Industry Voices Multifamily

Multifamily’s Path Ahead

Caitlin Walter

Considering the national lockdown and resulting shelter-in-place orders after COVID-19’s arrival in the U.S. last spring, the multifamily market was expectedly tight through June and July 2020. But as state and local economies began to open, apartment markets quickly regained momentum. Sales volume and market tightness indexes from the National Multifamily Housing Council returned to pre-pandemic levels by January 2021.

While the worst of the pandemic is in the rearview mirror — fingers crossed — multifamily is still facing an uncertain future. But Caitlin Sugrue Walter, Ph.D., vice president for the National Multifamily Housing Council, points to a healthy recovery in late 2020 as reason for optimism.

“We have seen a complete change in the leasing season, thanks to the pandemic,” she says. “If you look at 2020, the numbers were extremely different than the previous year. COVID-19 pushed everything back to early summer, which was not as strong a leasing season as we typically see. But we are still working through that and absorptions are still pretty good.”

Some CRE experts speculate increased interest in suburban and exurban areas with a new emphasis on social distancing and growing aversion to dense population centers. Considering these broad trends, will major metropolitan areas see a decreased demand for multifamily and office properties in cities like New York, San Francisco, or Chicago?

“There are certain jobs that can only be done in these cities,” Walter says. “We’re expecting that there’s still going to be quite a bit of demand going forward. There was a little bit more movement from major metros [in 2020] compared to previous years, but I don’t see it as an exodus from these cities. It was more that you didn’t have people moving in. For example, if you were living with your parents in a suburban area, and you held off moving for a year.”

But COVID-19 did accelerate some population trends that were already noticeable in 2018 and 2019. The tumult — and growing ability to work remotely — may have allowed people to make changes sooner than later.

“There’s definitely been a shift to some areas that already started to see a fair amount of attention,” Walter says. “They appear to have become even more popular — particularly Southern cities like Nashville, Tenn., and Austin, Texas. The number of people moving to Texas in recent years is through the roof, so I don’t think that was a result of COVID-19. I think there will be some more sorting out after COVID-19 as employers figure out work-from-home and remote work policies.”

While the true impact of the pandemic will play out over the coming years and decades, multifamily remains an attractive destination for capital.

“Especially when compared to other property types, apartment developments offer a pretty solid return,” Walter says. “It’s a long-term investment that can be appealing when compared to retail or office. Right now, it’s especially important to be careful, to account for uncertainty, and to do the necessary due diligence.”

As for long-term impacts in the design, construction, and operation of multifamily developments, Walter sees the market responding to COVID-19 in a similar fashion to localized natural disasters in the past.

“Obviously, I think the industry is still working through its response as we learn more about public health and safety issues,” she says. “But I expect more emphasis on things like ventilation and sanitation. I see it more like how Houston responded to Hurricane Harvey — to plan for flooding after a major storm. A pandemic could be another thing that folks are going to make sure they put in their design needs going forward.”

But for now, CRE professionals can keep a finger on the pulse of the multifamily sector by monitoring key figures like the NMHC’s Rent Tracker, which calculates the percentage of rent payments made throughout a month. January 2021 clocked in at 93.2 percent of payments made by the end of the month, a slight dip from 95.8 percent in January 2020 and 93.8 percent in December 2020.

“It’s one indicator that’s helped show where we were at throughout COVID-19,” Walter says. “Holding up around 90 percent, I think that’s reassuring to people. If something were to have happened, [that figure] would’ve shown it by now.”

Nicholas Leider

Nicholas Leider is senior content editor for Commercial Investment Real Estate. Contact him at

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