“It’s going to be a really big year or two for multi-family”: inside the market recovery

Whatever the sector of the real estate market, everyone is eager to see just how the recovery holds up as we emerge from the pandemic – and the multi-family market is no different.

While figures show multi-family is getting back on track, the recovery is not gathering speed as quickly as many would like. This is no cause for concern, however, says Justin Parker (pictured), chief financial officer at RCN – who is optimistic about the outlook despite the challenges faced.

“I think what we’re going to see for many more months is the continued resurgence and continued demand for this product,” he explained. “When you look at housing fundamentals around the country, there’s such a limited supply of homes and such a high demand. Home prices are going to stay significantly high, so we’re going to continue to see this demand where people want to rent because they don’t want to put up the money to buy these overpriced homes, coupled with the millennials out there who have always feared buying. So, it’s a highly competitive market out there.”

It sounds like some long-needed positivity after turbulent times. But how exactly did RCN handle its approach to the multi-family market during the darkest days of the pandemic?

“Multi-family certainly was the market that probably got hit a little harder during the pandemic,” Parker reflected. “The biggest focal point was the rent, and the forbearance or deferment plans that had been put in place. That really put a strain on the market. So, we’ve seen a little bit of that diminish and normalize again, but the long story short is we’ve seen a nice resurgence throughout the country. Residential, traditional apartment complexes are where we’re really seeing the resurgence. If there’s commercial aspects to the property, there’s still a little bit of a recovery to be had there, especially with the work-from-home mentality and people trying to get back into the office. But, overall, we really doubled down our effort on the multi-family housing market simply because there’s such a tremendous amount of opportunity out there.”

So, what’s next for RCN’s approach to the recovering sector? Never one to rest on its laurels, the organization has plenty to think about.

“I think initially when we were coming out of the crisis, one of the key areas that we were putting a lot of focus on was highly populated areas,” Parker said. “We were putting a close eye on that because a lot of people were trying to get out of those highly populated areas and move towards a more suburban lifestyle. I think as things have normalized and the world has kind of gone back to your standard working order, if you will, we’ve really pulled back from that focus.

“We’re still doing a little bit more diligence on making sure that all the tenants are making payments. Are there still tenants that are in deferment or not making their rent payments? We need to think about what that process looks like, and what the process might be to get them back up to speed.”

Overall, though, Parker is adamant that things are looking up.

“People are building new multi-family properties, or they’re trying to do some renovations or stabilize it to rent it out. So, I think it’s going to be a really big year or two here for multi-family. As long as that balance remains where people want to rent versus buy, or multi-family properties are such a desirable product with the right property manager in place, the sky is the limit for the amount of revenue generated from those properties.”