Where the ultra-wealthy once parked their gains in the office market, they are instead trying their hand at apartment buildings.

Billionaires are turning to the multifamily market in hopes demand in rentals keeps up for Americans as the housing market remains difficult to crack, Bloomberg reported

In the past decade, these ultra-wealthy people and their firms have more than doubled investments in the multifamily market, according to Knight Frank. The sector presents an area of growth, considering the fall in commercial property values and the outstanding need for housing.

Israeli billionaire Eyal Ofer is one of those ultra-wealthy individuals growing their multifamily portfolio. Over the summer, his Global Holdings Management Group paid $30.7 million for a 56-unit building at 51 Irving Place in Manhattan. The six-story, 42,500-square-foot property added to an already substantial (and growing) luxury multifamily portfolio for the firm.

Another billionaire digging into the multifamily market is Amancio Ortega, best known for the fashion company Zara. Last month, Ortega’s family office, Pontegadea, paid $232 million for one of Chicago’s most famous apartment towers in the West Loop. The firm snagged the 45-story, 492-unit luxury building at 727 West Madison Street from a joint venture of Ares Management and Skokie-based F&F Realty.

Carlyle Group co-founder David Rubenstein also raised money last year from around the world to buy apartment buildings.

Office properties used to be the crown jewel of the rich who wanted to bet on the stability of commercial real estate, with trophy offices providing a steady stream of income with long-term leases.

But the pandemic has soured many on the office market and left its fate unclear. Meanwhile, fundamentals have remained strong in the rental market, where rents have slowed on growth from a pandemic surge, but demand remains high and inventory issues in housing markets continue to sideline buyers.

Holden Walter-Warner

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