CRE Consolidation, American Cities, and Lennar – June 2020 Multifamily News Roundup
The Biggest June 2020 Multifamily News
We have summarized multifamily news to emerge in June 2020. CRE consolidation continues, the future of American cities remains up for debate, and Lennar had an unexpectedly positive second quarter.
CRE Consolidation Continues
Apartment owner and operator Greystar Real Estate has closed a massive deal: acquiring the property management division of Alliance Residential. The closing brings 130,000 units under Greystar’s control and cements the firm’s position as the nation’s largest apartment operator.
Negotiations began before the onset of the pandemic. Greystar has confidence in the multifamily market’s stability and resilience and chose to close despite the virus and the option to abandon the deal without penalty.
Many of the high-end buildings Greystar will now manage belong to the class that has best-withstood the economic fallout of COVID-19. The portfolio spans the western United States, with assets in Las Vegas, Denver, and several California cities.
The Future of American Cities
Unpaid property taxes have led to the tightening of city budgets. Ongoing uncertainty about when a vaccine will emerge has led to an ongoing exodus from large cities. Residents have fled to vacation houses, hometowns, or to markets with lower costs of living and more personal space. This trend has led to concerns about the fiscal (and overall) health and of major American cities.
Richard Florida, an urban studies professor at the University of Toronto, thinks cities have more resilience than most believe. In his opinion, the pandemic, recession, and protests after the killing of George Floyd may lead to further revitalization. From the various difficulties facing the United States, Florida anticipates the emergence of a broad coalition to emerge that will continue the trend of urban renewal that has buoyed the American economy for the last decade. In the mean time, creative programs by cities such as Tulsa may keep growth going.
Urban apartment owners have yet to feel the consequences of the various crises as sharply as small landlords, and months may pass before they do. However, American home builders have begun to capitalize on this new flight to the suburbs. More on that below.
Lennar and Home Sales
Lennar, a builder of multifamily complexes and single-family homes, had unexpectedly positive news for its investors: home sales in the second quarter remained about the same as those from last year. Low mortgage rates helped the company sell more homes than expected, though lower prices might prove bad for Lennar in the long term. As local governments reinstate lock-downs, Lennar will serve as a good indicator of where the industry’s future may reside: in dense cities or in their suburbs.
Other Stories from June
- Housing and Urban Development Secretary Ben Carson has announced a plan to address the affordable housing issue. He hopes to convert commercial spaces made vacant by the pandemic into housing.
- Hiring in multifamily remains strong despite the pandemic.
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