Twice a year we poll our investment sales and mortgage banking professionals to get a sense of what they see on the horizon for the multifamily landscape. Our Powerhouse Poll yields meaningful insight that shapes our guidance to clients and our priorities for the months ahead. Our Midyear 2021 edition was no different.
Of course, the COVID-19 pandemic continues to dominate the landscape as we see rippling effects across the economy and the industry. However, we remain optimistic about the outlook for the multifamily market, which has demonstrated impressive resilience throughout the pandemic and is continuing to attract new investors in new locations. We’ve seen a record setting first half of the year at Berkadia, with more than $13.5 billion in sales across 188 transactions in the first half of the year alone.
And this optimism is echoed throughout the industry, as evidenced in our National Multifamily Research Report. The U.S. economy continued to show steady recovery as employment approached prepandemic levels by mid-2021, driven by the resurgence in the leisure and hospitality hiring. Berkadia professionals (78 percent) are optimistic that by the end of 2021 the number of transactions within the multifamily industry will increase from 2020 and the most prominent investor trend for the second half of the year is actively pursuing acquisitions. It’s been an incredibly busy first half of the year and the pace of activity isn’t slowing down anytime soon! In terms of what we’re seeing trading, for transactions north of $50 million—the average is a 2000s vintage portfolios with a per unit price of $305,594. The average cap rate is 4.5 percent.
Of course, there are challenges ahead. Top of mind for Berkadians is the Affordable housing crisis. Occupancy has continued to rise in recent years and multifamily developers ramped up activity nationwide. Deliveries were on pace to hit a historic high in 2020, but the pandemic led to labor shortages, supply chain disruptions, and a significant increase in building costs. Apartment operators may face challenges in the near term due to an expected supply-demand imbalance and Berkadia mortgage bankers and investment sales advisors alike said multifamily rental demand outpacing supply is one of the major trends that will affect multifamily financing and investing in the second half of this year. Affordable housing is top of mind across the industry, and most Berkadia professionals agree (92%) that investors are more interested in Affordable housing properties now than they were last year
These are just a few of the insights from our survey. The full report can be read here—believe me, it’s a good one! In short, it’s an exciting time in the multifamily market to be sure and we remain motivated, and committed, to helping our clients find the best opportunities for their long-term success, no matter the market.
-Ernie Katai, EVP and Head of Production