By Stephen L. Burger, CPM, CRX, CRM
Once again, the apartment market seems to be the clear
choice for investors as the long-range economic waters start to grow a bit
murky. None of the real estate food groups--whether it be office, apartments,
retail, industrial or hotels--can ever be called immune from a downturn,
whenever that is likely to happen.
But the multifamily sector once again shows its
industry-leading investment potential in news we posted from Fitch
Ratings and GlobeSt.com. To
recap quickly, the multifamily market posted year-over-year gains in net
operating income of 5.4%. That is music to any wise investor’s ears. What’s
more, it exceeds last year’s NOI gains of 3.8%, indicating a positive
Further, GlobeSt.com reported that, “Fitch expects NOI growth for multifamily properties to
continue, given stable market fundamentals and favorable demographics for the
sector. From ’14 to ’15, 73% of the multifamily properties within Fitch’s
multi-borrower CMBS universe reported NOI increases.”
the record, this year’s performance of other food groups tells the complete
story.Hotels came in second, at 5.1%,
but Fitch anticipates a drop in occupancy this year and RevPAR (revenues per
available room) declines to follow in 2018. Next up was Industrial at 2.8% and
Retail at 1.5%. Office brought up the rear, with a paltry 1.1% uptick in NOI.
do believe that 2017 will be a good but not great year for commercial real
estate investment. We’re at a point in the economic cycle where the pundits,
whoever they are, form no consensus as to what exactly the economy will do.
They agree only that the current upcycle is getting long in the tooth.
this point in the cycle as well, investors start looking a bit more cautiously
before they leap. They’ve got capital to place and their question becomes where
best to place it for the longest-term gain.
as it proved its viability in the last, horrific economic unpleasantness, the
multifamily sector once again rises above the pack to answer that call.
Steve Burger, President
EUGENE BURGER MANAGEMENT CORPORATION
As president and COO
of Eugene Burger Management Co., Steve
Burger is directly responsible for the overall quality, depth and
consistency of management services provided in all 15 regions in the EBMC