Ian Ritter is Online Content Manager at GRS Group
On the heels of Bill Tryon’s recent blog about Fannie Mae Revisions to PNA requirements, we thought it would be a good time to provide a quick update on fundamentals in the multifamily sector of commercial real estate.
At the National Multifamily Housing Council’s (NMHC) Annual Meeting and Apartment Strategies Outlook Conference, speakers acknowledged that a recovering housing market could negatively impact rent growth and the value of apartment investments, according to a recent GlobeSt.com article.
But speakers on a panel at the Boca Raton, Fla., convention didn’t seem particularly concerned about over building, depending on the market where construction is taking place. New York City, for example, has a two percent vacancy rate, GlobeSt.com quoted Michael Katz, co-CEO of Sterling American Property Inc., saying. As a result, it wouldn’t hurt if that MSA gained some new supply.
Meanwhile, GlobeSt.com quoted Ella Shaw Neyland, president of Steadfast Income REIT, saying that consumers’ preferences have changed over the last few years in terms of the type of housing they prefer.
“Millennials don’t want to own a house; they’d prefer to rent and have the lifestyle and flexibility to move, if necessary. Baby boomers, too, are making lifestyle changes,” the commercial real estate news source reported her saying.
Another GlobeSt.com story from earlier in the conference also highlighted Houston, Dallas and Seattle as favorable investment markets.
According to a recent NMHC report, the apartment-market conditions did “soften slightly,” in January. The survey reported that higher interest rates may be partially to blame for declines in sales volume and debt financing. However, there is still “considerable equity capital continuing to look for apartment opportunities,” the report says.
“New supply is finally starting to arrive at levels that will more closely match overall demand. In a few markets, we are seeing completions a little higher than absorptions, but this is likely to be short term in nature,” the survey quotes Mark Obrinsky, NMHC’s senior vice president for research and chief economist. “Fundamentally, demand for apartment homes should be strong for the rest of the decade (and beyond) – provided only that the economy remains on track.”
Check out NMHC’s new “Apartments: We Live Here” Web page for some interesting statistics on the overall multifamily sector.