Blackstone and ESRT Expand Portfolios; New Apartment Projects Underway: February Multifamily News Roundup
The Biggest February 2022 Real Estate News
We have summarized the biggest multifamily real estate from February of 2022. Residential starts increased, Blackstone and Empire State Realty Trust have made acquisitions in the multifamily space, and more.
State of the Market
A forecast from the Mortgage Bankers Association predicts total multifamily and commercial mortgage borrowing will surpass $1 trillion this month, 13% more than 2021’s forecasted $990 billion. Multifamily lending alone is expected to hit a record $493 billion this year, 5% more than last year’s record of $470 billion. The upward trend is expected to continue for 2023.
After a dip in rental prices last year due to the pandemic, it’s expected that the United States will see an average rent increase of 4% this year. Inflation (growing at the fastest rate in 40 years) and limited housing stock in both multifamily and single-family housing have driven rental prices up in many markets. The Federal Reserve has increased interest rates for the first time since 2018, and we expect to see more rate hikes this year, resulting in mortgage rate increases. Stagnated wages have failed to keep up with rising costs, and working families are feeling the pinch.
Residential starts are up this month, increasing 6.8%. New U.S. home construction rebounded in February to the strongest pace since 2006. Buyer demand is high, but builders face the challenges of high commodities prices, supply chain woes and labor shortages. Russia’s invasion of Ukraine has rattled global supply chains and consumer confidence.
Empire State Realty Trust Continues Diversification Effort
Empire State Realty Trust, the office landlord, continues to face headwinds in its core sector as office workers opt out of returning from remote work. The firm announced that it is planning more forays into the apartment market. Last fall, the REIT successfully purchased two Manhattan apartment buildings with a total of 625 units for $307 million, competing with more established REITs and private investors. The New York rental market, famously hard to navigate, is further complicated by pro-tenant regulations. Multifamily powerhouse REITs Equity Residential and AvalonBay have recently scaled down dealings in the New York market to pursue more profitable deals in the Sun Belt.
New Projects in Texas Underway
Two new building projects have been announced this month in Texas. JLL has secured an undisclosed amount of funding for the construction of The Travis, a 50-story multifamily building located at 808 Rover Street in downtown Austin. The 423-unit project is slated for completion in fall 2024. Wood Partners has struck ground on a new luxury community in the Dallas area. Alta at the Farm is scheduled to open early 2023 with 325 apartment homes within a 135-acre mixed-use development called The Farm.
Blackstone Expands Portfolio
Blackstone announced acquisitions this month totaling 35,000 new holdings. Blackstone has acquired all outstanding shares of Preferred Apartment Communities’ common stock. In this transaction, Blackstone will add 44 multifamily properties consisting of 12,000 units in Georgia, Florida, Tennessee and North Carolina; 54 grocery centers; 2 office properties; and 10 mezzanine and preferred equity investments. This follows Blackstone’s recent acquisitions of Resource REIT and Bluerock Residential Growth REIT.
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