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Investor confidence in multifamily real estate begins recovery

According to a survey by National Real Estate Investor, confidence in multifamily properties appears to be recovering after a dip in 2018, though all other classes of commercial real estate have been neutral or dropped slightly. The survey asked respondents to rate the attractiveness of the major commercial real estate markets on a scale of one to ten. Most investors prefer multifamily and industrial properties over hotels, office, and retail; last year multifamily and industrial were tied for desirability, but this year multifamily pulled ahead at a 7.9 and industrial fell to a 7.5. They are both still well ahead of the other categories, though; hotels are a 5.9, offices are a 5.8, and retail is just a 4.8. 

Compared to 2018’s rankings, hotels dropped .2 points, offices dropped .1 point, retail held steady, and industrial dropped .2 points. Overall, multifamily has been a rock in the current real estate cycle, despite cap rates being driven lower by the high demand for multifamily. 

While desirability doesn’t necessarily reflect actual sales and purchases, sentiment can be a useful data point in the commercial real estate market. For more information about the current state of the market and how the San Francisco Bay Area differs from the nation as a whole, contact one of our advisors; we have specialists in multifamily and industrial properties as well as office and retail.

Source: National Real Estate Investor