Multifamily Leaders Unpack Challenges Amidst 70% Drop in Deal Volume
The discussion took place during a rapid-fire session at the GlobeSt. Multifamily Fall Conference held on Monday.
LOS ANGELES—Key industry leaders addressed the challenges facing the multifamily real estate market, with August’s deal volume plummeting by about 70% year over year and pricing declining by 15%. This discussion took place during a rapid-fire session at the GlobeSt. Multifamily Fall Conference held on Monday. The expert panel convened to analyze the current state of multifamily transactions, dissect the obstacles, and explore potential opportunities.
“In the multifamily space, we are still completing deals,” noted panelist James D’Argenio, senior principal of acquisitions at The Bascom Group. He emphasized that the key to success lies in creative structuring and optimizing the capital stack. “While we stepped away from the multifamily sector in 2021 and 2022 due to our short-term investment strategy, our historical exclusion of rent growth from our assumptions has proven beneficial. Today, it’s crucial to maintain a realistic outlook on your assumptions.”
Zack Streit, founder and Managing Partner of WAY Capital, highlighted the debt market’s dichotomy, where distressed deals are on the rise, while conventional deals are dwindling.
Regarding the pricing disconnect, D’Argenio stressed the importance of grasping intrinsic value for sound investment decisions. “The challenge we face is accurately determining the intrinsic value of assets, which has led to a transactional standstill. We often resort to large capitalization rates for safety, so it will be interesting to see how we navigate this issue.”
Coleman Wright, Senior Account Executive of redIQ, emphasized the significance of mastering your craft and taking the time to understand it thoroughly.
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