Why is multifamily seen as a product type that is less cyclical compared to retail, industrial, office and hospitality?

Best Response

In tough economic downturns, offices/industrial facilities can downsize, stores can close, but people will always need a place to live.

Investment Banking Internship In Houston

jimmymc

Senior Baboon

Hey, thank you, appreciate it! because tough economic times can also affect class A or luxury multifamily, would you say particularly class B and class C are even more of a slam dunk during a downtown as long as they were bought with good fundamentals?

AB84

Not necessarily. When Class A rents come in, it puts downward pressure on Class B and C rents. Wouldn't call it a "slam dunk" in comparison, but I would imagine class B/C to be somewhat more stable.

prospie

Almost Human

jimmymc:
Hey, thank you, appreciate it! because tough economic times can also affect class A or luxury multifamily, would you say particularly class B and class C are even more of a slam dunk during a downtown as long as they were bought with good fundamentals?

c stuff gets hit in downturns. one example why is that c apartments are full of construction workers, so if there's a construction slowdown...

overall, poor communities can definitely be negatively impacted by a recession.

Jim1234

Senior Baboon

in a downturn if you lose your home your next best option is to go into an apartment.

Pug

Human

Looks like AB84 summed it up best. One thing to note is that hospitality is the most sensitive to change. At the onset of economic downturn, the first thing to go is people vacationing or traveling.

“The three most harmful addictions are heroin, carbohydrates, and a monthly salary.” - Nassim Taleb

UrbanGladiator

Neanderthal

Also to add on a few rambling thoughts.. there's some cyclicality due to people consolidating into fewer households (young adults moving back home) when jobs pull back and unemployment increases. However, most places in the US have a growing population due to net migration into the country and births. But when people do move, it's pretty frictional for people to just pick up and leave a city to move elsewhere, so from my opinion that would impact mid and long term rental trends, rather than short term.

Authored by: Certified Real Estate Professional - Vice PresidentCertified Real Estate Pro

DCDigger

In our market you have greater volatility as you move downward in quality. Class C apts swing more, because those people are less financially secure, and are therefore more willing to put up with alternative living arrangements. They move in with roommates, family, etc. Tenants in Class A buildings don't do this as often.

Authored by: Certified Real Estate Professional - DeveloperCertified Real Estate Pro

Your boy Blue

King Kong

I understanding you're speaking to a specific market, but do you think this would hold true for both high COL areas and low COL areas? Instead of COL, is the right delineation to make the prevalence of marginal housing (Denver / Austin v. LA / Dallas)?

Array

DCDigger

Molestias vel aut non numquam. Quasi eius repudiandae eos dolor est eaque. Quis sit earum cum impedit. Ex laboriosam ut est dignissimos quia dolore. Distinctio accusamus a sed. Itaque eum cupiditate error placeat.

Occaecati quia corrupti nihil quam. Voluptatibus rerum quibusdam ut quidem. Quia reprehenderit consequatur aut accusamus ut dolores vel. Et et deserunt quo sed asperiores iure.

Sint rerum sit fugiat ex in ut explicabo. Reprehenderit occaecati sapiente porro consectetur. Eveniet deserunt cumque voluptas minima omnis libero dolores. Impedit aut eaque ullam dignissimos quis. Temporibus quibusdam dolores officia odit maxime sed sunt. Aliquam ullam id facilis optio.