Multifamily Investment Sales Broker at Marcus & Millichap
P: 630.570.2246
Randolph Taylor
Mission Capital Advisors, a subsidiary of Marcus & Millichap Capital Corporation, is a leading loan sale advisor and due diligence provider. Mission Capital utilizes an integrated platform to manage single asset and loan portfolio trading, valuation, transaction management, and data/document curative services for both the commercial and residential real estate loan markets. Mission Capital represents domestic and foreign banks, credit unions, debt and equity funds, government agencies, special servicers, institutional investors, and other holders of loans.
 
 
*Includes Multifamily/Retail & Office/Retail Mixed‐Use

MOST RECENT CLOSINGS

 

MULTIFAMILY & OFFICE

NY/NJ Loan Portfolio

$36.8MM

Unpaid Principal Balance

Performing

Regional Bank

HOSPITALITY

NY/CA/WA Loan Portfolio

$105.7MM

Unpaid Principal Balance

Performing

Regional Bank

WHOLE LOAN TRADING ACTIVITY

 
Strengthening bank balance sheets, due to a somewhat unexpected recovery in the investment sales market, have provided financial latitude for banks to accept discounts on the limited remaining problem hot spots, such as legacy hospitality, retail and senior care loans.

The demand for seasoned performing loans of all types increased due to excess liquidity and deposits, in addition to unspent and unforgiven PPP funds.

For More Information, Click Here

ADDITIONAL WHOLE LOAN TRADING CATALYSTS

AND OBSERVATIONS FOR 2021

 
In 3Q 2020 and 4Q 2020, banks invested substantial time and resources to evaluate troubled loans in order to identify and separate long-term credit and collateral issue loans from recovering and borrower supported loan relationships. The expectation is that the longer-term collateral and credit issue loans will most likely be offered in the secondary market in 2021, while brisk resolution activity will reduce this exposure.

Bank analysts note that Section 4013 of the CARES Act entitled “Temporary Relief from Troubled Debt Restructurings” has provided wide latitude to banks in avoiding migration of Substandard or Special Mention loans to TDR (Troubled Debt Restructuring) status based on deferrals or forbearances.

Mission Capital continues to monitor secondary market transactions, as well as industry sources, for insight into the effect the regulations will have on the value of collateral and loans long term.

Multifamily Investment Sales Broker at Marcus & Millichap
P: 630.570.2246
Randolph Taylor

 

For 2021, here are our latest top misconceptions we’ve found that the public has about 1031 Exchanges.

    1. 1031 Safety in Tax Reform
    2. Like-Kind Property
    3. Vacation Home Usage
    4. Reverse Exchange
    5. Reinvesting Proceeds and Replacing Debt
    6. Partially Tax Deferred Exchanges
    7. Identification Rules
    8. Penalties
    9. IRS Filing
    10. Partnerships & LLCs
    11. Improvements
    12. Starting an Exchange

1031 Safety in Tax Reform

Threats to repeal or cut 1031 never make it through tax reform proposals and bills.

FALSE

The threat of 1031 limits or even repeal is real. Currently, the latest proposal caps deferral at $500,000 (single taxpayer) / $1 million (married taxpayers filing jointly).  IPX1031, the Federation of Exchange Accommodators together with many individuals, companies, and trade associations representing many diverse industries are actively educating and advocating our federal legislators in Washington D.C.

What can you do? It is important that Congress hears your voice – and more than once. Click here to send an electronic letter to your U.S. Senators.

Like-Kind Property

If I sell an apartment building, I must buy another apartment building because of the 1031 “like-kind” requirement.
FALSE
The “like-kind” requirement does not mean selling and buying the same exact type of property. In an IRC §1031 transaction, you can exchange real property for virtually any other real property in the United States, as long as the property is held for productive use in a trade or business or for investment purposes. The term “like-kind” refers to the nature or character of the property, not its grade or quality. For this reason, nearly all real property is like-kind to all real property. You can sell an apartment building and exchange it for a strip mall, a warehouse, an office building, a vacant lot, farmland, etc.

Vacation Home Usage

Vacation and second homes have been a hot investment, especially during the pandemic. I’ll sell my investment real estate and buy a vacation home that I can enjoy with my family during the summer months. Since it’s my investment property it qualifies under the 1031 rules.
FALSE
You can sell your investment real estate and reinvest the gain, tax-deferred, to purchase your vacation or second home, the challenge is making sure it will qualify as a 1031 investment property. Meaning that during the initial 24 months of ownership there are strict rules to follow regarding personal use. The important rule is that you can only use the property for 14 days each year or 10% of the actual days that you rent it out. For example, if you lease it for 200 days each year, your personal use can be up to 20 days. If you are able to abide by these rules, after two years the dream vacation home is yours to use as often as you like without any more requirements. Check with your tax advisor and click on the links below when considering a vacation home or second home as a new Replacement Property to complete your 1031 Exchange.

Reverse Exchanges

Reverse Exchanges are quick and simple – I just buy my new Replacement Property first, then sell my old Relinquished Property by year’s end.

FALSE

The concept of buying first/selling second is correct, but Reverse Exchanges are not simple nor quick. Many exchangers do not realize that when the new property is acquired, IPX1031 (through an affiliated entity) needs to be the titleholder of the old Relinquished Property or new Replacement Property. You cannot own the Relinquished Property and the Replacement Property at the same time. Due to this requirement, Reverse Exchanges take longer to structure and because there are more steps and increased complexity, there are additional costs and fees.

Reinvesting Proceeds and Replacing Debt

I only have to reinvest the profits from the sale of my old Relinquished Property to fully defer my taxes in a 1031 Exchange. 
FALSE

For a full deferral of taxes, you should follow three rules:

    1. Purchase like-kind Replacement Property of equal or greater value than the Relinquished Property (buy equal or greater in value);
    2. Reinvest all of the net equity (exchange funds) from the sale of the Relinquished Property into the Replacement Property (spend all of the net equity); and
    3. Replace the value of the debt paid off on the Relinquished Property with cash (from outside of the exchange) or debt placed on the Replacement Property.

As a practical matter, satisfying the first two rules, buying equal or greater value property and reinvesting all of the exchange funds, will result in the debt requirement being satisfied.

Partially Tax Deferred Exchanges

I sold for $100,000 but I cannot defer my taxes since the new property I plan to purchase has a sales price of only $92,000. Therefore, I cannot defer my taxes via a 1031 Exchange.
FALSE

A 1031 Exchange does not need to be an all-or-nothing proposition. A partially tax-deferred 1031 Exchange is valid. If you purchase property lower in value or take a portion of the cash from the closing of the sale and do not reinvest all of your exchange proceeds, you will have a partially tax-deferred exchange. You will pay taxes on the “boot”, which are those funds not reinvested or debt replaced.  At times, a partial exchange may be advantageous to an Exchanger. Depending on your circumstances, it’s a strategy worth discussing with your legal and tax advisors.

Identification Rules

It doesn’t really matter that I did not identify any property for my exchange within 45 days if I eventually purchase a new property and follow the other rules.
FALSE
The rules under section 1031 are very strict. If you do not identify any property within the identification period, your exchange will fail. There are no exceptions. It is important to remember from the day your Relinquished Property transfers, you have 45 calendar days to identify potential Replacement Property using the 3 Property Rule (most common), 200% Rule, or 95% exception. You can change your identification at any time before the expiration of the 45-day identification period, but not after it expires. The statute is very clear, to be eligible for deferral under section 1031, the like-kind property must be identified within 45 calendar days and acquired within 180 calendar days from the transfer of the Relinquished Property.

Penalties

The IRS will penalize me for not completing an exchange.
FALSE
If you set up your sale as a 1031 Exchange and cannot locate a new property to complete your exchange, you will not be penalized by the IRS, nor by IPX1031. The exchange simply “fails”, and you will pay the same taxes as if you had never attempted to complete a 1031 Exchange. However, there are strict rules in the 1031 regulations as to how long you will need to wait before IPX1031 can return your funds to you.

IRS Filing

When I complete my exchange – successful or not, IPX1031 will file my exchange with the IRS.
FALSE
IPX1031 (your QI) will not file any forms with the IRS.  When a 1031 Exchange is complete, you or your tax advisor will need to include IRS Form 8824 with your federal tax return for the year the Relinquished Property was transferred. Form 8824 identifies the Relinquished Property, the Replacement Property, and the date it was identified. The form also identifies the recognized and deferred capital gain as well as any taxable boot or non-like-kind property received by you in the 1031 Exchange.

Partnerships & LLCs

A partnership or multiple-member LLC can sell property, and after the closing, the partners/members can each take their percentage of sale proceeds and go their separate ways to buy Replacement Property on their own.
FALSE
Only real estate is eligible for a 1031 Exchange. A partnership interest is a personal property right to the assets owned by the partnership. If partners or members intend to go their separate ways after the transfer of the Relinquished Property, planning and restructuring of the ownership entity should be accomplished well in advance of placing that property for sale.

Improvements

I can buy lower-valued Replacement Property, take the title and then make improvements after closing using my exchange proceeds, my own cash, and/or financing to increase the property value in the exchange.

FALSE
Once the taxpayer takes title to the Replacement Property the exchange is over. Any improvements made after taking title regardless of how they are paid for will not count towards the exchange. If you would like to build on or make improvements to a Replacement Property, you can use the exchange proceeds by structuring an Improvement Exchange, also known as a Build-to-Suit Exchange or a Construction Exchange. This structure adds complexity and ultimately more cost to your exchange yet can be very beneficial.

Starting an Exchange

I closed yesterday but haven’t touched the funds. I can still set up an exchange.

FALSE
Unfortunately, you cannot defer your taxes via a 1031 Exchange if you have already closed on your property. To comply with the requirements of the 1031 regulations, you must enter into an Exchange Agreement with a Qualified Intermediary (IPX1031) and the Qualified Intermediary must assign into the contract between you and your buyer before the “benefits of benefits and burdens of ownership” transfer to the buyer.


Multifamily Investment Sales Broker at Marcus & Millichap
P: 630.570.2246
Randolph Taylor

In this Nov. 8, 2013 file photo, boats move along the Chicago River near the Trump International Hotel and Tower, center, in Chicago.

Americans are on the move, and those moves are affecting rent prices in Illinois and around the country.

For the past two years, people have been migrating out of the bigger cities and heading to the suburbs.

Analysts at QuoteWizard found that the reshuffling has changed the number of available apartments in almost every state, creating a significant supply and demand issue that has reversed long-standing trends in rental prices.

“With remote work, with lower prices to live in the suburbs, you don’t have to live in the city anymore,” said Nick Vin Zant, an analyst with QuoteWizard. “You can get city income to pay suburb housing prices.”

There are more available apartments in Illinois than two years ago and rent prices have declined by more than 6%, according to a QuoteWizard analysis.

Major cities such as Chicago, New York, and Los Angeles had 50% to 400% increases in their numbers of available rental properties.

Since 2019, the vacancy rate has gone down by as much as 60% in less populous states and risen by as much as 175% in more populous ones.

Vacancy rates on apartments vary throughout the country. The number of available apartments has decreased by more than 50% in Nevada, Vermont, and Delaware. Indiana, New Jersey, and Massachusetts saw numbers of available rental properties increase by more than 70% each.

Vin Zant said he doesn’t see the migration out of the city changing anytime soon.

“I think we are going to continue to see more people move out of urban centers and move into suburbs for at least the next couple of years,” he said.

As people move out, rental prices come down. Rents among the most expensive U.S. cities dropped 16.3% since the beginning of the pandemic, according to apartment rental site Zumper.


Multifamily Investment Sales Broker at Marcus & Millichap
P: 630.570.2246
Randolph Taylor

 

Fox Business features Marcus & Millichap’s President and CEO Hessam Nadji 

Post-Pandemic Cycle Accelerating, But New Tax Proposals Spark Uncertainty

  • What’s fueling post-pandemic economic growth
  • The drivers supporting positive CRE momentum
  • Why new tax proposals are creating investor uncertainty
  • How 1031 Exchanges support the economy and real estate investment
Multifamily Investment Sales Broker at Marcus & Millichap
P: 630.570.2246
Randolph Taylor
Apartment demand rebounded in the nation’s gateway markets in the 2nd quarter, after fundamentals in these regions suffered throughout much of the past year.
U.S. apartments saw a burst in renter demand in the 2nd quarter of 2021, logging higher absorption than the nation has seen since RealPage began tracking the market back in the early 1990s.
While the Sun Belt markets – areas that have proven resilient throughout much of the COVID-19 pandemic – accounted for a sizable portion of the nation’s recent demand comeback, gateway markets also logged notable apartment absorption. This recent performance in gateway markets countered the declines these more expensive markets saw throughout much of the past year when deep job losses and population declines resulted in rising vacancy rates and price-cutting measures.
Los Angeles/Orange County
The California market Los Angeles/Orange County absorbed over 12,000 apartments in the 2nd quarter, marking the second strongest showing in the nation, after only Dallas/Fort Worth. This quarterly tally accounted for roughly half of the annual demand volume of over 23,880 units, the nation’s third-best performance after Dallas/Fort Worth and South Florida. This recent performance in Los Angeles/Orange County was quite a turnaround after this region logged annual net move-outs in 2020’s 2nd and 3rd quarters, as the job base dwindled and residents left the area for less pricey locales. At the same time, construction levels remained elevated in this area, especially in the Los Angeles urban core.

Solid 2nd quarter demand made up for previous losses, pushing occupancy in Los Angeles/Orange County to 96.6% as of June, a rate that is back in line with the national average after falling to a low of 95% in June of last year. Apartment operators responded to rebounding occupancy by pushing rents by 3.5% in the year ending June. While still only rising at about half the level of the national norm, rent growth in Los Angeles/Orange County is quite a change from the price cuts that got as deep as 5.1% not long ago in October of 2020.

Chicago

Chicago absorbed over 10,000 apartment units in the 2nd quarter, making up for some net move-outs seen earlier in the pandemic and taking annual demand to over 7,300 units. Apartment occupancy climbed 110 basis points (bps) in the past year to stand at 95.6% in June. While still behind the national norm, that is the strongest performance Chicago has seen since August of 2019. In the year ending June, effective asking rents grew 2.3%. While this performance was still well behind the national average, it was the first time Chicago saw the return of rent growth since annual price cuts started back in May 2020.

Washington, DC

Washington, DC absorbed over 8,100 apartments in the 2nd quarter, accounting for most of the market’s annual demand volume of over 9,750 units. While apartment demand here never did fall into negative territory, it did fall well behind concurrent completion volumes, which are some of the most aggressive nationwide. Occupancy has rebounded slightly, hitting a few ticks ahead of the five-year average at 95.8% in June. While annual rent growth in Washington, DC seems insignificant at just 0.1%, this was the first time price increases returned after rent cuts were the norm for this market since May 2020.

Bay Area

The three Bay Area markets of San Francisco, San Jose, and Oakland logged sizable quarterly demand for 7,920 units, making up the bulk of annual demand of 8,380 units. The return to solid demand was especially significant for the Bay Area, which was one of the worst-suffering markets during the deepest declines of the COVID-19 pandemic. At its worst, annual net-move-outs in the Bay Area got as deep as 5,530 units in 2020’s 3rd quarter. The return of positive demand pushed occupancy up to 95.1% in the Bay Area in June. While that figure is a bit behind the region’s five-year average, it is well ahead of the low point of 93.6% logged as recently as February 2021. The Bay Area is one of only a handful of regions in the nation where rent change has not made it back to positive territory just yet. Prices were cut 5.9% year-over-year as of June, though that is notably better than the double-digit rent cuts the region was seeing just a few months ago.

New York

New York – another expensive gateway market where apartment fundamentals were hard-hit by the COVID-19 pandemic – saw a significant rebound in demand in the 2nd quarter when over 7,000 apartment units were absorbed. While healthy quarterly demand made up for some of the net move-outs seen earlier in the pandemic, however, annual absorption remained negative, with a loss of over 25,000 units, on the net. While demand boosted occupancy to 95.9% as of June, well ahead of the low point from February, this rate was still 100 bps below the year earlier showing. Thus, New York is the only major market where occupancy is still down year-over-year. Rents are also still being cut on an annual basis as well, but cuts of 8.4% are much better than the annual declines that got as deep as 15% not long ago in March 2021.

Seattle

In the April-June time frame, Seattle absorbed nearly 5,900 apartment units, accounting for a sizable portion of the 7,260 units of demand seen in the year-ending 2nd quarter. This annual showing was close to hitting the market’s five-year norm and nearly matched concurrent supply volumes for the first time since the 1st quarter of 2020. Seattle apartment occupancy climbed to 96.1% in June, notable progress from the recent low of 93.8% logged at the end of 2020. Seattle didn’t see rent cuts get as deep as what was seen in the Bay Area and New York in the COVID-19 era, but this market has also yet to pull itself out of price decline. As of June, effective asking rents were down a modest 0.3% year-over-year. This is the mildest annual decline this market has seen since operators turned to price cuts in July 2020.

Northern New Jersey

Newark absorbed 5,100 units in the 2nd quarter, just missing out on a top 10 national performance. This recent boost pushed annual demand to nearly 9,570 units, the market’s best showing since the 3rd quarter of 2018. Furthermore, demand is back to pacing close to annual apartment supply, which has been at some of the nation’s strongest in the past year. Occupancy has rebounded in recent months, climbing to 96.7% in June, quite an improvement from the low point of 95.8% seen in March 2021. As a result, annual rent growth returned, albeit at mild amounts at 0.5% in the year ending June. Just a few months ago, when Northern New Jersey was at its worst, rents were being cut by 3.3% on an annual basis.

Boston

In Boston, apartment demand hit a solid 4,930 units in the April-June time frame, also just missing out on a top 10 national rate. This recent performance made up about half of Boston’s annual absorption of 9,430 units, the market’s strongest annual demand performance in at least a decade. Recent demand pushed occupancy up to 96.4% in June, pacing well ahead of Boston’s five-year average. Boston was another gateway market that saw the return of annual rent growth in June. Prices were up by 1.3% year-over-year after deep cuts were instituted throughout much of 2020.


Multifamily Investment Sales Broker at Marcus & Millichap
P: 630.570.2246
Randolph Taylor

Earlier this year, a leading equity crowdfunding site conducted what’s believed to be the largest-ever survey of individual real estate investors in order to gauge their appetite for investing in a pandemic. Despite the economic volatility, nearly all of the 1,240 investors surveyed (96 percent) plan to add commercial real estate to their portfolios in 2021.

Notably, a whopping 90 percent said they were likely to invest in multifamily. For comparison, less than half of investors expressed interest in office investments (47 percent), and even fewer were likely to consider retail (25 percent).

Given the challenges of the last 18 months, how has investor confidence in rental housing remained so strong? Multifamily was certainly not immune to the impacts of COVID-19, but it does have several strategic advantages.

Critical Piece of Infrastructure

The renter demographic was particularly vulnerable to the COVID-19 crisis. Congress moved quickly at the start of the pandemic to establish expanded unemployment benefits, stimulus checks, and nationwide eviction moratoriums in an effort to ensure that America’s renters didn’t lose their homes.

Investors took notice that the government was investing in housing as an integral part of a pandemic recovery strategy, unlike any other CRE asset class. Maintaining an affordable housing supply is a vital component of the American economy. As with any type of commercial real estate, multifamily investors take on risks. But historically, they’ve made a fair return on their investment. The ability to make a positive impact on the infrastructure of local neighborhoods and economies continues to win investors.

Hands-On Value Creation

Another winning quality is multifamily’s relatively low barrier to entry. Many apartment investors get their start in real estate by purchasing a single-family home or duplex. New owners can then add value to their property through their time, expertise, and hard work. This “sweat equity” grows over time and results in a larger portfolio, increased returns, and greater value appreciation.

But let’s be honest: Being a landlord isn’t easy in a good year. The pandemic ignited a boom in a sweat equity strategy known as multifamily syndication, where investors pool their money to purchase apartment communities, and a sponsor manages the property’s rehab business plan and oversees daily operations.

Favorable Leverage/Debt

Multifamily benefits from the most favorable financing treatment of all real estate asset classes, oftentimes receiving the most competitive interest rates and longest amortization periods.

This favorable environment is led by agency lenders, which were originally created to support housing stock. Freddie Mac was chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing. It, along with Fannie Mae, has the mission is to provide liquidity, stability, and affordability to the U.S. housing market.

When the pandemic hit, Congress recognized the role it and the agencies could play to enhance housing stability and keep renters in their homes. A critical component of the CARES act of 2020 helped multifamily borrowers with agency loans by providing a forbearance period at no penalty. Loan payments could be deferred by up to a year while property rents stabilized post-pandemic. Because of this treatment in the CARES act, the multifamily industry weathered the worst of the pandemic.

History tells us that during recessions, multifamily housing production contracts moderately, rent declines are short-lived, and vacancies only increase briefly and by modest amounts. Recent headlines reflect the same resiliency in these metrics in a pandemic slowdown. Looking ahead, investors will continue to inject funds into apartment assets as a winning bet to yield successful returns over the long term.


Source: How Apartments Have Prevailed During the Pandemic

Multifamily Investment Sales Broker at Marcus & Millichap
P: 630.570.2246
Randolph Taylor

Governor J.B. Pritzker (Getty)

Illinois will phase out its moratorium on evictions starting in August, 18 months after it took effect, and the same time a federal ban ends.

Governor J.B. Pritzker said he plans to issue an executive order on July 23 allowing eviction filings to begin on Aug. 1, but barring enforcement until Aug. 31. In a statement, the governor’s office urged tenants still unable to keep up with their rent to apply for rental assistance programs that have more than $2 billion in funding.

The deadline to apply for aid through the Illinois Rental Payment Program, which received $500 million in funding, is midnight July 18.

Pritzker said in May an additional $1.5 billion in housing assistance will be available in coming months.

After a year-and-a-half of eviction protection for tenants who lost income during the pandemic, the state is trying to cushion the impact of a return to evictions. For those who do get removed, the court records will remain sealed until the summer of 2022, to give them a chance to find a new apartment without the shadow of eviction hanging over them.

“Through a coordinated approach, we hope to relieve the potential pressure on the court system while also ensuring that tenants and landlords have every opportunity to benefit from the state’s rental assistance programs,” Pritzker said in a statement.

Grants are slated to cover back rents from July 2020 through June 2021, though rental assistance may also be available for eligible tenants for July, August, and September of this year. The maximum grant amount is $25,000.

“Households behind on their rent or at risk of eviction shouldn’t wait to get help,” Kristin Faust, executive director of the Illinois Housing Development Authority, said in a statement. “IHDA staff is working to award these funds as quickly as possible to households in need. Funding is still available.”

The state funding comes through the $25 billion earmarked for rental assistance programs at state and local levels that was part of the $900 billion stimulus relief bill Congress passed in December.

The Illinois Department of Human Services also has programs available with no deadline for rental assistance and eviction mediation and plans to reopen other federal funding sources in the fall with announcements in the coming months.


Multifamily Investment Sales Broker at Marcus & Millichap
P: 630.570.2246
Randolph Taylor

 

Buyers are much more focused on creditworthiness rather than acquiring large groups of properties.

Right now, bigger isn’t necessarily better in net lease. During a COVID flight to safety, investors stayed away from portfolios. Those transactions decreased from 18% in the first quarter of 2020 to approximately 14.5% in the first quarter of this year, according to Marcus & Millichap.

M&M says buyers are much more focused on creditworthiness rather than acquiring large groups of properties. However, when it becomes apparent what retailers are surviving, portfolio sales should pick up.

Even if portfolios aren’t selling, prices are inching up. Easy access to capital and low-interest rates helped push the price of single-tenant properties up 0.7% nationwide. With investors targeting creditworthy tenants, the average first-year return dipped ten basis points to 6.1%. The spread between interest rates and cap rates is wide. In fact, M&M says purchasing a single-tenant property is among the strongest returns available.

“Going forward, single-tenant assets will remain a popular destination for investor capital as a hedge against inflation and an alternative to low-yield bonds,” according to M&M.

Investors should also flock to suburban properties, following the migration of Americans through the pandemic as they sought housing with more space. M&M says that increased traffic in single-tenant properties in those locations should attract buyers.

“Buildings with a drive-thru have performed well and are expected to receive steady traffic in the coming months as many residents remain hesitant to fully resume their activities until a larger percentage of the population is vaccinated,” according to M&M. “Additionally, more Americans are projected to live in suburbs over the long term as millennials enter the prime age to start families and move to less dense areas.”

At GlobeSt.’s Net Lease Spring event Revathi Greenwood, global head of data and insights at Cushman and Wakefield, shared a Redfin survey that indicated one-third of respondents would move to the suburbs if they could.

Looking at the last ten years compared to the next ten years, nearly every city seeing increased migration is a Sunbelt market, with the exception of Seattle. Dallas tops the list, followed by Houston, Phoenix, Miami, and Atlanta. The biggest losers in the migration are mostly Gateway market cities, like New York, Chicago, Los Angeles, and Detroit. However, Greenwood pointed to Cleveland and Memphis as being two cities to watch for inbound migration.


Source: Smaller Deals Come to the Forefront in Net Lease

Multifamily Investment Sales Broker at Marcus & Millichap
P: 630.570.2246
Randolph Taylor

Investors flush with lots of capital are looking for properties to buy.

Cap rates are facing significant downward pressure for many types of commercial real estate from apartments to self-storage facilities to hotels and industrial properties, says Marcus & Millichap SVP  and director of Research Services John Chang in the latest installment of his video briefings.

Speaking to apartments, Chang says part of the buzz of large investors at the recent National Multifamily Housing Council strategy conference was that cap rates for larger properties 100 units and up have been pushed down to the 5% range in smaller markets.

He asserts there is tremendous market liquidity and the pricing structure is particularly strong with prices surges fueled by big market activity and low-interest rates.

“Investors flush with lots of capital are looking for properties to buy,” says Chang.

During the conference, Chang says most people he spoke to believe capital gains will go up to 30%.

He added many attendees were concerned higher interest rates could pinch yield spreads. Looking broadly at CRE, the Marcus & Millichap research leader says many investors will find selling is a much better option now than holding for one to three years particularly if they believe capital gains taxes and interest rates will rise. He recommends considering new markets and out-of-favor liquidity types to balance portfolios. “The market could shift quickly, and opportunities may not stay long. There is a relatively short window of opportunity,” Chang predicts.

Earlier this month, Peter Rothemund, managing director at Green Street said property prices are quickly recovering lost ground. “In some cases, like self-storage, industrial, and manufactured home parks, prices are hitting new highs—and are now 15-25% higher than pre-COVID marks,” he noted.


Source: Cap Rates Facing Downward Pressure for Many Types of CRE

Multifamily Investment Sales Broker at Marcus & Millichap
P: 630.570.2246
Randolph Taylor

 

Save the Dates: November 1 – 4

 

While the national multifamily industry is emerging from the pandemic in relatively good shape, the apartment industry in the Midwest and Chicagoland is experiencing a more mixed outlook.

Are Chicago and the Midwest contrarian opportunities in the near term? There are silver linings among the clouds, as the states open up and the economy returns back to “normal.” How will the regional apartment industry fare in the coming months and years? Who is actively acquiring and developing in the region, and where are there opportunities to be found?

Come together with fellow multifamily owners, investors, and developers as well as industry experts at the Marcus & Millichap / IPA Multifamily Forum: Chicago & the Midwest. This multi-day conference is held online from November 1 to 3 and in-person in Chicago on November 4.
 

Agenda

 

Register today

 for the early bird rate.

 

Register Now!
 

Learn More About the Event

 

Topics to be addressed include:

 

New Development

New development
Value Add Investment

Value add investment
Apartment Design

Apartment design
Construction issues

Construction issues

 

New Tech

New technology
Property Management

Property management
Emerging Trends

Local and regional trends
Capital sources

Capital sources

 

Get Involved!

 

Register Now!
 
Past Participant Firms (partial list)

 

AMLI Residential Belgravia Group CA Ventures Cedar Street CAA Eastham Capital

 

Equity Residential Evergreen Fannie Mae Fifield Focus Freddie Mac

 

Greystar Habitat Company Hines JK Equities John Buck Company JVM Realty

 

Laramar Group Lendlease Lennar Multifamily LivCor Marquette Companies McCaffery Interests

 

Nuveen Oxford Capital Group Redwood Capital Group Related Sterling Bay USAA

 

Vermilion Development Vornado Waterton Windy City RE Wirtz Realty Wood Partners

 

Conference Chairs
  Marcus & Millichap IPA  

 

2021 Sponsors

 

Xfinity Communities
  Brilliant CMC Energy Services  
  Mary Cook Associates Seldin Company  

 

Conference Organizer

 

Powered by GreenPearl