Multifamily Is a Top CRE Investment Sector but Volumes Drop
The good news: multifamily remains an acknowledged commercial real estate investment powerhouse by where people put their money in the fourth quarter of 2022, according to CBRE. It saw $48 billion, a 37.5% market share, followed by industrial and logistics at $32 billion.
The relative bad news: transaction volumes fell a lot in all sectors, and multifamily was no exception. There was an overall big drop — 63% — in quarterly transactions from the prior year. For multifamily, the decrease was 69.6%. Taking all of 2022, multifamily was down 18.9% from 2021. What makes the fall relative is because 2021 volume was the record, and 2022 was still the second highest annual amount at $671 billion.
However, Offerd saw the beginning of a significant slowdown in the second half, through both our private market and public market work on behalf of clients. While 2022 was overall a fine year for multifamily, the fourth quarter is far more indicative than all four quarters together.
This news is particularly important for sellers. Conditions have changed significantly. Financing is much harder and more expensive to procure, making a decision on refinancing a challenge. The large drop in transactions has created a need not yet filled for price discovery, leaving all parties wondering how to satisfy markets while making a deal that is good for them.
Rather than assume that the statistics of large numbers will bring enough to satisfy them, sellers must know how their expectations match local conditions and where to find the buyers most likely to make a satisfactory bid.
That starts with data and the proprietary analytic tools Offerd has, along with our private market and data on thousands of investment groups as well as a working relationship with many top firms looking to acquire properties. The right information and preparation can uncover a list of potential buyers who are the best potential choices. Offerd can pinpoint market to the most likely buyers through their extensive data and reach.