Nearly half of multifamily housing commercial real estate professionals plan to expand their portfolios in 2015, according to a recent survey conducted by Capital One Multifamily Finance. Forty-three percent of respondents plan to be net buyers in 2015, while just 14 percent plan to be net sellers.
Grace Huebscher, president of Capital One Multifamily Finance
The survey examined industry sentiment among West Coast-based professionals and was a follow-up to a similar East Coast survey in January.
Asked which type of financing will be most important to their business in 2015, 52 percent of the 200 respondents who visited Capital One’s booth at an industry trade show pointed to acquisition financing. Financing for construction (21 percent) and refinance (20 percent) were also identified as important needs for businesses next year. Only 7 percent of respondents said that financing for lines of credit is a priority.
According to the survey, seventy-four percent of respondents expect to approach banks and agency lenders for financing in the coming year. Fewer respondents will engage other capital sources (18 percent) and commercial mortgage-backed securities (8 percent).
“Our survey reinforces that it’s truly a great time to be in the multifamily space,” says Grace Huebscher, president of Bethesda, Md.-based Capital One Multifamily Finance. “The industry’s appetite for acquisition financing is an early sign of a strong 2015, and our team is looking forward to supporting multifamily housing operators as they pursue their growth objectives.”
Forty-two percent of multifamily housing professionals reported that renovations and modernizations of existing properties will be the trend to gain the most momentum in 2015, closely followed by developers moving into new and emerging markets (38 percent). Just 11 percent of respondents expect a significant increase in affordable housing developments, and even fewer (9 percent) anticipate gains in luxury developments to be the market’s dominant trend.
Meanwhile, 44 percent of respondents expect to see the greatest increase in value for urban properties, while 23 percent predict the largest increases for suburban properties.
Global uncertainty was cited by a third of respondents as the one topic that keeps them up at night, followed by potential interest rate increases (24 percent), overbuilding of apartment units (16 percent), pace of cap rate expansion (14 percent) and sustainability of continued growth in net operating income (13 percent). By contrast, a similar Capital One survey conducted in January 2014 found that just 10 percent of multifamily housing professionals reported global uncertainty as their primary concern.
“Despite uncertainty with the global economy, we’re hearing that multifamily professionals have an optimistic outlook,” says Senior Vice President Kristen Croxton. “We anticipate 2015 to continue to show strong multifamily fundamentals and expect to find lots of opportunities for our expertise and financing solutions to add value to our clients’ investment strategies.”