‘Astronomical’ Multifamily Investment Demand Drives Up Pricing, Says Marcus & Millichap’s IPA Panel
The U.S. multifamily sector remains an attractive option for real estate investors looking for a safe haven. Beyond the pool of traditional buyers who are actively acquiring apartment properties, the sector has become a landing spot for companies that aren’t legacy multifamily owners.
Steven DeFrancis, CEO of Cortland, cited REITs like Blackstone Real Estate Investment Trust as newly establishing a presence in the multifamily sector. BREIT recently made a $240 million preferred equity investment in Tricon Residential connected with Tricon’s purchase of single-family rental (SFR) homes in Nashville. Nuveen Real Estate is also a recent institutional investor entrant in the emerging SFR sector.
“We’re seeing a lot of new capital, whether it’s coming from overseas or from here,” said DeFrancis. “Institutional capital is continuing to move into real estate, and then within real estate there’s a lot of movement from other sectors into multifamily.”
Jessica Levin, senior director of acquisitions at Intercontinental Real Estate Corp., said that the influx of capital into the U.S. apartment market the past six months has been “astronomical.” She also said that there’s no slowdown ahead.
“Competition is stiffer now than in the past 10 to 15 years, and it’s only going to increase from here,” said Levin. “[Investors] will overpay where they feel are safe assets, which is multifamily and industrial.”
DeFrancis and Levin made their comments during “Institutional Multifamily Outlook and Post-Pandemic Investment Strategy,” a webcast hosted by Marcus & Millichap and its subsidiary Institutional Property Advisors (IPA). Hessam Nadji, president and CEO of Marcus & Millichap, moderated the discussion, which took place on Tuesday, April 13.
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