December 11, 2022
Multifamily has generally been seen as a low-risk investment considering the constant need for affordable rent. This rule-of-thumb, however, was tested by the “urban exodus” prompted during the pandemic; the trend was followed by a turn to suburban markets. Tired of small spaces in crowded spaces, people sought the comfort of more space with access to the outdoors.
While this led to a decline in the popularity of multifamily during the pandemic, it has recently experienced a resurgence in popularity. This is in part due to the increase in employees returning to the office as a result of decreased Covid-19 intimidation, as well as the desire for employees to maintain job security in a potential recession. As a result, employees have been relocating to central business districts. Further, strong job and wage growth have contributed to the rise in demand of this sector.
According to CBRE, “Investment in the multifamily sector increased by 56% year-over-year to $63 billion in Q1 2022 – the strongest first quarter on record…Multifamily accounted for 275 of total commercial real estate investment volume in Q1 2022, followed by office at 21 and industrial at 20%”.
While “urb-suburbs” haven’t disappeared, multifamily has shown that its safe investment is a rule of thumb for a reason, even amidst a pandemic.