Why big money is flowing into apartment construction

People want to live in urban settings and avoid cars. That’s not the opinion of some environmentalist plugging “smart growth” and walkable communities, but the executive vice president and division manager for Umpqua Bank’s commercial real estate division, John Swanson.

Swanson tells the Portland Business Journal that the bank probably has more apartment loans under construction than any other product type in Seattle, Portland, Ore., and Walnut Creek, Calif. He estimates there have been 19,000 new jobs created in Portland in the last 12 months, and that the apartment vacancy rate there is just 3 percent.

For banks, the great thing about apartment projects is that once they’re built, institutional investors will step in and finance a permanent loan, freeing up capital reserves that banks can use to fund other projects. “The insurance and pension funds really like apartments,” Swanson says. Source: bizjournals.com