Multifamily Webcast hosted by Institutional Property Advisors (IPA)
With their outlays historically under-allocated to commercial real estate generally, institutional investors’ focus on the apartment sector will, if anything, only increase from current levels. That’s among the top-level themes sounded during Marcus & Millichap’s April 13 webcast, “Institutional Multifamily Outlook and Post-Pandemic Investment Strategy.” As Marcus & Millichap CEO Hessam Nadji observed during introductory remarks, “Apartments continue to outperform at a macro level and do so extremely well.”
Moderated by Nadji, the hour-plus discussion presented insights from Steven DeFrancis, CEO of Cortland; Swarup Katuri, managing director, investments at Brookfield Asset Management; and Jessica Levin, senior director, investments at Intercontinental Real Estate Corporation.
One factor driving investment in the apartment sector has been the pandemic’s dramatic impact on fundamentals in other sectors, including hospitality, retail and to a lesser extent office. “You have seen a sector rotation to multifamily, industrial and many niche sectors such as life science, self-storage, etc.,” Katuri said.
Based on current trends, expect to see institutions’ investment strategies evolving. Levin thinks we’ll be seeing a shift in the trend of buying in secondary and tertiary markets: less activity on the tertiary side, in favor of properties in secondary and “outer ring” locations.
There’s likely to be a difference of opinion on the relative attractiveness of urban core properties versus their suburban counterparts. During the 2009 recession, panelists recalled, there was an investment flight to safety that favored CBDs. In 2021 and beyond, it’s a question of whether the migration of renters by choice to suburban properties—away from densely-populated center-city neighborhoods—will be permanent.
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