Webinar: Multifamily still most favored asset class despite potential headwinds

Eighteen months into a pandemic that some thought would undermine the apartment sector for the foreseeable future, rent growth in some markets has exceeded pre-pandemic levels, while investor interest is as keen as ever. That’s despite potential headwinds, some deriving from the pandemic and others from legislation making its way through Congress. 

These are among the insights shared by a panel of industry leaders in Connect CRE’s latest webinar, “Buy, Build, Sell, Hold or Trade Apartments,” now available for on-demand replay. Sharing their expertise were Doug Bibby, president of the National Multifamily Housing Council; David Schwartz, CEO of Waterton and chair of NMHC; and Jeffrey DeBoer,  president and CEO of the Real Estate Roundtable. Daniel Ceniceros, founder and CEO of Connect CRE, moderated the conversation. 

Since the onset of the pandemic, NMHC has published a Rent Payment Tracker monitoring the rate of rent collections, and their timeliness. Bibby said that for most of the past 18 months, the Tracker has seen an average of 95% of apartment renters making full or partial payments each month. Most recently, though, that has dropped by seven percentage points. 

“We think it’s a combination of the delta variant beginning to show its ugly face and businesses beginning to get a little hesitant to reopen,” said Bibby. 

That hesitancy is having a ripple effect among small businesses located near currently empty office buildings. “We’ve got to get people back in their workplaces,” said DeBoer. “I hate it when people say, ‘We’ve got to get people back to work.’ People are working, but we’ve got to get them back in their workplaces.” 

In the meantime, there’s some $46 billion of rent relief monies allocated by Congress. Schwartz noted that rollout of the funds has been slow as it passes through multiple jurisdictions. “Some states are good at it, and some aren’t,” he said. 

Congress’ potential impact on the industry isn’t limited to the Emergency Rental Assistance Program. All three panelists weighed in on the provisions of infrastructure packages being considered by the House and Senate—sweeping legislation that naturally raises the question of how to pay for it. 

At present, DeBoer is feeling “pretty good” about the prospects for the 1031 exchange to lawmakers’ efforts to fund the wide-ranging investments in infrastructure, as well about as other tax issues pertinent to real estate. He cautioned that the infrastructure program likely will mean tax increases for the industry’s highest earners—but the increases will come because they’re making money, not because they’re making it from real estate. 

Schwartz said Waterton has been a net buyer of apartments throughout the pandemic, in an environment that has become increasingly competitive due to all the capital in the marketplace. “In spite of various challenges—potential tax headwinds and regulatory headwinds—it’s still the most favored asset class of all the food groups,” he said. 

Click here for replays of the webinar.