Rather than being driven by jobs, this current multifamily cycle appears to be focused more on cyclical and secular factors such as high debt levels, mediocre confidence, and tight lending standards.
San Francisco, CA (PRWEB) October 31, 2012
Economic uncertainty and jobs dominated the conversation at the RealShare Apartments 2012 conference, held in Los Angeles on October 24th at the Westin Bonaventure Hotel. Attendees heard the opinions of dozens of industry experts regarding the state of the multifamily real estate market.
Hessam Nadji, the SVP and managing director of Marcus & Millichap, took the spotlight with his special presentation Can Apartments Withstand the Economic Headwinds? “Demand is high and multifamily developers are ready to build,” said Nadji, “but equity for development is still very cautious and not readily available. I don't think overbuilding is going to be a problem through 2014,” he said.
An expert session entitled, “Anticipating the Curve Ball: What Factors Will Impact the Multifamily Market Next?” highlighted differences in the current apartment cycle versus those of the past several decades. Rather than being driven by jobs, this current cycle appears to be focused more on cyclical and secular factors such as high debt levels, mediocre confidence, and tight lending standards.
A factor that has not counted as heavily in the past is the growing number of non-traditional households. It was pointed out that 50% of today’s renters are middle aged. This data flies in the face of developers, who have been more focused on the echo boom generation, and are missing out on the opportunity presented by the actual renters.
Affordability of rental units appears to be emerging as a problem, with it becoming cheaper to buy in some markets versus renting. As a positive, the panel did not anticipate any problems with overbuilding, in general, though it was pointed out that some coastal areas could see a glut of rentals.
About Genesis Capital
Genesis Capital is a dynamic nationwide network of seasoned commercial real estate and financial professionals that believe in the potential of today’s market. Genesis works with principals only, and assists buyers and sellers in off market transactions, which include bank notes. A new division, the Small Balance Multifamily Group, was recently created at Genesis Capital.