On paper multifamily fundamentals are fine. In reality the asset class is overshadowed by the uncertainty of the cost of debt, rising inflation and a potential recession that could cause rent growth to moderate.
Not surprisingly, closing deals in this environment has been tough, especially with a bid-ask spread that has become a hindrance in negotiations, says Ari Abramson, vice president of Multifamily Acquisitions for Continental Realty Corp.
"In the summer we thought the markets would stabilize and post Labor Day the floodgates would open for deals. That did not happen. Sellers have become hesitant about valuations and the 10-year Treasury has become very volatile. It is very hard to know where to lock a fixed interest rate for any type of debt instrument."
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
