It’s conference season in the CRE world and our team has fanned out over several conferences and events… and cocktail hours… to take the market’s pulse. Our survey was very much an informal one, but nonetheless turned up the following top five major trends:
1. The CRE cocktail cognoscenti are of two minds. Many (at least those that play in the dominant multifamily sector) seem to remain bullish. Shovels keep going into the ground… especially in the multifamily sector.
2. The remainder of the cognoscenti feel that 2019 will be more challenging, perhaps significantly so, than in the previous few years. Prudence and careful strategizing are becoming more the name of the game for some. Others are expecting a market hiccup or even full-blown pullback. Of note: Nobody seems to believe that we are in for a full repeat of 2008.
3. Multifamily is in a class by itself. Of course, this sector benefits from the effective sponsorship of the market by Fannie Mae and Freddie Mac. These, in turn, have had recent confirmation by the FHFA of continued lending caps of $70 billion (total), a boon to the multifamily and related spaces. See our related week’s end wrap-up, where we noted that, for 2018, CBRE was just crowned the leading lender in Freddie’s rankings, while Wells Fargo Multifamily attained the same honor in Fannie’s rankings.
Further, overbuilding is not a concern for many – as absorption seems to be keeping up with inventory increase. Among other things, both millennial housing patterns and immigration are drivers of the need for multifamily – as millennials and immigrants continue to need housing.
Of note – housing trends for both immigrants and millennials may be changing in ways that may undermine long-term aggressive growth in multifamily development.
4. If one listens carefully over the sounds of all of those shovels in ground, and the clinking of celebratory glasses, another noise is audible — the whoosh of traditional lenders pulling back from certain markets. This especially impacts some of the non-multifamily sectors.
Many agree that debt funds continue to increase their influence, not just in bridge and construction lending (their more-traditional segments) but even in senior debt. Stay tuned for CrediFi’s insight-filled 2019 CRE Outlook report coming shortly, where we discuss this in more detail.
5. Finally, market participants are thinking of ways to be more strategic with data, in order to continue to meet revenue goals, and avoid risk pitfalls. This may sound like a big of a self-promotion… but that doesn’t make it any less true.