MidwestMultifamily Berkadia outlook: Multifamily stays strong in 2020 Dan Rafter January 24, 2020 Share on Facebook Share on Twitter Share on LinkedIn Share via email The mortgage banking and investment sales pros with Berkadia expect the multifamily sector to remain a strong one throughout 2020. But what could bring at least a minor hiccup to the sector? Interest rates and the presidential election. That’s according to Berkadia’s 2020 Outlook Powerhouse Poll, a collection of insights from more than 150 Berkadia investment sales brokers and mortgage bankers across 60 offices. According to the poll, investment sales brokers and mortgage bankers expect interest rates and the presidential election to have the greatest impact on multifamily investing and financing this year. A total of 86 percent of bankers cited interest rates in the study, while 44 percent pointed to the election. Rounding out the top three expected major trends, 44 percent of bankers cited GSE reform. For trends impacting multifamily investing, 77 percent of investment sales brokers cited interest rates, 63 percent the presidential election and 40 percent debt underwriting. The survey found, too, that 91 percent of mortgage bankers expect GSEs to see the most activity in 2020. “With the presidential election in sight, we are closely monitoring new developments in Washington so we can continue to provide the best recommendations and offerings regardless of what happens on The Hill,” said Ernie Katai, executive vice president and head of production at Berkadia. “The continued uncertainty around GSE reform has paved a wide, prosperous road for institutional investors and other nontraditional lenders to enter our industry, creating overall strong deal volume and available capital throughout the market.” Investment sales brokers and mortgage bankers told Berkadia that they are confident that deal activity across the industry will remain strong, with 92 percent of Berkadia professionals saying that the capital available for deals in 2020 will increase or stay the same compared to 2019. A total of 79 percent of survey respondents said the number of transactions this year will increase or stay the same compared to last year, and 83 percent said the same about deal volume. There are challenges, though. A total of 88 percent of survey respondents said that the need for more affordable housing will have a significant impact on the way in which the CRE industry operates this year. Berkadia professionals ranked the top three potential solutions to the affordable housing crisis as modifying tax credit policy (79 percent), local and state government intervention (63 percent) and regulatory changes to GSEs (62 percent). “Opportunity zones were investors’ major focus early last year, but more recently, these tax benefit programs have led investors to deeper conversations around the affordable housing crisis,” said Katai. “This year, with potential changes at both local and national levels, we will see investors dive deeper and seek out affordable housing projects in order to help underserved communities across the country.” Eighty-five percent of respondents said that institutional investors will show increased interest in commercial real estate investments in 2020. Also, 66 percent of mortgage bankers and investment sales brokers agreed that nontraditional commercial real estate investors, such as insurance companies, pension funds or hedge funds, will play a major role in addressing the affordable housing crisis. Technology is important to sales brokers and bankers, too. The Berkadia survey found that 96 percent of investment sales brokers and mortgage bankers agreed that technology significantly improved and streamlined processes within the commercial real estate industry in 2019.