Mark Halloran, director of Key Accounts for GRS | Corteq, has his finger on the pulse of the commercial real estate industry. He was recently at the Crittenden Multifamily Conference in Dallas, where many leaders in the commercial real estate sector provided their perspective. This is his take on how the sector doing, and what GRS took away from the show.
What was the overall feel of the conference? Were people still bullish on apartments?
It was definitely an upbeat conference. The multifamily sector is still hot. There are a lot of financing options available out there. Everybody was very upbeat. There were players providing debt, preferred equity and mezzanine financing options. The consensus seemed to be that the financing environment was pretty rosy for the near term.
Were there any concerns about the multifamily market overheating or the single-family market coming back?
There was a discussion about there being too much capital out there, but that’s making pricing more competitive for borrowers. I don’t think it’s overheating the market yet. When some of the pros graphed what they thought the longevity of this run is going to be, they said there would be two or three years more of values increasing and rents increasing. Maybe things will plateau off after that.
Was new development discussed at all?
There is a lot of new residential and multifamily construction going up, and there seems to be financing available from local banks. For older assets, there were a lot of banks that were willing to do deals for properties that need to be renovated or repositioned. The loan proceeds provide the funds to upgrade the propertiesin primary cities where values continue to rise. There is availability for traditional ground-up construction, acquisitions and substantial rehab jobs.
Multifamily is obviously not cooling off. But do you see any other sectors catching up?
It seems like the hospitality segment has come back strong as well. Retail and office are coming back too, but there needs to be some real job growth before those are as strong as multifamily.
How do you see the multifamily sector holding up in your trade area in the Northeast?
One of the hottest markets that I see personally are the outer boroughs of New York City. For the typical “taxpayer” property, a four or five-story walk up with 20 units and a few thousand square feet of ground-floor retail, the appetites from banks is insatiable. My busiest lenders this quarter have been local banks doing walk ups as one-offs and in clusters throughout NYC, and garden apartments in the surrounding suburbs. Even a few years ago Freddie Mac or the Fannie Mae would be doing these deals, but local banks are stepping up in a big way to put money out on this asset class.
So how did the conference tie into what GRS Group is doing?
We had three from the GRS | Corteq side of GRS Group, and Suzette Hinds from GRS | Title. As much as firms promote themselves as global organizations and national and international service providers, most real estate is local. One of the things that we were finding out is that if people didn’t have a need for GRS | Corteq’s services, they might have a need or interest in the Title, Survey, Appraisal or Zoning services we offer. Our tagline – local knowledge | global perspective – really came out at the show. We were a big, capable, multifaceted global brand and have the expertise that these owners, brokers and lenders like to have. They know that our support team is knowledgeable about the local market that they’re operating in, and we understand the wide CRE marketplace.
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