Commercial Investment Real Estate March/April 2018 | Page 19

Surging cities: Seattle, Denver, and Raleigh-Durham, N.C., forecast rapid growth. However, institutional capital could give the edge to Salt Lake City’s strong tech base or to San Diego’s transition with new mid-rise and high-rise development. Sector Evolution Though conventional multifamily outshines sector interest, 2018 will put the spotlight on three niches. Student housing: Since proving itself recession-resilient, this sector is becoming a favorite among institutional buyers and international investors, delivering new equity to multifamily. More than 33 percent of 2017 deals tapped international capital, up from 20 percent in 2016. Seniors: Active adult activity will thrive. Cap rates should remain stable as more investors — global, private equity, and public and private REITs — drive development and acquisition in markets with high barriers to entry. Affordable housing: Affordable has become a buzzword among niche players and institutions since Starwood’s grand entrance with the purchase of a $500 million portfolio. Expect a steady flow of deals as properties reach the 15-year investment horizons. While yields may compress, they’ll stay stronger than conventional growth without relying on substantial hikes in rent. Debt Market Movement Debt capital for well-positioned assets will remain plentiful despite a pullback in the CMBS market. Meanwhile, govern- ment-sponsored entities, banks, and life insurance companies are expanding their outstanding debt. Lending across major metros will continue to benefit from regional banks expanding their real estate balance sheets, while larger national banks remain more risk-averse. Strong Forecast Overall, employment growth remains positive nationwide, strengthening demand for multifamily and bringing wel- come change across the industry. These advances encompass greater diversification of investors, an influx of new equity, shifts among lending sources, and sector evolutions. Even disruptions from short-term rentals should start to ease up and work in concert with apartment owners. Through 2018 and beyond, expect multifamily to make the most of these fluctuations. Blake Okland is vice chairman and head of U.S. Multifamily at ARA, a Newmark company, in Charlotte, N.C. Contact him at [email protected]. Build More Business Referrals Advertise in CIRE Magazine to connect with 13,000 members in the CCIM global community. CCIM business owners receive a 20% discount on select ads. Learn more at www.ccim.com/advertising CCIM.COM March | April 2018 17