|It’s too early to suggest that office, retail and apartment properties are undergoing a permanent structural change, though creative destruction will impact some asset types in certain geographies. After nearly a year of isolation at home, people are eager to resume social interaction and experiences — collaborating in offices, congregating in restaurants, meeting clients at convention hotels, enjoying tourist destinations. There are a few notable green shoots, including signs of life in Manhattan retail properties. Once vaccines are widespread, a tsunami of pent-up demand and savings will be unleashed, including a portion of the more than $20 trillion stashed away in money market mutual funds and savings deposits.
In terms of transaction activity, longer-term perspective paints a more upbeat picture. While deals declined year-over-year in Q4 2020, the period actually exceeded activity in 2006, the height of the last real estate cycle, according to a new report by Marcus & Millichap research. Capital is aggressively seeking distressed deals, which continue to be more elusive than anticipated.
Watch for some banks, insurance companies and CMBS to be more active in multifamily lending on A and B+ properties, since Fannie Mae and Freddie Mac have reduced lending caps and are allocating more of their capital to affordable housing. Structured debt players are gravitating from urban centers to secondary and suburban markets in search of opportunities.
In short, the disruption could continue for another six to eight months, so keep your eyes on the horizon. Amid all of the uncertainty, MMCC continues to close loans across all asset classes, leveraging our unparalleled network of lender relationships. Please reach out to an MMCC advisor for the latest updates and guidance on all your capital markets needs.