2022 Pulse Check: Insight from Berkadia’s Powerhouse Poll Outlook Report

February 1, 2022

2022 Pulse Check: Insight from Berkadia’s Powerhouse Poll Outlook Report

February 1, 2022

I’m thrilled to launch Berkadia’s 2022 Powerhouse Poll Outlook Report. For this year’s Outlook survey, we continued to ask our producers how the evolving COVID-19 pandemic is affecting the commercial real estate industry. But after a year that saw the multifamily industry bounce back tremendously, we also focused on the new areas of interest— Environmental, Social and Governance (ESG), Single-Family-Rental/Build-for-Rent (SFR/BFR), Affordable housing—that are shaping the future of investment. We are in an industry that is constantly evolving, and our mortgage bankers and investment sales professionals are excited about what 2022 holds, as am I.

A few key themes for the year ahead emerged from the survey, and they align with what we discussed in our 2022 Forecast webinar and what we heard in conversations with clients at NMHC. When it comes to 2022, here’s what we’re tracking:

Continued surge in multifamily demand

Last year was quite a year for the multifamily market—we experienced a 75% increase in sales year over year for our industry! The momentum we experienced was truly incredible and we expect to see it continue in 2022. A majority of our mortgage bankers and investment sales advisors (82%) say they expect multifamily rental demand to continue to outpace supply in 2022, and 36% expect the number of transactions within the multifamily industry to increase from last year, even with the potential of rising interest rates and inflation.

Trends accelerated by COVID-19 are here to stay

Berkadia mortgage bankers and investment sales advisors agree (94%) that since the COVID-19 pandemic began, renters have flocked more to suburban areas instead of urban cities. With the opportunity for more square footage and lower prices, as well as booming employment hubs near several metro areas, this trend is expected to stay for 2022. In fact, Berkadia professionals (61%) say investment sales activity in 2022 will be highest in secondary markets. While we’re hopeful that the effects of the COVID pandemic will continue to lessen, we’re ready and able to adapt to its evolving impact.

Keeping the focus on affordable housing

According to Berkadia professionals, investors are more interested in Affordable housing properties (LIHTC/HAP) now than they were last year (89%). Specifically, Berkadia mortgage bankers and investment sales advisors say the Southeast is expected to see an increase in Affordable housing (LIHTC/HAP) development over the next two years. Berkadia Affordable has been expanding to accommodate this growing need in the market, with our Affordable team closing $3.3 billion in financing and $1.5 billion in investment sales transaction in 2021, and we hope to continue to grow to meet the critical need for affordable housing in communities across the country.

The state of financing

Last year, Berkadia financed a record breaking $40 billion in loan production and we don’t expect that to slow down 2022, especially with the GSEs increasing their caps from last year. For financing deals, Berkadia mortgage bankers expect to see the most activity in 2022 from GSEs (66%) and private funds/debt funds (24%). For 2022, we expect that Fannie Mae and Freddie Mac will continue to be benchmarks for the multifamily financing industry and that similar capital sources will pick up the slack where the GSEs may still be limited, including the always-important life company, bank, and debt fund executions.

This is just an overview of all the great insight encompassed in 2022 Powerhouse Poll Outlook Report. Check out the full report here and reach out to us with any questions.

-Ernie Katai, EVP, Head of Production