Even supercharged demand is unlikely to rescue a few metro areas where the supply of new apartments is growing especially quickly. Most of these construction-crazy metros have something desirable to draw developers, such as strong projected job growth.
Good news for multifamily housing—demand for space is likely to be even stronger than experts estimated, helping the sector keep ahead of new construction for the immediate future, according to the Mid-Year Outlook 2104 from Freddie Mac Multifamily Research.
It’s shaping up to be another big year for commercial and multifamily lending—especially for banks and conduit lenders, according to the latest figures from the Mortgage Bankers Association (MBA), an industry trade group.
Microapartments—living spaces of less than 500 sq. ft.—are already popular in gateway cities like New York and Boston, but haven’t quite caught on yet in secondary markets. Developers like Evan Granoff are trying to change that. Granoff has brought new apartments of less than 300 sq. ft. to his native Providence, R.I. And residents are paying top dollar to rent them.
When people talk about commercial real estate, they often think of it as a steady business dominated by the “five major food groups”: multifamily, office, retail, industrial and hospitality. It’s supposedly a simple, straightforward sector. It’s an asset class that delivers income and some appreciation in property values.
Cold weather earlier this year didn’t put a brake on new construction for long. Developers are starting more new commercial and multifamily projects than experts anticipated, even before the long, cold winter.
Banks are willing to make permanent loans to apartment properties at rock bottom interest rates. To compete, Fannie Mae and Freddie Mac lenders are offering the lowest rates they can, plus faster service.
Apartment rents will grow faster in many secondary markets than in the top primary markets like New York City and Los Angeles, according to 2014 projections from data firms Reis Inc. and Pierce Eislen.