Pat Jackson

Multifamily is undoubtedly tremendously popular among investors—and for many reasons. Renter demand is up, and more young people want to live in urban, walkable markets, but the trend has led to a flood of class-A development and repositioning projects, which has taken away affordable housing supply. In a downturn, class-A apartments will be the first to see a dip in demand and rents. However, even with that in mind, multifamily remains the best asset to survive a downturn.

"If you look at multifamily, ultimately, it is a utility. People have to have a place to live, so buy the very nature of the asset class, it fills an essential need rather than a an inessential need, like a shopping center," Pat Jackson, founder and CEO of Sabal Capital, tells GlobeSt.com. "For that reason, it is the most recession resistant asset class. That is why investors continue to like multifamily. Even regulators in the bank sector treat multifamily differently than other CRE assets, and that is because it has an inherent risk aversion to a market cycle."

While class-A apartments will certainly see some dip during a recession, workforce housing should remain stable if not better performing as demand for attainably priced units increases. "We especially think about work force housing multifamily as even more recession aversion that multifamily in general," says Jackson. "Class-A multifamily has to rely a lot on the excesses of the market to perform. That is not really where we play. Class-B and class-C housing has historically been phenomenally durable. In the last cycle—and I don't think we'll have that kind of downturn again in our lifetime—workforce housing performed extremely well."