The multifamily market’s rapid rebound out of the recession is tempering a bit as waves of new apartment supply are set to hit select metro areas are and rent growth is moderating in a number of others. Investors are keeping a watchful eye on these trends, even as some of the market’s underlying fundamentals remain strong, said a panel of the industry investors during the 2014 NMHC Apartment Strategies Conference.
Terri Herubin, portfolio manager for Cornerstone Real Estate Advisers, said, while supply concerns were warranted in some areas, it was unclear whether they indicate short-term blips in the market or a more long-term issue. “We’ve already faced some considerable amounts of new supply. But we find that if we buy well, we’re okay,” she said. “Our investors are concerned. But the question is what inning are we in?”
“We have to buy where we can raise rent,” she added. “It doesn’t matter to us whether we raise rents because of job growth or whether we are buying poorly managed properties or making some improvements.”
Ella Shaw Neyland, president of Steadfast Income REIT, said she looked at the supply issue slightly different. While the very large, first-tier metro areas were experiencing some significant increases in inventory, she said many of the second- and third-tier cities still had a lot of potential, which is why her company was focused on finding good opportunities in what she called the “fly-over states” in the central part of the country. Apartment demand was still strong in many of those markets, real estate was less expensive and there is less competition, she said.
“Half of that construction is in half a dozen cities. So it’s not really affecting the central corridor,” she said. “I think you are seeing permits decline, but I also think the concept of overbuilding is a little blown.
Despite these near-term concerns about potential oversupply, the panel still believed the apartment market was attractive for investors of all stripes. Kees Bruggen, managing director of Stonebridge Investments, said, “The apartment market is one of the most stable investments in the U.S., certainly from a cash flow perspective.”
- NMHC Participates in Successful Innovative Housing Showcase on the National Mall
- NMHC Member Daryl Carter to Testify on the Hill as Congress Focuses on Infrastructure
- What Deconstructing the Affordability Crisis Tells Us About Fixing It
- Sue Ansel Testifies on Behalf of NMHC/NAA Regarding the Cost of Regulations on Affordable Housing (9/5/2018)
- James Schloemer Testifies on the Cost of Regulations on Affordable Housing (9/5/2018)