Jeff Weidell, NorthMarq Capital president, doesn’t take a myopic approach to lending in today’s interesting environment. The amount of change, number of opportunities and potential challenges that abound keep his eye focused on the puck, while acknowledging where it’s been and where it’s likely to go.
With that in mind, Weidell, like many others France Media spoke with at MBA CREF 2018, still sees the multifamily market as a sound investment — with a few caveats. On the positive side, he’s witnessing great demand from seasoned investors and those new to the multifamily game. Some of this interest comes from the asset’s generally healthy performance over the past real estate cycle, which many believe will further benefit from the new tax reform laws. These guidelines seem to favor multifamily over single-family homes, particularly in costly coastal markets like New York and Los Angeles.
Multifamily’s continued popularity also presents some challenges. Sellers don’t seem nearly as eager to sell as buyers are to buy. This disconnect has kept appetites hungry for this product type, especially as the cost of capital reduces, while rents continue to climb.
Interestingly, Weidell noted that many sellers aren’t holding onto their properties due to a disconnect on pricing, but rather because it’s a comfortable vehicle to remain in right now. Finding another investment as viable as multifamily can be challenging, Weidell explained, though not impossible. Stock market volatility has turned many away from that option, though he said many investors who are exiting the multifamily market may seek out industrial products or older office assets in strong locations.
Weidell credits the popularity of bridge lending for the added success in not just the value-add multifamily market, but in many cases where an investor can tap into older, well-located properties in need of an upgrade.