Multifamily Trends That Will Loom Large This Year

Multifamily should be set for a strong 2022 if Berkadia’s mortgage bankers and investment sales advisors are right in their responses to the company’s 2022 Outlook Powerhouse Poll, as 82% think demand will continue to rise.

“If that continues to be the case, this sector will continue to perform the way it’s been performing in what has been a really interesting two years, when you look at forbearance and the headwinds that were there,” Ernie Katai, executive vice president and head of production at Berkadia, tells GlobeSt.com.

“I feel like New York City, Chicago, and the big metros, are starting to have interest in them again,” Katai says. “Another big number that jumps out at me is suburban is still the location of choice, at 94%. I think that’s impressive. But when you break it down, you get increased square footage, lower prices, and amenities like green space that are really hard to come by in the big city. And 61% of our investment salespeople [expect the highest activity] on secondary markets.”

Single-family rentals and built-to-rent were expected to continue as big markets to investors over the next couple of years, according to 72% of the respondents. “It fits the barbell to demographics that still have the feeling of a home to it. We’ll continue to hear about ESG. I think it’s something that’s long overdue. It was ignored for a long time and now there’s so much focus on it that we’ll be able to see progress. If you look at our survey of three to four years ago, there’s hardly a mention” of SFR, BTR, or ESG.

The mortgage bankers expect the most activity in 2022 to come from government-sponsored enterprises (66%) and private funds and debt funds (24%). In investment sales, 58% of the sales advisors expect private domestic capital sources to be the most active.

According to 89% of the advisors, investors are more interested in affordable properties than last year. The Southeast is expected to be a big area, which makes sense given the ongoing shift in population. 

The focus on affordability has a grounding in reality and expectations of how long rents can increase. “I do think there’s a little catch up there [from the pandemic downturn], but at some point, this has to slow down in affordability, the percentage of wallet share we’ve seen people pay toward rent,” Katai says. “At some point, you’re going to hit a level where people are going to have to make choices” between housing and other expenses.