Odd Lots Another Part of Commercial Real Estate Is in For a Reckoning
11 snips
Dec 6, 2023 
Lee Everett, vice president of research and strategy at Waterton, shares his expertise on the multifamily residential sector. He discusses the dramatic shifts in the market, detailing how rising interest rates and increasing operating costs are pressuring apartment owners. The podcast highlights a post-pandemic reckoning, where investors face falling rents, especially in the Sun Belt. Everett also dives into the complexities of current financing challenges, the ramifications of a past investment surge, and the looming oversupply of multifamily units.
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Multifamily Boom and Potential Trouble
- Multifamily dwellings, particularly in the Sunbelt, experienced a boom.
- This boom, however, might lead to trouble due to rising rates and falling rents.
Exceptional Rent Growth in 2021
- Rent growth in 2021 was exceptionally high, exceeding 15% in some markets.
- This was driven by a surge in renter households, exceeding previous records.
Low Cap Rates and Reliance on Price Growth
- High demand and low financing costs led to low cap rates, even for older properties.
- Investors relied heavily on price growth rather than income growth.