Multifamily continues to be the darling of the investment community based upon its solid market fundamentals and its long term positive outlook. Substantial capital, both debt and equity are readily available for this sector because of its long term sustainability. Rents have been rising, cap rates have been depressing although at a slower pace, sales prices per square foot have been increasing and new product has been kept in check. The vacancy rate has ticked up slightly which is the only negative. The biggest risk that is looming is rising interest rates. As interest rates rise so do cap rates, and values fall. The big question is can rental rates and occupancy rates rise faster than interest rates.
August 27, 2018