Forty-five days ago, a multifamily asset on the market would receive bids from 30 groups, unintentionally driving up the price for the property. Today, the buyers are still there but there are fewer of them and many of the deals aren't hitting their whisper price, according to Noam Franklin, Managing Director – Head of Eastern US, JV Equity & Structured Capital Group, at Berkadia. "Almost every deal I'll ask if the whisper price has been hit and the answer is no," he tells GlobeSt.com. "There still is a healthy return but there is some discount," usually around 6 to 10%. 

Multifamily, as healthy and robust as the asset class is, apparently is not immune to the forces of gravity after all. The same economic uncertainty the greater markets have been experiencing, led by spiraling inflation and rising interest rates, is nibbling around the edges of the apartment asset class with some clear effects. For many in the market, these cracks in the market may be worrisome but for Franklin they spell opportunity. Franklin represents institutional equity in the housing market and for the last year many of the multifamily deals he has sent over have been too rich for institutional capital seeking out value-add JV investments. Once they would unwind the rents and pencil in the money on upgrades, they would find that the return was not equal to the risk they would have to take. So these life companies, private equity providers and pension funds, for the most part, stayed on the sidelines instead of investing through JVs.

Instead, what they did was take a barbell approach, Franklin explains, blending some ground up deals, some core plus and so on to reach a value add return.