INVESTORS MAXIMIZE DIVERSIFYING OPPORTUNITY SET
Investors will opt to diversify to breathe new life into portfolios:
Class A, workforce, Boomer-targeted or other niche segments such as colliding. Class A has made a comeback while renter-by-choice households (earning $100k+) increased from 10-21% of renters in the past decade. The demographic fundamentals and undersupply of “attainable housing” across a broadening income spectrum will amplify demand and drive value.
HIGH-RISE REGAINS COMPETITIVENESS
Broad multifamily capital markets trends—price appreciation, slowing NCREIF returns and effectively flat transaction volume—followed the status quo in 2019. The sharp slowdown in garden and midrise NCREIF returns has repositioned institutional high-rise assets to be more competitive.
STATE REGULATIONS EMERGE
2019 saw the passage of rent control-related bills in California, New York and Oregon. Increasing sociopolitical pressures surrounding affordable housing have driven states and localities to take action Inclusionary Zoning and rent control. We foresee this continuing whether jurisdictions adopt affordability measures or preempt.
TRANSACTION VOLUME TO KEEP PACE
We foresee 2020 transaction volume tracking with 2019 at a historically elevated level. Activity will be supported by a highly liquid debt market with multiple execution options available to borrowers. New GSE caps should permit space for continued growth in originations with greater focus on affordable and workforce properties.
CAPTURING SUNBELT VALUE
Increasingly targeted investment strategies will be key differentiators, such as capitalizing on premiums created by local infrastructure initiatives, incentives and powerful net-in-migration trends. Local dynamics raise markets such as Phoenix, Raleigh/Durham, Austin, Salt Lake City, Tampa, Dallas, Charlotte, Nashville, and Jacksonville to the top of investor priorities.