As published in Scotsman Guide's Commercial Edition, August 2010.
I’ve spent what seems like an abnormal amount of time in apartment/condominium-complex community or “great” rooms the past few months.
And these gathering spaces are abnormal in themselves — a cross between Hyatt kitchenettes, dentist waiting rooms and reality-show sets, thanks to the inescapable specter of security cameras documenting friends of the square-feet-scarce as they futz with contractor-grade barbecue grills.
The really weird part? These rooms always seem to be available and empty. Primarily, because the complexes are near-empty themselves.
I’m not sure I’ll be saying the same thing next summer. Because as Victor Calanog notes in this month’s Property TypeCast column, the multifamily sector’s future may be far less gloomy than newer complexes’ glum amenities.
Although Calanog says vacancies may be the last element to perk up, other factors could help push them down. Far less multifamily construction is expected this year compared to 2009, for example. And any sustainably positive job news can yield increases in demand and rents.
More multifamily cheer exists on the financing side. According to Scotsman Guide analyst Dan Yeh’s Mortgage Metrics: Commercial blog post this past June 17, lender-reply rates for multifamily-loan scenarios hit their highest levels ever on Scotsman Guide Loan Post the past two quarters. This is consistent with information from research firm Real Capital Analytics, which stated last month that there are more multifamily investors than multifamily assets right now. Late June also witnessed multifamily loans back the year’s third commercial mortgage-backed-securities deal.
What can mortgage brokers do at this point? Keeping your multifamily clients operating at a high level is a start. As National Tenant Network Inc.’s Edward F. Byczynski explains in this issue, ensuring landlords and property-managers maintain high tenant standards — even as rent concessions persist — goes a long way toward positioning their properties for the market rebound.