CAP RATES WILL COMPRESS
Given that most multifamily predictions include higher vacancy rates, low demand, high interest rates, and slowed development, what does this mean for operators? What I am predicting will be a focus on efficiency. Operators will need to focus on eliminating friction points from the prospect finding, leasing, and moving-in to operators communicating through the resident’s life cycle. MULTIFAMILY WILL FOCUS ON EFFICIENCY
The terrain ahead for multifamily will be a sludge. Modest rent growth, soft occupancies, and rising costs will all be a part of the 2024 multifamily story. But another part of the story will be innovation. In every downturn, there is always a bright spot. For the multifamily business, the bright spot I foresee will be the continued innovation and adoption by owners, clients, management companies and on- site staff to embrace new technologies that will create cost saving efficiencies to improve the bottom line, but also to enhance the resident and prospect experience. MULTIFAMILY OPERATORS WILL INNOVATE
I believe we’re near the bottom of the market for the current cycle with values off 25-30% from two years ago. Over the next 12 months, my prediction is that we will see a “tale of two operators” —owners with floating rate debt and expiring rate caps will continue to face significant financial headwinds, while owners with fixed-rate debt or who survived the last two years unscathed will likely start to see valuations recover and an opportunity to recapitalize or sell. I expect retail sales to outpace distressed sales, so cap rates should start to compress, and values should start to increase.
This efficiency will come through technology, more specifically AI.
Consumers expectations have evolved into quicker follow up and seamless integration through the process. AI will make these contact points and workflows smoother.
The time is now to find ways to make technology work for your operations.
MY PREDICTION IS THAT WE WILL SEE A “TALE OF TWO OPERATORS”.
EFFICIENCY WILL COME THROUGH TECHNOLOGY.
IN EVERY DOWNTURN, THERE IS ALWAYS A BRIGHT SPOT.
Gary Gregory Coach and Author of The SUPERFANTASTIC ME! Read Gary’s Book
J Scott Co-Founder of
Tony Sousa Vice President RPM Living Connect with Tony
Bardown Investments Podcast Host of Drunk Real Estate Connect with J
PAGE 54
Powered by FlippingBook