LOS ANGELES—Is the multifamily runway endless? It is the big question that experts will be discussing today and tomorrow at the annual RealShare Apartments conference at the Westin Bonaventure in Downtown Los Angeles. The line-up includes all of the big names—Bob Hart of TruAmerica, Jerry Fink of the Bascom Group; Gary Goodman of Passco Cos.; David Woodward of Brookfield Property Group, and the list goes on. They will be dissecting the market from every angle to gain a clear look at what's to come.

From the investor perspective, Goodman, SVP of acquisitions at Passco, forecasts rising rents and values, meaning the market will continue to be hot for investors. Construction lending is down—largely because of financial regulations, according to Goodman—limiting the supply and putting upward pressure on rents and values. “There is a little bit of a concern about overbuilding, as well as by mandate with Basel II and Dodd Frank, banks are not as eager to lend on new development as they have been in the past,” he tells GlobeSt.com. “Their reserve requirements for high volatility investments are higher, so they are penalized for making loans on new development. We expect to starts really moderate and decrease toward the end of 2017, and because the demand had increased, there will be a real push on rents and values.”

As a result, his firm is largely focusing on suburban core multifamily assets, where there is already a supply issue because single-family homeowners often fight new development. The dearth of development in these markets paired with the decrease in construction lending means that there is little possibility of new product entering the market. “If you can find a deal in those markets, it will be solid, because you aren't going to have any new supply in those markets,” he adds.

The lack of construction lending doesn't mean that there isn't plenty of capital chasing multifamily deals, however. Gary Tenzer, co-founder, principal and managing director at George Smith Partners, says that the agencies are remaining very competitive, adding that for multifamily “they are really the way to go.” The agencies are highly active in the market, but he says are only doing A and B deals. “If it's C, they won't touch it.”

With the upward pressure on rental rates and limited new supply, Goodman expects to see more foreign capital enter the market as well. “I see an increase in investment demand from private capital and off shore, particularly Asian, investors,” he says. “Ten years ago, they wouldn't have been interested in investing in multifamily, but now they are very interested in it.”

Join us at RealShare Apartments today and tomorrow to hear more of the multifamily discussion from the top experts.

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.

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Will the Multifamily Runway Ever End?

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