July 9, 2018

Gottesdiener's multifamily outlook

Northland Investment Corp. CEO Larry Gottesdiener shared his outlook for the nation's hot apartment market.

Q. With multifamily occupancy and rents in Connecticut and the U.S. trending upward nationally, where do you see the market peaking?

A. In multifamily, we're in the ninth inning. The reason is demand is spectacular but supply is outstripping demand. So, we're right at the top of this cycle. That being said, I feel like the 'down,' if you will, is not a down. It's going to be a flattening. That's what we're seeing now, just slow inflationary type growth -- 2 to 3 percent. I think it's going to be a double-header. We're at the end of the first game, but after a quiet period, I think there's going to be another leg up in multifamily.

… The second uptick is going to be because of rising interest rates, rising costs. Rising labor. So, there's no demand problem. The second leg up is going to be a function of less supply.

Q. Timetable on that?

… At the end of this year, we're starting this flattening down. By the way, I think that's going to last for a couple years, maybe '20, '21. Then I think you're going to see … a recession. So that'll also choke off supply. So, I think the next leg up will be in the next decade.

It's been a very, very good multifamily run. It's been maybe the best in history, certainly since the Great Recession.

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