The multifamily investment landscape has experienced significant shifts in the last year with higher interest rates, challenges securing debt for new developments, and softening fundamentals across asset classes. Despite the obstacles, CBRE’s 2024 Global Multifamily Investor Intentions Survey recently revealed upbeat investor sentiment as multifamily remains the top acquisition target. Fogelman, like many others, has adapted new financial strategies amid this shift, remaining strategic and prudent in its approach toward new investments. Here are five considerations in looking ahead at the multifamily investment landscape:
1. New Realities of the Market
The current economic landscape has certainly impacted the attractiveness of multifamily investment. Compared with 2022 peak levels, the asset prices have declined by 20% to 30%, while the cash flow profile remains just as challenging as it did two years ago. As a result, many investors, including Fogelman, have remained conservative despite the more attractive price/pound of apartments for new acquisitions over the past 18 months.
While new CBRE research suggests that fundamentals remain challenged with near record high supply levels delivering in most markets, we’re expecting improvements in 2025 amid slowing completions, bolstered by a resilient macro-economy.
2. Resilient Macro-Economy Despite CRE Recession
The overall economy is faring better than it did during the Global Financial Crisis, and the multifamily sector is experiencing a more stable environment compared with the tumultuous conditions of 2008. Many of the larger management players, including Fogelman, have become uniquely positioned to navigate the new realities of today’s market. The wealth of tangible and reliable real-time data gleaned from managing an extensive portfolio lends itself to the anticipation of future trends and confidence in adapting effectively to the evolving market conditions.
3. Top Risk-Adjusted Opportunities: Outlook for Midwest and Sun Belt Markets
4. Transaction Activity: Exceptionally Low but Should Ramp Up Significantly