Sign On
  • KeyNavigator
    Sign On Form is Loading
  • CIS Online Brokerage CIS Login

Cyclical change is inevitable in any capital market—including the still bustling multifamily sector—so seasoned lenders take the long view when it comes to evaluating the impact of current trends. From political uncertainty and the dearth of affordable housing to the increasing impact of short-term rentals and historically low unemployment rates, it is essential to weigh the many current factors that stand to affect long-term outcomes in this specialized yet diverse class.

The need for experienced perspective in structuring intelligent capital deals was a common theme at the InterFace Multifamily Southeast Conference, held recently in Atlanta. Chris Black, Regional Manager, Multifamily Lending for KeyBank Real Estate Capital®, participated in a panel exploring current lending terms and what could be on the horizon for 2020 if interest rates stay low. Afterward, he discussed top takeaways multifamily investors should consider as they move forward.

The bottom line: Always take a holistic view of the market. Political change can play a major role, but perhaps just as important are local economic trends. If large or mid-size companies with healthy capital positions are moving in, a surge in multifamily demand could be on the horizon, too.

Today’s Multifamily Outlook Shows Opportunities and Challenges

Across the U.S., increasing urbanization and unemployment rates hovering around 3.5%—a historic, 50-year low1—have been creating continual demand and capacity for multifamily development. Industry insiders expect a strong 2020 to follow, with rental production projected to continue at near-present levels, with a 1% increase in 2020 and a 4% increase in 2021, amidst low vacancies and increasing demand by millennials.2

Political uncertainty around the presidential election, together with changes on the state and municipal level, make it difficult to predict exactly how multifamily lending will look beyond 2020. Changing regulations will play roles yet to be determined, such as those affecting rent levels in its many forms, which can in turn be tied to income trends, and potential salves for the affordable housing crisis.

Still, a few other trends are creating more tangible impacts now:

  • Low interest rates, for now. Interest rates continue to be low, contributing to widespread optimism. But newer industry players may take these rates for granted, lacking the long-term experience of previous cycles, when transactional velocity was at a lull.
  • Corporate interest is stimulating multifamily demand. The war for talent is enticing multifamily investment to cities with strong corporate activity, particularly those with a strong tech presence. In Seattle, for example, employment is growing faster than in many other parts of the country, with over 3% increase year-over-year3 compared to 1.5% nationally. And multifamily investors have been taking note, with the city averaging one of the country’s highest volumes of multifamily permits being processed.4 Austin is another city exhibiting similar characteristics and activity.5

    In any market, investors do well to assess the corporations that are already there. What are their capital positions? Are they hiring? Do they have funding? Often, medium-size firms make up the nuts-and-bolts of the entire economy and can help paint an accurate picture of the market in question.

  • Short-term rentals are on the rise, although lending for them is not. Short-term rental (STR) supply grew by 26% in 2019, with multifamily units comprising the second-largest group of STRs available for booking in the U.S. (after houses).6 While some investors have found short-term success in meeting initial leasing goals with STR companies, particularly in areas with high turnover and transience like Orlando, long-term lending on a larger scale is unlikely, as institutions consider its effects on the deeper fabric of their communities, from day-to-day social interactions to the potential impact on affordable housing needs.
  • Manufactured housing is here to stay. Continued growth is on the horizon for this now-institutionalized asset class. Increasing consolidation is creating new potential for turnaround and equity growth.

Tomorrow’s Successes Depend on Intelligent Deals, Today

Experienced lenders bring deep industry insight to the table and understand the value of strong relationships. Amidst the changing winds of politics, corporate activity, and regulatory environments, it’s wise to work with lenders who understand the specialized multifamily housing industry. As one of the nation’s leading lenders in the multifamily sector, KeyBank Real Estate Capital’s integrated team delivers debt, equity and advisory services and arranges permanent multifamily property financing, syndicated loans and agency financing—with a senior team on every deal.

To learn more and discuss your next multifamily project, contact your KeyBank Mortgage Banker, or reach out directly to Chris Black.



Gerrity, Michael. “Multifamily Sector in U.S. to Enjoy a Strong 2020.” 1/27/20. World Property Journal.


Jobs outlook 2020: Seattle-area job seekers are ‘still in the driver’s seat’ Seattle Times, 1/10/20


Kane, Caroline. “How Looking at a Local Tech Scene Can Help Maximize Multifamily Investment Returns.” National Real Estate Investor, 1/21/20.


Curbed. “Report: Austin ranks second in country for multifamily housing permits,” 11/13/19.


CBRE Research. “Short-Term Rentals: A Maturing U.S. Market & Its Impact on Traditional Hotels.”