Industry leader Greg Willett joined Marcus & Millichap earlier this year as first vice president responsible for spearheading the company’s Institutional Property Advisors (IPA) multifamily research.
Willett is a leading multifamily research expert with over 25 years of experience. Prior to joining Marcus & Millichap, he spent 22 years at RealPage, where he served as chief economist responsible for the company’s real estate industry research and analysis team. He is active in the National Apartment Association, the National Multifamily Housing Council, and Urban Land Institute.
“Greg is an iconic member of the multifamily industry’s research community,” says John Chang, senior vice president and national director of Marcus & Millichap’s Research Services. “He is the ideal person to lead our IPA multifamily research efforts as his decadeslong experience and unique insights will support and empower decisions by institutional and major private investors. Greg brings a powerful perspective that weaves hard data with market nuances that will help multifamily investors define their strategies in 2022 and beyond.”
Multifamily Executive caught up with Willett to discuss his new role, inflation, and the short-term outlook for the industry.
MFE: Tell us about your new role at Marcus & Millichap?
Willett: It’s great to be joining a real estate services organization that prioritizes research and knowledge of the marketplace. At Marcus & Millichap and IPA, we want to facilitate our clients’ ability to establish informed, forward-looking investment strategies. I am focusing on institutional multifamily investors and their market analytics needs predominantly in major U.S. metros.
MFE: What’s your multifamily investment forecast for 2022?
Willett: Look for investor demand for apartment properties to remain very strong over the next couple of years. That outlook partly reflects the prospects for investment yields in commercial real estate and housing versus other capital deployment options. There’s a housing shortage that’s limiting the availability of both for-sale and for-rent residences, so vacancies are at historic lows, and consumer prices are rising. In turn, asset values in most major markets are rising quickly. It constantly gets tougher to add more product, so it’s very difficult to build our way out of this situation overnight.
Having said that, the apartment market outlook is favorable. Keep in mind that all-time records for nearly every key performance metric were set in 2021. If performances in 2022 and 2023 don’t quite hit the 2021 growth levels, we’re still in very good shape.
The apartment sector’s positive near-term outlook is very broad across individual markets and product segments. There’s something for everyone, covering an array of investment strategies.
MFE: What markets are you bullish on for multifamily investment?
Willett: Fast-growing metros in the Sun Belt and across the Mountain/Desert region are favorites for many investors. On the other hand, the coastal gateway metros where performances stumbled in the early days of the COVID pandemic are making big comebacks now, so there’s strong appeal in those locations too. Interesting things also are happening across some of the previous “slow-and-steady” performers in the Midwest and parts of the South. Product availability is completely exhausted in those spots, triggering rent increases that make new development feasible for the first time in years, sometimes even decades.
MFE: What economic trends are you keeping a close watch on for the coming year?
Willett: Inflation is today’s hot-button economic indicator. Many consider hard assets like real estate a good hedge against inflation, so the outlook for investment flow remains positive. That’s especially true for apartments, since leases turn quickly, allowing for immediate consumer price resets. However, if efforts to curb inflation push up interest rates significantly, real estate investors may need to recalibrate their underwriting.
MFE: Related to the multifamily industry, what’s keeping you up at night?
Willett: Labor shortages are another key concern when thinking about the outlook for the apartment sector. Many companies are struggling to land the workers needed to satisfy growing demand for the goods and services they produce. If the people aren’t there to hire, there’s a potential cap on job creation, household formation, and housing demand.
The housing affordability challenges that the nation faces have become an increasing concern for the apartment industry. That’s especially true when policy decisions are being made in some locations that ignore the root cause of high pricing, which is too few housing units generally and drastic shortages of housing at lower price points.
