6 Commercial Real Estate Investing Trends for 2019
By Jeff Bardos, CEO, Speritas Capital Partners (Jeff’s Bio)
January 26, 2019 – Greenwich, Connecticut
2019 is shaping up to be a very interesting year for the multifamily housing market. Rental demand, demographic trends, construction costs, tax incentives and interest rates will continue to drive investment and multifamily financing.
In my view, the 6 trends below are what commercial real estate investors and lenders in the multifamily space will focus on in 2019. I welcome your comments!
1. Strong Multifamily Rental Demand
The main drivers will be demand from both younger and older adults. Many factors add to the forecasted rental demand – the cost of living coupled with student loan debt leaves many unable to make a down payment, young adults are marrying later, and empty nesters are looking for more flexible downsizing options.
2. Strength in Selected Sectors
Multifamily housing demand will remain strong, with a focus on workforce housing, student housing, and senior and assisted living. Demand for flexible office space will remain strong.
3. Strength in Secondary Markets
Investors will continue to focus on secondary and tertiary markets to find attractive returns. These markets have more affordable housing, lower construction and living costs and strong demographics trends.
4. Focus on Qualified Opportunity Zones
Although there are many details which need to be sorted out, multifamily investors with large capital gains are looking at Qualified Opportunity Zones (QOZs) as a tax deferral option. Some estimates of unrealized capital gains in U.S. households are as high as $4 trillion. Shovel-ready projects are seeing high investor interest.
5. Big Data Will Bring Competitive Advantages
Property owners and managers are increasing ROI by collecting and analyzing market and property rental data. Data analysis can reveal the impact of services, amenities and economic growth on concessions and turnover.
6. The Effect of Interest Rates
No forecast for multifamily loan rates for 2019 would be complete without a comment on interest rates. A spike in commercial mortgage interest rates would have a negative impact on the market, but most market observers expect rates to be flat for the year.
About the Author
Jeff Bardos, CEO, Speritas Capital Partners
Jeff has over 25 years of experience in the financial services industry. After graduating from the Columbia Business School, he joined the New York Federal Reserve Bank as a senior staff member in Bank Supervision, leading the Bank Analysis department. From the nation’s central bank, Jeff moved into the private sector, working at senior levels in commercial banking, retail banking and risk management. He has also played senior founding roles in several start-ups. Learn more about Jeff.
Speritas Capital Partners specializes in difficult credit, collateral and cash flow situations and we never take upfront fees.