Even as multifamily borrowers secure some of the most favorable lending terms in years, warning signs are emerging beneath the surface.
That tension—between abundant capital and rising credit risk—took center stage at the National Association of Real Estate Editors conference in Miami this week, where panelists pointed to a growing disconnect in the sector's fundamentals.
Judith Ricks of the Mortgage Bankers Association said a recent MBA analysis shows a shift away from long-term debt toward shorter-term financing, a trend that could heighten near-term risk.
"We sense that vintage multifamily loans originated in 2023 will soon enter board delinquency," she said.
That caution stands in contrast to what some operators are experiencing on the ground. For The Morgan Group, access to capital remains strong, particularly for established sponsors in competitive markets.
"These are the best terms we've seen in a long time because lenders want to work with quality sponsors whom they are familiar with, and they want to put their money to work," said Evan Schapiro, regional development partner, East.
"The equity is there; we're getting lots of deals put on our desks for high-barrier-to-entry markets."
The divergence underscores an increasingly segmented market, where well-capitalized players continue to find opportunities even as broader risks build.
Morgan Group has leaned into that advantage by concentrating its footprint in Texas and Florida, exiting other markets to streamline operations.
"Dallas is the best apartment market in the United States right now," Schapiro said. "It has a solid economy and lots of jobs. There is available land, and it is easy to get it titled."
In Florida, however, development conditions vary widely depending on location.
"Moving in just a few miles from the coast to places like Broward and Palm Beach is a much healthier development environment," Schapiro said, noting that projects east of Interstate 95 face intense competition from high-rise condominium development.
At the same time, competitive pressures from build-to-rent operators have eased significantly.
"About 18 to 24 months ago, we were constantly competing for space in Florida with build-to-rent and single-family rental operators," Schapiro said. "Now, for the past nine months, we've not been competing for sites at all."
He added that some build-to-rent operators have struggled to execute their business plans, citing regulatory complexity and operational hurdles.
Demand-side shifts are also influencing performance. Schapiro said many affluent renters are opting for larger units rather than pursuing homeownership, particularly because costs and trade-offs associated with buying remain high.
"These renters are happy to just make one rent payment each month and live in a nice home and not have to spend the money they saved up for retirement," he said.
Among younger renters, that trend is even more pronounced.
"So, they have no problem with renting," Schapiro said.
Frequent moves have also allowed renters to take advantage of concessions, though that dynamic may be changing as market conditions stabilize.
"Rents right now are either falling or stabilizing," Ricks said. "Owners were able to offer concessions to balance occupancy."
Both Ricks and Schapiro noted that concessions are beginning to fade in select markets, another sign that conditions are shifting yet again.
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