Yes, COVID-19 is still casting a pall on the U.S. economy, especially now that mask mandates and other restrictions might be returning because of the rise of the delta variant. But even with this uncertainty, mortgage bankers and investment sales advisors with Berkadia say they are optimistic about the what the remainder of 2021 holds for the multifamily sector.
Berkadia recently released the results of its 2021 Mid-Year Powerhouse Poll. And the news was mostly positive: 78 percent of Powerhouse Poll respondents said that this year will see a higher number of multifamily transactions than the industry recorded in 2020.
The poll also found that both Berkadia bankers and investment sales advisors said that the need for new multifamily properties continues to rise. As the respondents said, rental demand continues to outpace supply, one of the big trends that will impact financing and investing during the second half of this year.
And when it comes to specific property types? Affordable multifamily housing remains in demand. A total of 92 percent of Berkadia poll respondents agreed that investors are more interested in affordable housing properties now than last year.
A total of 49 percent of responsdents said that they expect affordable housing property acquisitions to be attractive to investors. An additional 31 percent said that they expect investors to also be interested in rehabs of existing affordable multifamily properties.
“Multifamily real estate transactions may have taken a pause at this time last year, but the length of a market slowdown was much shorter than initially predicted,” said Ernie Katai, executive vice president and head of production at Berkadia, in a written statement.
Katai said that during the first half of this year, the multifamily market saw a rebound resulting from pent-up demand and the availability of capital.
“This led to a record-setting start to 2021,” Katai said. “Further, an increased desire for the transient, renter lifestyle and migration patterns have led to increased renter demand, and corresponding investor interest, particularly in secondary markets across the country.”
As institutional investors become increasingly interested in adding commercial real estate investments to their portfolios, Berkadia’s latest Powerhouse Poll also looked closely at trends within this investor group.
In today’s real estate market, Berkadia advisors see the lack of deals to purchase (58%), lower risk-adjusted returns (19%) and decreasing cap rates (18%) as the most common pain points among institutional investors.
As confidence, stability and liquidity return to the marketplace, respondents expect single family rentals or build-for-rrent (28%) and renovation and rehabilitation (24%) property opportunities to be the most attractive to their institutional clientele during the next two years.
“We have been impressed by institutional investors’ continued interest in the commercial real estate industry, throughout the pandemic but particularly as we continue towards recovery,” said Mary Ann King, co-head of investment sales and head of Berkadia Institutional Solutions, powered by Moran.