Even as interest in other commercial sectors starts to gain momentum, investors still see upside in multifamily, according to a recent survey of real estate executives from the consulting firm KPMG.
Despite oversupply fears in certain markets, 53 percent of respondents said they expect a “significant amount” of new development to launch, which is up from last year’s 43-percent in last year’s survey. Somewhat surprisingly, 5 percent of respondents expected no construction activity in multifamily (that number was at 11 percent last year). Hospitality was second with 34 percent of respondents expecting significant activity (up from 18 percent in 2013).
“As U.S. job growth has recovered slowly, the multifamily sector has benefited from new household formation—for example, young people moving out of parents’ homes and into rental apartments—as the economy has started to improve,” KPMG said in the report. “Many household members fared badly during the recession and are unlikely to be homebuyers again anytime soon. They may also be deterred by today’s stricter mortgage guidelines or driven by the need for easy mobility to take advantage of career opportunities.”
Forty-eight percent of survey respondents saw the most opportunity for commercial real estate investors in the Southeast. That was followed by the Southwest (33 percent) and the Midwest (31 percent). The Southeast and Midwest saw significant increases from the 2013 survey.
“Respondents’ selection of the Southeast as the region of greatest potential for real estate investment may come as a surprise because this was one of the regions that suffered the most during the housing crisis,” the report said. “Recently, however, housing prices continue to rise across Florida and construction is booming again in Miami, signaling a welcome rise in demand. A manufacturing boom is also underway in the Southeast and the United States overall.”