With retail and hospitality industries in a perpetual state of uncertainty for the foreseeable future, real estate investors have been drawn to multifamily properties. “Interest in multifamily is at a fever pitch right now,” CBRE Vice President Joe Ayers told the Jacksonville Daily Record...
It’s a difficult time to be a multifamily property owner. We want to show compassion and empathy to tenants who may be struggling economically, yet at the same time our own mortgages and other financial responsibilities have not changed.
With that in mind, it may be heartening to know that investors are bullish on long-term trends for multifamily properties, especially in smaller suburban markets. Read on to learn more about why real estate investors will continue to set their sights on residential rentals in 2021.
Multifamily Provides a Safety Net for Real Estate Investors
With retail and hospitality industries in a perpetual state of uncertainty for the foreseeable future, real estate investors have been drawn to multifamily properties. “Interest in multifamily is at a fever pitch right now,” CBRE Vice President Joe Ayers told the Jacksonville Daily Record.
There is particular excitement about properties in areas outside of major metros, like Jacksonville, Ayers explained. During the pandemic, these more-affordable, less dense areas have become newly popular with former urbanites looking for more space and easier access to nature.
Investcorp recently expanded its holdings in these suburban markets, spending $330 million to buy five class B properties in suburban Jacksonville, Atlanta and Baltimore. “Looking ahead, we believe that multifamily real estate, and particularly class B, will continue to be a highly sought-after asset class given its ability to offer consistent yields,” said Michael O’Brien, managing director and co-head of North America real estate at Investcorp.
O’Brien believes the benefits to investing in multifamily now are likely to continue or even be enhanced after the pandemic is over. That theory was echoed by Ari Rastegar, who owns a real estate company that specializes in “recession resistant” development, in a recent piece for Forbes. “With the need for stable housing and more people pouring into smaller metros, the rental market is one of the few that’s set to boom in 2021,” said Rastegar.
He pointed to the number of young people who have moved in with their families and will be looking to head back out on their own, most likely to apartments, when the economy gets rolling again. “The lasting effects of the pandemic will be far-reaching, particularly among millennials, likely meaning a longer stay on the rental market than previous generations,” he said. “Many will be reluctant or completely unable to make large purchases, such as a house, meaning a sustained demand for rental units for years to come.”