Multi-Family Sector soars above all other CRE Asset Classes

Our partners at marcus evans have conducted an interview with Anika Khan, Economist at Wells Fargo Securities, recently and kindly gave us a preferential permission to publish it on our website.

One of the biggest reasons for bank failures during the recession was failure in Commercial Real Estate (CRE) portfolios. Loan standards spiraled out of control and banks were unprepared for the crash that followed. The United States CRE market is currently on a gradual but uneven path to recovery, while multi-family has been steadily improving.

“Improvement in the multi-family sector continues to be driven by a surge in apartment demand and limited supply. Moreover, during the housing boom, many traditional renters chose to buy a home to reap the benefits of rising home prices. That said, the sharp downturn and now adverse psychology around owning a home has returned many traditional renters to the apartment market. We are also seeing baby boomers that would typically trade down to a smaller home also choosing to rent. This trend will likely begin to slow as supply eventually catches up with demand. While conditions are improving across the country, rents are rising the fastest in areas

that are benefitting from the explosive growth in energy and high technology,” said Anika Khan, Economist at Wells Fargo Securities and a speaker at the upcoming 6th Annual Risk Management for CRE Conference, September 11-12, 2012 at the Millennium Knickerbocker Hotel in Chicago, IL.

The development of the multi-family sector raises the question on whether or not the growth of multi-family will propel growth in other commercial real estate classes.

“There is a correlation; as each property type has its own drivers, but all depend on the pace of economic activity, employment, and income growth,” said Khan.

Despite the success the multi-family sector has had above all other asset classes; there is skepticism about its sustainability.

“A slowdown in multi-family would be due to a shift in supply and demand dynamics. Operating fundamentals for the industrial and office market are improving, but the pace is sluggish with trade and employment as key drivers. The retail sector will continue to lag as consumer spending has slowed and improvement in the housing market remains sluggish. The pace of economic activity, however, will continue to be the glue that binds the sectors,” said Khan.

Anika Khan will be leading the session, “Determining if Multi-Family Has Reached its Highest Point” on September 12, 2012 at 9:45 AM at the marcus evans 6th Annual Risk Management for CRE Conference. Attending this session will enable you to:

Evaluate how multi-family has soared above all other asset classes recently
Look at rents and other market trends to evaluate if it is becoming overheated
See what can be done to properly mitigate risk of any slowdown
Extrapolate the impact a cool-down in multi-family could have on other asset classes

“The panel discussion will be very informative and should provide insight on key trends in the commercial real estate market,” said Khan.

For more information regarding this conference and to register, please visit http://www.marcusevansch.com/CRE2012_Interview_AnikaKhan or contact Robin Yegelwel at (312) 540-3000 ext. 6483 or robiny@marcusevansch.com

About marcus evans

Marcus evans conferences annually produce over 2,000 high quality events designed to provide key strategic business information, best practice and networking opportunities for senior industry decision-makers. Our global reach is utilized to attract over 30,000 speakers annually; ensuring niche focused subject matter presented directly by practitioners and a diversity of information to assist our clients in adopting best practice in all business disciplines.

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