combined to slow the rate of activity and indefinitely pushed off many otherwise solid deals . Given the uptick in 3Q2020 activity versus 2Q2020 , we expect activity to dramatically pick up in 2021 as long as health concerns are mostly behind us . As for multifamily values , expect muted growth and some declines due to the overall level of uncertainty . As the economy and migration patterns sort themselves out , dips in value from 5 percent to 10 percent of those in 2019 may not be uncommon through 2021 and into 2022 .
URBAN VS . SUBURBAN MARKETS To parallel the decline in dense urban markets described above , data show approximately twice the rent declines in central business district submarkets versus their suburban counterparts . Details tend to show that both A and B / C segments are struggling a bit in and around CBDs , but for different reasons . For A properties , some upper-income residents have used the pandemic as an excuse to finally make that move to the suburbs . Many residents of B / C properties do not have the income or the down payment funds to make the same jump . While a few have picked up and moved to less expensive Sun Belt cities , others have moved back into their parents ’ homes or
We expect activity to dramatically pick up in 2021 as long as health concerns are mostly behind us . As for multifamily values , expect muted growth and some declines due to the overall level of uncertainty .
remained with roommates past the time they expected . We also must account for the disproportionate effect this pandemic has had for low-wage workers . Eviction moratoriums and loan workouts have muddied the data a bit , but unless Congress passes a major relief package or we once again reach full employment ( doubtful anytime in the next year or so ), we will see further stress on B / C properties .
THE DARLING OF CRE ? Even with some of the concerns listed above , multifamily is holding up well , and consensus forecasts continue to point towards stability . Given this , the sector will continue to get its fair share of investment dollars , and maybe even more given the issues facing retail , hospitality , and office . Only industrial , with its e-commerce-inspired boom , can be put into the same category ; but even there , greater uncertainty exists . Any significant pullback in the economy or slowdown in recovery will quickly halt consumer spending and cause problems for warehouse and distribution . The same situation for multifamily will also be problematic , but likely less so . Households still need shelter , and a move to a single-family home in the suburbs becomes more troublesome during a poor economic climate . Maybe multifamily is , after all , recession- and pandemic-proof .
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Troubled Assets and Opportunities in the Age of COVID-19 Learn how to apply the CCIM strategic analysis model to assess potential distressed asset opportunities in your market .
Thomas P . LaSalvia , PhD Senior economist at Moody ’ s Analytics REIS
Victor Calanog , PhD Chief economist and senior vice president at Moody ’ s Analytics REIS
To register , visit www . ccim . com / education or call + 1 ( 312 ) 321-4460 , opt . 2