SAN DIEGO—“Overall, the rising economic tide has been floating different property type boats.” That is according to Jamie Woodwell, VP of commercial real estate research at the Mortgage Bankers Association.
Woodwell spoke on Sunday at the MBA's CREF/Multifamily Housing Convention and Expo 2017 here in San Diego. He noted that “we are in an extraordinary time in the commercial real estate markets,” adding that “There is a lot of appetite out there for property and the numbers out there right now are tremendous.”
Those “tremendous numbers” he pointed to include the apartment vacancy rate. “It is a rate we haven't seen since the mid-1980s. It is that low,” Woodwell said.
If you look at the investment market, it is around a 6.7% cap rate, he explained. “If you look on the apartment side, we have never seen cap rates this tight,” Woodwell said. “Investors are demanding less of a return than they ever had.”
In terms of multifamily units, he said the number of units under construction hasn't been this number since the 1970s. And he added that mortgage rates as of Q4 2016 had never been lower. “We will see how the 'November surprise' affects that and it may put some upward pressure.”
But Woodwell said that he has never seen this much transaction taking place on the multifamily side. “If you look at the lending going on, it is relatively constrained.”
The Mortgage Bankers Association projects commercial and multifamily mortgage originations will grow to $515 billion in 2017, an increase of 3% from the 2016 estimated volumes of $502 billion. Mortgage banker originations of multifamily mortgages, specifically, are forecast at $219 billion in 2017, with total multifamily lending at $267 billion, said Woodwell.
There are extraordinary conditions out there and all of the economic growth we have seen has really been pushing the commercial real estate market into unchartered territory, explained Woodwell, who added that there are different drivers with each property types.
The driver for apartments is the supply versus demand. For office, he said, the employment growth has driven demand as well as the continued efficiencies being done in the space.
Retail is a different story, he said, with an awful lot going on in the e-commerce space. “It has always been a story of the haves and have nots.”
But industry is benefiting from a lot of that e-commerce, said Woodwell, with many industrial sites moving to denser areas.
“There are all very different stories in each property types. It is a positive economic story in the numbers… The vacancy rates and the asking rent growth… it has been a long, long run in the positive numbers.”
And lastly, looking at NOI growth, Woodwell said it is a strong and steady story.
Keep checking back with GlobeSt.com for more live coverage from the MBA CREF/Multifamily Housing Convention and Expo 2017 here in San Diego.
SAN DIEGO—“Overall, the rising economic tide has been floating different property type boats.” That is according to Jamie Woodwell, VP of commercial real estate research at the Mortgage Bankers Association.
Woodwell spoke on Sunday at the MBA's CREF/Multifamily Housing Convention and Expo 2017 here in San Diego. He noted that “we are in an extraordinary time in the commercial real estate markets,” adding that “There is a lot of appetite out there for property and the numbers out there right now are tremendous.”
Those “tremendous numbers” he pointed to include the apartment vacancy rate. “It is a rate we haven't seen since the mid-1980s. It is that low,” Woodwell said.
If you look at the investment market, it is around a 6.7% cap rate, he explained. “If you look on the apartment side, we have never seen cap rates this tight,” Woodwell said. “Investors are demanding less of a return than they ever had.”
In terms of multifamily units, he said the number of units under construction hasn't been this number since the 1970s. And he added that mortgage rates as of Q4 2016 had never been lower. “We will see how the 'November surprise' affects that and it may put some upward pressure.”
But Woodwell said that he has never seen this much transaction taking place on the multifamily side. “If you look at the lending going on, it is relatively constrained.”
The Mortgage Bankers Association projects commercial and multifamily mortgage originations will grow to $515 billion in 2017, an increase of 3% from the 2016 estimated volumes of $502 billion. Mortgage banker originations of multifamily mortgages, specifically, are forecast at $219 billion in 2017, with total multifamily lending at $267 billion, said Woodwell.
There are extraordinary conditions out there and all of the economic growth we have seen has really been pushing the commercial real estate market into unchartered territory, explained Woodwell, who added that there are different drivers with each property types.
The driver for apartments is the supply versus demand. For office, he said, the employment growth has driven demand as well as the continued efficiencies being done in the space.
Retail is a different story, he said, with an awful lot going on in the e-commerce space. “It has always been a story of the haves and have nots.”
But industry is benefiting from a lot of that e-commerce, said Woodwell, with many industrial sites moving to denser areas.
“There are all very different stories in each property types. It is a positive economic story in the numbers… The vacancy rates and the asking rent growth… it has been a long, long run in the positive numbers.”
And lastly, looking at NOI growth, Woodwell said it is a strong and steady story.
Keep checking back with GlobeSt.com for more live coverage from the MBA CREF/Multifamily Housing Convention and Expo 2017 here in San Diego.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
