As Multifamily Debt Demand Grows, More Lenders Stepping Up via CoStar Group

For the first time in more than a decade, apartments have replaced office buildings as the top investment sector for commercial real estate in the United States, and with that demand has come a commensurate need for debt capital and a growing source of lenders to fill the need.

New development of multifamily space across the U.S. has been unabashedly robust over the past year, leaving many anxious about the impact the new supply will have on market conditions. However, according to Jones Lang LaSalle, reports of overbuilding in the apartment sector are greatly exaggerated, as the number necessary to sustain demand fell short by 100,000 units last year, pointing to a healthy outlook for 2013 and well into 2014.

“The multifamily market is still playing catch-up, as supply remains depleted. Development will continue to grow at a solid pace in 2013 with approximately 260,000 units expected to come online, while demand requirements outpace the supply pipeline. This year, expected deliveries of new product will be 12% below historical average delivery levels,” said Jubeen Vaghefi, international director and leader of Jones Lang LaSalle’s Multifamily Capital Markets.

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