There’s been a fair amount of discussion in multifamily circles of the recently released Emerging Trends in Real Estate 2009 Report from the Urban Land Institute and PriceWaterhouseCoopers LLP.  This report offers an interesting contrast to the opinion from the NMHC in the last post. 

MarketWatch offered a reasonable summary of the release – here’s a link to their summary review article. 

Here’s the money quote for multifamily investors –

The cyclical real estate markets always come back, and they will this time too, but not anytime soon,” said Tim Conlon, partner and U.S. real estate sector leader, PricewaterhouseCoopers. “Commercial real estate was the last to leave the party, will feel the pain in 2009, and may be the last to recover. In the meantime, smart investors are going to hunker down and manage through these tough times. We expect to see patient, disciplined, long-term investors rewarded and return to a back to basics approach to property management, underwriting and deal structure.”

Distress in the housing market is benefiting the apartment market, which the report lists as the number-one “buy.” The report goes on to suggest that moderate-income apartments in core urban markets near mass transit offer the best buy, a trend that carried over from the previous year.

Another interesting quote block from the article – their suggestions for managing through 2009 –

  • Investors should sit tight. Opportunities will surface at significant discounts.
  • Buy discounted loans.
  • Recap distressed borrowers — invest in maturity defaults, construction loans/bridge loans, or take mezzanine positions and equity stakes in properties.
  • Invest in publicly-held real estate investment trusts (REITs) - they will lead the market’s recovery.
  • Focus on global pathway markets — 24-hour coastal cities.
  • Staff up asset managers, leasing pros and workout specialists. Separate good assets from bad.
  • Retrench on development and reorient to mixed-use and infill. Higher-density residential with retail will gain favor in next round of building.
  • Go green — cutting energy expenses is likely to be a priority.
  • Buy or hold multi-family; hold office; hold hotels; buy residential building lots, but be prepared to hold.
  • Purchase distressed condos in urban areas near transit.
  • Focus on neighborhood retail centers with strong grocery anchors and chain drugstores.

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