The State of the Multifamily Market
March 25, 2020
Yesterday, our partners CBRE held a flash call on the state of the multifamily market, led by Spencer Levy, CBRE’s Senior Economic Advisor and Chairman of Americas Research. The hour-long call featured representatives from the public market, debt, and investment sides of CBRE, CITI, Fannie Mae, Freddie Mac, focused on a few key areas. Across the board, operating fundamentals have clearly been negatively impacted — the question now is how deep, and for how long?
Bottom Line: Uncertainty still reigns and we expect continued volatility over the next few weeks. However, the fact that this downturn is not rooted in bank or debt crises leads experts to believe markets will bounce back much quicker that historical analogues (post-911; the 2008 financial crisis). We’re also seeing an unprecedented level of cooperation and collaboration between the government, lenders, and investors.
+ It’s possible last week could have been the low point for debt. Based on the fact that this economic shift isn’t a bank or debt crisis, and that China is recovering well, CBRE economists believe that we will bounce back from this downturn quicker than post-9/11 and the 2008 financial crisis.
+ Within the multifamily sector, senior housing has experienced the most negative impact. This age cohort is experiencing an outsized impact, and CBRE economists anticipate a pull-back. However, we still have a strong long-term view on senior housing.
+ Indices and spreads move every day, and many lenders are taking a pause, but a large number are still looking to lend — even in current conditions. We’re focused on educating lenders on assets, with a patient approach to debt execution where feasible.
+ Assets that went to market before March 11 are staying in the market, with investors taking a wait-and-see approach.
+ Across the country, sellers are moving forward with marketing materials for assets that are on hold — and want to be ready to launch at a moment’s notice. For assets that were about to enter the market, we’ve seen a virtual halt in activity — however, teams remain mobilized to prepare for the turn-around.
+ Virtual tours continue to gain steam — for both prospective renters, and increasingly for potential investors. It remains to be seen how much pre-due diligence can successfully be done virtually.
Multifamily remains one of the best-positioned asset classes for the coming decade — to learn more, check out CBRE’s 2030 Global Outlook: The Rise of Responsive Real Estate. As always, if you have any questions, don’t hesitate to reach out — our collective of experts in multifamily are happy to provide insight.
For Streetsense updates, follow us on social media or sign up for the Word on the Street newsletter.