By David Baird - “Multifamily opportunities in 2009 will be abundant.” It doesn’t take a rocket scientist to understand that when tough times hit the for sale sector of the housing market (owner occupied single family homes), that the multifamily/apartment sector is a direct beneficiary. In today’s post I’ll make the case for aggressively pursuing multifamily investments in 2009…
As the national director of the multifamily practice for Sperry Van Ness, I have more than 30 years of experience including more than 300 completed transactions totaling more than $2 Billion dollars. Suffice it to say, I have been through a few economic cycles and have witnessed the best of burgeoning markets, and the worst of depressed markets. I have one piece of advice for you in 2009: invest in multifamily now…
While there are clearly several factors catalyzing the demand for multifamily investments, I believe there are two primary drivers influencing the multifamily markets:
- The Economy: The capital and credit crisis has had an adverse impact on underwriting standards. This in turn has constrained the flow of funds available to borrowers. The lack of financing has forced many families out of the housing market and back into the rental market fueling demand for apartments.
- Condo Conversions: The huge conversion of for rent apartments into for sale condominium projects over the last few years has taken hundreds of thousands of rental units off the market shrinking inventory of available rental supply.
The reality is that a lack of supply coupled with increased demand have taken absorption rates to heights we haven’t seen in years. Principals who own apartments can expect substantial opportunities for rent bumps and increased NOI. Developers looking to bring more projects online will continue to see rapid absorption with few rental concessions.
Bottom line…investing is not a spectator sport. My advice is simple; don’t sit on the sidelines and watch opportunity pass you by, rather get in the game a leverage the current market trends to your advantage.