What Does the Future Hold for Multifamily Lending?

Ten years ago, JPMorgan Chase acquired Washington Mutual and along with it, $30 billion of mortgages on apartment buildings, which had earned strong returns despite how the economy was doing. Fast forward to today, JPMorgan Chase has more than doubled its balance sheet and is one of the biggest multifamily US lenders. GlobeSt.com exclusively caught up with Al Brooks, JPMorgan Chase’s head of commercial real estate, to talk about how the company is making strides in innovating and improving the business for real estate investors since the acquisition, what the current lending landscape looks like and the 2019 outlook.

GlobeSt.com: How has JPMorgan Chase grown the CRE business since the 2008 acquisition/?

Al Brooks: When I joined JPMorgan Chase, I was blown away by the solutions the firm offers its clients and its impressive fortress balance sheet. In every single market we serve across our three commercial real estate businesses—commercial term lending, real estate banking and community development banking—we’ve made strategic investments, developed a strong team and work with great clients enabling us to grow the business. Today, we’re the fastest organically growing CRE business in banking and the No. 1 multifamily lender in the US. It’s a testament to our commitment to our clients, deep industry knowledge and ability to provide real estate investors, developers and property owners with a full suite of financial solutions—including cash management, investment banking and private banking, among other solutions.

GlobeSt.com: What is the current state of multifamily lending and what’s next?

Brooks: Across the US, we’re seeing multifamily units absorbed quickly in the major cities—including New York, D.C., Boston, San Francisco, Los Angeles, Chicago, Denver and Seattle. We’re not seeing as many construction cranes as we were a few years ago, but there’s a continuation of more supply coming online and vacancy rates remain low. We’re seeing a persistent trend toward urbanization and the demand for affordable places to live continues to rise.

GlobeSt.com: What is JPMorgan Chase focused on to keep up with the changing environment?

Brooks: In all of the markets and industries we serve, we’re focused on maintaining a fortress balance sheet and offering our clients access to an array of financial solutions that will help them succeed throughout the cycle. We’re also constantly looking at how we can continue to innovate and improve the way we do business to make it easier for our clients. For example, we’ve been able to bring down our controllable cycle times by digitizing the process. Now about 40% of our commercial term lending business is done under 30 days.

GlobeSt.com: What’s your industry outlook for 2019?

Brooks: We feel good about the market. With the economy doing better, interest rates will continue to slowly rise. We also see rents continuing to rise, but we don’t anticipate huge leaps in rate increases. Vacancies remain low and we expect that to continue through 2019. We’re also seeing asset classes impacted by ongoing changes in the industry. E-commerce will continue to evolve retail, giving rise to more experiential retail concepts, as well as result in increased industrial asset class activity. The office sector is also changing, with open floor concepts continuing to trend, square footage per employee is decreasing and more amenities are needed to meet expectations. As we get toward the end of the cycle, it’s more important now than ever to make strategic investments and build a fortress balance sheet.

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