Hello all - I would value your input on a crossroads I am facing.
I work for an LP fund that focuses on multifamily and student housing. We have been on the value-add train, slowly shifting to core-plus (like everyone else). Deals are getting harder to find, the compensation sucks, I'm not learning anything new.
An opportunity has crossed my path to join a developer focused on multifamily, mixed-use, and office in major markets throughout the southeast, predominantly major florida markets. The compensation is **immensely **better and the projects are more interesting.
As exciting as this is, I'm worried about getting into the development space at this point in the cycle. I raised this issue over the phone with their CIO, and he focused on a few points:
- The amount of institutional opportunistic equity on the market is very high and increasing (I'm not sure why this is a good thing, beyond making it easier to capitalize projects)
- Value add returns are coming in (I didn't understand how this related)
- This group "picks their spots" with a recession in mind (medical/academic employment drivers, core downtown areas, etc.)
So what do you all think about opportunitistic plays at this point in the cycle? On one hand, I totally believe in the multifamily demand story. On the other hand, I don't think $2,000+ 1 bedroom rents are sustainable (Maybe im wrong?).