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Length of Cycle Kept Institutions on the Sidelines in 2017

Multifamily deal volume fell this year for institutional players, but private capital remained active players this year.

By Kelsi Maree Borland | Updated on December 01, 2017

Gary Goodman Gary Goodman is the SVP of acquisitions at Passco Cos.

Multifamily deal volume fell this after record-breaking transaction activity in 2015 and 2016. Institutional players specifically sat on the sidelines, while private investors remained active—at least for the limited deals available. There were several factors that contributed to the slowdown, including the growing length of the cycle.

“For the most part, the private capital owns the market. The pension fund advisors and the REITs are sitting on the sidelines,” Gary Goodman, SVP of acquisitions at Passco, tells GlobeSt.com. That is because those investors used consultants, and the consultants are concerned about where we are in terms of the cycle and cycles don’t last more than seven to nine years. There is this consensus that people should wait for the next buying opportunity. I think it is a false view of things because cycles don’t die on their own. Usually, there is a black swan event that occurs.”

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