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There has been a clear slowdown in commercial real estate transactions since the start of the coronavirus in the US, but for the most part multifamily was untouched.

Now that may be changing, according to a new research note by CoStar, which added the caveat that it is still too early to make that call with certainty. It also reports that there may also be indications of a capitalization rate spike, related to a cut in deals and a spike in BBB yields. And not surprisingly, underwriting assumptions from a month ago likely need reassessment, particularly regarding rent growth.

Even deals that go through may first have to overcome some hurdles in this new environment.

Karlin Conklin, executive vice president of Investors Management Group, told a webinar hosted by Crowdstreet last week that the company never used to retrade multifamily deals before, but they did in a recent deal. "It's been a seller's market for years," she said. "Now we have a shock to the system."

Deals may hesitate, she says, because we have to understand how collections will play out, and that is an unknown right now.

For now, capital flows remain one bright spot for multifamily. Walker & Dunlop CEO Willy Walker told listeners on a webinar last week that most lenders are still quoting deals, including for multifamily. "While spreads have blown out a little, multifamily is still active," he said. "There is plenty of demand for Fannie Mae and Freddie Mac paper and that continues today."

He also said that he expects the FHFA to increase the lending caps for the GSEs in keeping with the federal government's goal of supplying as much liquidity as possible to the market.