Dees Stribling, Contributing Editor
New York–Multifamily real estate might not be out of the woods just yet, but two new surveys released separately this week point to improvement ahead for the property type, as well as commercial real estate as a whole. One survey was conducted by Integra Realty Resources, a commercial real estate consulting firm that specializes in CRE valuation. The company polled 59 of its managing directors nationwide regarding the first quarter of 2010 to determine the rate of change in valuating all property types, including multifamily, lodging, industrial, retail and office.
One conclusion from the Integra survey: the multifamily sector is currently the most stable real estate sector and is performing above expectations, with only a rate of decline of one percent in valuations during the past three months. By contrast, the office, industrial and retail sectors experienced a two percent drop in value during the past three months, while the lodging sector endured a four percent drop.
Integra predicts that the multifamily sector will fully stabilize in the next six months. In fact, the eastern and central U.S. multifamily markets have already stabilized in the past three months, according to the survey.
“The strongest demand driver for multifamily property is the job market,” Jeffrey Rogers, president and COO of Integra, tells MHN. “While the US economy isn’t yet adding net positive jobs to the market, unemployment has stabilized.”
Rogers adds that the absorption of apartments is traditionally less during the first and fourth quarters of a year, but this year is unusual so far in that regard. “The apartment sector experienced an exceptionally strong absorption level in the first quarter of 2010 for two reasons,” he says. “First, like all sectors, there was a lot of room to increase performance due to the severe downturn. Second and more importantly, the labor markets stabilized.”
In a separate survey ahead of its Global Real Estate Summit this week, DLA Piper notes that for the bigger CRE picture, “the overall consensus was that faced with billions of dollars in commercial real estate debt coming due, the industry refuses to panic, sensing that the ‘bottom’ of the cycle is upon us.”
More specifically, according to the real estate executive respondents of the DLA Piper “State of the Market Survey,” multifamily ranked as the most attractive investment opportunity during the next 12 months–37 percent of the respondents said so–while hotels rebounded from last place in 2008 to finish as the second most attractive investment opportunity (25 percent).