Multifamily Market's Robust Rebound Faces Supply Challenges

Unveiling the Market's Secrets from Behind the Scenes

Author

Nuvo Capital
January 11, 2024

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“The U.S. multifamily market staged a strong rebound in 2023 as the number of units absorbed rose by 122% year-over-year to 332,000 units. While the increase in demand was impressive, it was overshadowed by the influx of new units, causing imbalances in supply and demand and pushing vacancy rates higher.”

- Jay Lybik, National Director of Multifamily Analytics at CoStar Group

Recent Multifamily Sales (Click to view details)

Recent Multifamily Loans (Click to view details)

Question: 

In the context of multifamily acquisitions, how do you conduct a risk analysis to identify potential challenges and devise mitigation strategies?

Answer: 

Conducting a comprehensive risk analysis in multifamily acquisitions is crucial for informed decision-making. Start by assessing market risks, considering factors like economic volatility and regulatory changes. Scrutinize the property's physical condition and potential maintenance issues. Analyze tenant composition and lease expirations to identify turnover risks. Engage with legal experts to assess any existing or potential legal issues associated with the property. Develop mitigation strategies for identified risks, ensuring they align with the investment's overall objectives. This proactive approach minimizes surprises and enhances the likelihood of a successful and sustainable acquisition.

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Structural Changes in CRE Debt Markets, Ares' Bryan Donohoe Helps Us Sort it Out

In a special guest episode of The TreppWire Podcast, we are joined by Bryan Donohoe, Partner and Co-head of Ares US Real Estate. Bryan breaks down the world of debt markets, lending, and originations. We break down past market disruptions, CRE fundamentals, and the structural changes in the CRE debt markets.

Quiz of The Week

In multifamily real estate, what does "occupancy rate" refer to?

a. The rate at which property taxes increase annually

b. The percentage of occupied units in a building

c. The interest rate on a commercial loan

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Random Tip of the Week

✍ Evaluate Market Demand - Before investing, assess the demand for rental properties in your chosen area. Research factors like population growth, job opportunities, and lifestyle amenities. A strong demand for rentals increases your property's occupancy rate and potential for consistent rental income.

Current Rates (Weekly Update)

10-Year Treasury - 4.02% (⬆️.14%)

Fed Funds Rate - 5.33% (0%)

1-Month Term SOFR - 5.33% (⬇️.01%)

About Nuvo Capital Partners

Nuvo Capital Partners is a niche market-focused multifamily investment platform operating in the Southeast. As a dedicated sponsor (General Partner), we specialize in institutional quality real estate investments within these regions. Our team comprises industry professionals with 25+ years of combined experience, ensuring expertise and market knowledge. We pride ourselves on offering a transparent investment process, providing our investors with access to high-quality real estate opportunities while upholding integrity throughout.

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