By: Kelsi Maree Borland

There have been a huge volume of 1031 exchange deals this year, but Marcus & Millichap’s Tyler Leeson says the volume is nothing new.

It may seem like 1031 exchange transaction volume is growing this year, but Tyler Leeson of Marcus & Millichap says that the volume of 1031 deals is the same as it has always been—huge. While he agrees that the majority of multifamily transactions are 1031 exchanges, he says that has always been true. Leeson recently closed four 1031 exchange deals in Anaheim and Oceanside for a total of $67.7 million, and Leeson says this is an example of the typical deal flow his team sees.

“The majority of our transactions are 1031 exchanges on one or both sides of the deal. People always do 1031 exchanges to avoid capital gains taxes, and that is the reason that we have always done them,” Leeson, senior managing director at Marcus & Millichap, tells “We haven’t seen in an increase in the number of transactions; historically speaking, owners typically do a 1031 exchange and trade into another apartment building or another product type. Over my career, rarely do people cash out.”

In general, transaction volume trended down last year as many investors were waiting on the sidelines to see the outcome of the tax overhaul; however, Leeson says—at least in his business—there was not a decrease in 1031 exchange volume last year, and the deal flow has remained consistent through the first half of this year. “We didn’t see a huge drop off last year with 1031 exchanges,” he says. “The market has continued to be steady. My team has done 27 1031 exchanges this year.”

In general, 1031 exchanges can be difficult in terms of finding product to trade into with the right timing. That is especially true in this market, which is highly competitive with limited opportunities. “We are able to find the inventory,” says Leeson. “That is important to point out. Our team has been able to find the inventory out there even when other teams or companies haven’t been as successful. We are finding deals for all of our clients that want to do an exchange.”

The four transactions that Leeson recently closed fell into that category. The buyers traded into assets in different markets and different multifamily investment classes. “This particular set of 1031 exchanges was unique because the owners exchanged into different markets and into value-add buildings,” explains Leeson. “We are seeing people trade into different product types for ease of management. It isn’t because they can’t find an apartment building. On these deals, our clients traded into the properties because they were a good fit.”

While the activity isn’t necessarily picking up, Leeson also says that it isn’t declining—and he doesn’t expect it to any time soon. “I don’t ever see the volume of 1031 exchanges going down,” he explains. “If everything stays status-quo in terms of the interest rate market and economy, I think we are going to see a really similar second half of the year.”