Multifamily Investment’s Bright Spots for 2023

CRE investors are generally behaving rationally given the current lending environment, according to Ken Munkacy, senior managing director of Kingbird Investment Management.

But while rising interest rates, the possibility of a policy-induced recession, credit terms, and valuation uncertainty are all real, the current “doom and gloom” headlines are specifically oversimplifies and obscures the long-term positive fundamentals of the multi-family asset class. Said.

Based on Kingbird research and analysis, the underlying fundamentals of this asset class remain strong and investing in distress as it unfolds in 2023 presents an opportunity to capture strong risk-adjusted returns. Offers.

labor force living in a bright place

The US market is chronically undersupplied, with most estimates short of millions of units.

Despite more than 400,000 units being completed by the end of 2022, and nearly half a million more new apartments by the end of 2023, according to CoStar, “this housing shortage is unlikely to go away,” Munkacy said. said.

And it’s not just a shortage of troops, he said, it’s a shortage of the kind of troops the Americans need. Luxury homes alone are not meeting the needs of the rental market,” he said.

“The overwhelming portion of new development in the United States is luxury, high-rent buildings,” he said. Millions of luxury buildings contribute to new vacancies. ”

According to Munkacy, there is a growing need for worker housing to attract people in the middle. Both those currently priced out of Class A buildings and those that have been rented in the Workers’ Housing category all along.

spawning area hotspots

A variety of new mega federal programs – the Inflation Reduction Act, the $280 billion CHIPS Act (which incentivizes microchip and semiconductor manufacturing), and the Department of Energy’s new $250 billion clean energy loan program – all matter. It is a harbinger of a “jump start”. New onshoring and reshoring initiatives in green technology, energy, advanced computer electronics, and infrastructure.

All of this will create a need for new housing in general and multi-family housing in particular, especially in markets like Austin and Columbus, Munkacy said.

Several other cities where Kingbird is investing in apartments. Including Dallas, Huntsville, New York City and Los Angeles. We also prepare important new technology, infrastructure, media, defense and aerospace projects. Those workers will need a place to live.

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