Has the US Multifamily Sector Peaked?

MULTIFAMILY OUTLOOK: Has the U.S. Multifamily Sector Peaked?
FEATURING:
QUINN EDDINS, Director of Research and Analysis, CBRE
JESSICA OSTERMICK, Director of Research and Analysis, CBRE
CAPITAL SPREADING TOWARDS SMALLER MARKETS
Share of total sales volume (4-quarter trailing average), %
50
40
30
20
2010
2011
Primary
2012
2013
Secondary
2014
Teriary
Sources: RCA, CBRE Econometric Advisors.
Primary: Boston, Chicago, New York, Los Angeles, San Francisco, Washington DC
Secondary: Atlanta, Baltimore, Dallas, Denver, Houston, Miami, Minneapolis, Orange County, Philadelphia, Phoenix, Riverside, San Diego, Seattle, St. Louis
TANGIBLE PREMIUMS REMAIN FOR ASSETS IN
PRIMARY MARKETS, DOWNTOWN, AND CLASS A
URBAN INFI LL
SUBURBAN
Class
Class
A
B
C
A
B
C
Primary
4.3
4.7
5.5
4.8
5.2
5.7
Secondary
4.7
5.4
6.1
5.3
5.7
6.3
Tertiary
5.4
6.2
7.2
6.3
6.6
7.3
Source: 1st Half 2014 CBRE Capital Markets Survey, CBRE Econometric Advisors.
Primary: Boston, Chicago, New York, Los Angeles, San Francisco, Washington DC
Secondary: Atlanta, Baltimore, Dallas, Denver, Houston, Miami, Minneapolis, Orange County, Philadelphia, Phoenix, Riverside, San Diego, Seattle, St. Louis
STRONGER REVENUE GROWTH EXPECTED IN THE SUBURBS
2014-2019 average annual revenue growth, %
3.5
3.0
2.5
2.0
Primary
Secondary
Urban Core
Tertiary
Suburbs
Source: CBRE Econometric Advisors.
Historical and current multi-family vacancy and rent data are provided by RealPage Inc.'s MPF Research division.
WHERE SOME OF THE OPPORTUNITIES ARE?
4
3
2014-2019 average annual
revenue growth, %
2
1999-2014 revenue growth
volatility, %
1
Ratio of future revenue growth to
the historical revenue growth
volatility
Nation
Dallas
Sacramento
Atlanta
Kansas City
Norfolk
San Diego
Baltimore
Nashville
Philadelphia
Richmond
Cincinnati
San Antonio
0
Source: CBRE Econometric Advisors.
Historical and current multi-family vacancy and rent data are provided by RealPage Inc.'s MPF Research division.
UPSIDE POTENTIAL FOR RENTER DEMAND
Tenure shift and demographics continue to support fundamentals
Homeownership Rate (%)
Renter Households (Mil.)
71
42
40
38
36
34
32
30
28
26
24
22
20
69
67
65
63
61
59
1965
1970
1975
1980
1985
Homeownership Rate (L)
1990
1995
2000
2005
2010
Renter Households (R)
Source: CBRE Econometric Advisors, Moody’s Analytics, and CBRE Research, November 2014.
HAS MULTIFAMILY PEAKED?
Completions and Net Absorption (Units, 000's)
Vacancy Rate (%)
Completions (L)
Net Absorption (L)
Vacancy Rate (R)
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2
2007
-200
2006
3
2005
-100
2004
4
2003
0
2002
5
2001
100
2000
6
1999
200
1998
7
1997
300
1996
8
1995
400
SPEAKER BIOS
PETER DONOVAN
Senior Managing Director
Capital Markets, Multifamily
CBRE
Mr. Donovan, a 34-year veteran of the financial services and multifamily industries, joined CBRE
in November of 2006 and co-leads the CBRE Capital Markets, Multifamily service line as Senior
Managing Director. In his role, Mr. Donovan oversees our Fannie Mae and FHA debt platforms
for CBRE throughout the United States. Mr. Donovan was previously the Chief Executive Officer
of Deutsche Bank Berkshire Mortgage, steering that firm to a market-leading position in
government-sponsored multifamily loans.
QUINN EDDINS
Director of Research and Analysis
CBRE
Mr. Eddins is Director of Research and Analysis for the state of Florida where he leads Florida’s
research teams and is responsible for generating market intelligence and ensuring that clients
receive thorough, timely and strategic research information. Prior to joining CBRE, Quinn was
Director of Research for Radar Logic Inc., a New York City-based real estate data and analytics
company serving the financial services industry. He has experience in finance, real estate, capital
markets and business development.
JESSICA OSTERMICK
Director of Research and Analysis
Ms. Ostermick has over 10 years of commercial real estate experience. As the Director of
Research and Analysis for the Colorado region, Jessica generates market insight and
intelligence to support defensible decision making for CBRE professionals and clients. With
expert discernment in market trends and key regional dynamics, Jessica anticipates opportunities
and provides strategic analysis for all asset classes. She specializes in Multifamily, Energy and
Data Center industry research at a national level.
CBRE
SPEAKER BIOS
BOB PLUMB
Managing Director
AEW Direct Investment Group
Acquisitions
Mr. Plumb leads the AEW Direct Investment acquisitions team, a group of 21 acquisitions
professionals who are responsible for sourcing, negotiating, underwriting and closing investment
opportunities for AEW’s core and value-added clients. Mr. Plumb has over 30 years of diversified
real estate experience that encompasses the sourcing, structuring and underwriting of new
investment opportunities, as well as the management of existing assets and portfolios.
BOB DEWITT
Vice Chairman, President and
Chief Executive Officer
GID
Mr. DeWitt oversees corporate strategy development, new client/equity partner sourcing and
procurement, property acquisitions and dispositions, client relations and overall management of
the company. In his oversight of GID's equity co-investment programs, he directs real estate
acquisitions, dispositions, portfolio management and partner communications. Previously, he was
Chief Investment Officer of GID and Senior Vice President of GID Acquisitions. Mr. DeWitt joined
the company as Vice President of GID Acquisitions in 1987.
GLEB NECHAYEV
Senior Managing Economist
CBRE Econometric Advisors
Mr. Nechayev has over 15 years of real estate experience and is responsible for the analysis of
the U.S. Multifamily market, including the quarterly forecasts and consulting projects. Prior to
joining CBRE in 2002, he was an Associate with Lend Lease Real Estate Investments.
SIMON BUTLER
Executive Vice President & Partner
CBRE New England
Mr. Butler is an Executive Vice President/Partner at CBRE/New England leading the New England
Multifamily Investment Sales team. He most recently served as Executive Director with Cushman
& Wakefield, Inc.'s Capital Markets Group having joined in October 2006. Prior to Cushman &
Wakefield, Inc., Mr. Butler was with CBRE/NE as a member of the Investment Properties Group.
Since January of 1996, he has dedicated his focus to the marketing of apartment communities and
was included as a member of the CBRE Multifamily Group..

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