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Watch for parking to be heavily scrutinized more often by developers as both land costs and construction costs remain high. Parking is expensive to build and requires a lot of valuable real estate. While the demand is still there, the cost to build is only increasing. Due to sizing constraints for urban sites, most firms More

Converting older buildings into apartments will draw in patient equity investors like moths to a flame. Adaptive reuse deals transform functionally obsolescent office, retail, factory buildings, etc., into apartments by creative sponsors. These opportunistic situations will attract equity dollars as they are some of the few multifamily deals out there that consistently yield high-teen and More

The drop in interest rates fired up value-add buyers, causing cap rates to fall even further. While there are slightly fewer groups aggressively targeting only value-add deals (particularly in Texas due to real estate taxes), competition has grown even fiercer. Hard money acquisitions at contract signing are becoming more frequent. The combination of high-net-worth capital More

Count on single-family housing developers to make themselves at home in the multifamily space going forward. The beginning of this cycle saw a shift of new entrants such as Lennar, DR Horton, Toll Brothers, MBK Real Estate and Tricon become trailblazers for other housing developers tempted to get into multifamily development. Expect to see more More

Expect true, unrenovated value-add deals to be few, far between and highly competitive to close. New buying groups are emerging and they are closing deals, making the crowded space even tighter. Institutional money such as Prudential and Heitman have entered the Class B space in search of yield at a strong risk-adjusted basis. Family offices More

Companies such as Pinnacle, Lincoln, Uptown Rental Properties and Kettler will be watching virtual reality tours like a hawk. Online tours have been a huge boon to the online leasing trend that has taken off in the last couple of years. This new marketing technique is still in its infancy, but count on seeing more More

Bridge lending remains fierce for multifamily, but some of the newer debt funds may step away from the space. Surety of execution will be the most important factor for bridge lenders going forward. The explosion in the space means rates can be absurdly low for bridge loans. Borrowers will still need to do their due More

Opportunity zones appear incredibly attractive to investors, but many developers refuse to chase the deals. Investors can take proceeds that would be subject to capital gains and put them into Qualified Opportunity Funds (QOF) to defer their capital gains taxes after 10 years, but specific regulations haven’t been finalized. It’s a gamble to pursue OZ More

Count on buyers such as Inland Real Estate Group, Cortland, Goldman Sachs and more to slowly step away from the value-add space in search of core-plus opportunities. Many firms will still try to pursue value-add deals opportunistically, but they are becoming less frequent while demand is still tremendous. Finding suitable investment opportunities and hitting investment More

The demand for equity in the multifamily space will be immense, as equity capital stays fluid. There’s plenty of equity-provider interest in multifamily, especially from global institutions who want experienced, specialized operators to mitigate risk. Targeted IRRs will be in the mid-teens-plus with preferred returns in the low-teens. Construction IRRs should be in the high-teens More

Equity Residential, MAA, Aimco and the other public REITs will move at a steady pace this year. Many of the public REITs are increasing their budgets for development costs, which can include redevelopments and renovations, likely as a response to high buying prices and moderating returns. Same-store NOI, occupancy, revenue and expenses reflect the sentiment More

Multifamily borrowers will see plenty of bank lending activity this year including big players such as Wells Fargo, U.S. Bank and BofA. Look for banks to be more competitive with terms and provide the most flexibility. Anticipate them to become more active in the value-add and bridge lending multifamily space in their search for yield. More