Multifamily Real Estate Taking Off via Financial Advisor Magazine

While the single-family housing market remains stagnant, demand for apartments is on a tear, making the multifamily segment very attractive for nontraded REIT investors, say executives at Orlando-based CNL Financial Group.

Jeff Shafer, group president of CNL Securities Corp., who is responsible for CNL’s capital-raising activities, says CNL looks for alternate real estate assets that can produce growth and capital appreciation.

“Suddenly, you have a tremendous demand for multifamily units,” says Rick Coe, principal managing director of investment for CNL Financial Commercial Real Estate. “In the past year, the vacancy rate of multifamily housing slipped to 5.2 percent compared to a historical average of 6.5 percent to 7 percent.”

Coe says the burgeoning demand for rental housing is fueled in part by baby boomers’ offspring, dubbed “echo boomers,” who either cannot afford to own a home, or prefer not to buy one. The rental boom, he says, is also a major bi-product of the 2008 financial market crash that has pushed echo boomers, baby boomers and others to pass on or get out of the housing market. “The supply and demand metric for multifamily housing has shifted over the last four to five years," he noted.

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