Comparatively, in 2013 there were 265 apartment sales in the Portland market area, totaling $1.17 billion.

Charlotte Boxer, director of commercial real estate markets at Pacific Continental Bank, said the increase in dollar amounts is due to a large number of institutional buyers 鈥� those spending $10 million and up on an apartment building 鈥� entering the Portland market.

鈥淢ost of the buyers are institutional and plan on holding onto their purchases for the long haul,鈥� Boxer said. 鈥淚nstitutional buyers are just flush with money because they hoarded it during the recession.鈥�

Frick said institutional buyers want to put their capital into hard assets in markets like Portland because of factors such as the strong job market and the in-migration of new residents. In addition, limitations on urban sprawl contribute to increased property values.

鈥淭he UGB creates an artificial restriction on supply,鈥� Frick said. 鈥淚n markets like Phoenix where they’re allowed to sprawl it encourages a boom-and-bust market, where Portland is kind of like a steady eddy.鈥�

From the first of the year through September 2014 there were 21 apartment building transactions of over $10 million, compared to just 20 for all of 2013, according to Frick’s data. Those 21 transactions totaled $794 million, which is $80 million more than 2013 and $250 million more than 2102.

Capitalization rates are at just over 4 percent, lower than they’ve been since 2006, Boxer said. But that’s not stopping buyers.

鈥淭hose CAP rates are for Class A buildings,鈥� Boxer said. 鈥淭hey’re willing to take less of a return because they’re getting a prime piece of real estate.鈥�

Frick hypothesized that the downward trend in number of sales is due to historically low interest rates causing non-institutional owners to refinance and make upgrades to existing properties instead of trading up.

Interest rates are at historic lows, but that won’t last forever, Boxer said.

鈥淭his is not the norm,鈥� she said. 鈥淭his isn’t a free economy; it’s planned. These interest rates were put in place after the recession to stimulate economic growth.鈥�

Boxer said she’s also seeing some of her clients selling their buildings in anticipation of values decreasing when the wave of newly constructed apartments hits the market.

鈥淚n the last three years we only added 9,000 new units,鈥� she said. 鈥淣ow there are about 23,000 planned or under construction.鈥�

Boxer believes the Portland multifamily market is at the top of its cycle and predicts the new construction will result in approximately a 6 percent vacancy rate by this time next year.

鈥淭he amount of sales is a sure sign that some people realize we’re at the top of the multifamily real estate cycle,鈥� Boxer said. 鈥淚f you’re ever going to sell, now’s the time to sell to maximize profit.鈥�