Gray Report Newsletter: January 18, 2024

Will the Multifamily Market Reignite?

A number of potential scenarios could restart activity in the multifamily market, with rate cuts, pent-up investor demand, loan maturities, and continued operational challenges among the possible factors that could close the buy/sell gap and motivate more apartment property sales. Multifamily asset performance faces near-term pressures from increased apartment supply as well as a potential economic downturn, but investors will be poised to act on long-term investment strategies should an opportunity emerge amid the current uncertainty.

Multifamily, the Nation, and the Economy

The Bill Is Coming Due on a Record Amount of Commercial Real Estate Debt

Via The Wall Street Journal: “Vacancy rates are increasing in some multifamily markets, making it harder for many of those landlords to raise rents or make payments on floating-rate debt . . . ‘At some point borrowers are going to have to come to grips that their lenders might be right about the values and look at it from the worst-case scenario.'”

Multifamily Markets and Reports

Multifamily Forecast: 3% Rent Growth, 30BPS Cap Rate Expansion

Berkadia: Among the projections in this forecast report is a substantial amount of demand, nearly enough demand to match the historic amount of new apartment supply expected to enter the market this year.

Multifamily and the Housing Market

2024 Apartment Supply Scheduled to Outweigh 2023

RealPage: “2023 logged a big increase in deliveries, with nearly 440,000 apartment units completed throughout the year, a 36-year high for the market. For 2024, scheduled completions in the U.S. total another 670,000 or so apartments, which blows past that record volume by about 50%.”

Migration and Housing Reports

2023 Migration Patterns Study

Via Atlas Van Lines: “Hawaii was once again a sought-after destination this year, with 77% of the shipments being inbound,” followed by Maine, North Carolina, Montana, and New Hampshire.

Commercial Real Estate and the Macro Economy

Connections & Disconnections of Commercial Property Cap Rates

Via CBRE: “The statistical evidence presented herein aligns with the proposition [that] . . . all real estate performance is driven by the same forces . . . and not the conventional wisdom that idiosyncratic fundamental forces result in property type performance measures that show very different patterns over time.”

Leave a Comment