Multifamily Remains a ‘Favored Nation’ CRE Asset Class
Markets where people can “get away from the craziness” are performing well.
Multifamily remains the most attractive asset class in commercial real estate, with industrial and self-storage not far behind, according to Leo Leyva, co-chair of the Litigation, Real Estate and Real Estate Special Opportunities departments at the law firm Cole Schotz.
“Multifamily is your ‘favored nation’ asset class for investing. Lenders of all types — institutional, private equity, banks — offer construction and exit loans,” Leyva tells GlobeSt.com. “Industrial and self-storage are also performing well, but their growth has slowed a bit lately.”
Key multifamily markets where we’re seeing continue growth are the familiar ones: the Southwest, Carolinas, Tennessee – “places where people want to move to and live and get away from all the craziness in the blue states. Jersey City has also been hot along with some boroughs in New York.”
Jersey City has also been a top performer, along with some boroughs in New York, Leyva said. “Offices and condos in New York have been a sugar show. The world is upside down.
“Loans are maturing and there are few investors who are there to pony up the money to take them on. If they do, it’s a short-term arrangement and a hope and a prayer.
“You see landlords like Brookfield, Blackstone, RXR, CIM and others giving buildings back. Other Investors/Owners are thinking, ‘Hey, I can do that, too.’ ”
Restructuring deals have also once again been involved in lender traunch warfare, Leyva said. “You can have Lenders in the capital stack fighting among each other to gain leverage,” he said.
Lenders today, for the most part, including platform lenders, are taking a wait-and-see approach, he added.
“You hear people talking about foreclosures creating good opportunities, but we’re not seeing that, yet,” Leyva said. “We’re seeing a little bit of chaos here and there, where pieces of deals get done on an asset-by-asset basis, but nothing is moving in big ways.”
For things to get better, “we need real changes, overdue changes in zoning, use, and regulations,” Leyva said.