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Friday, Jan 27, 2023
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The Number

Though it seems like every other development story has been about apartments and condos over the past year, don’t expect that trend line to alter one bit in 2015. In fact, expect more of the same. That’s the conclusion of a survey conducted by Capital One Bank’s Commercial Real Estate Group, a unit of the MacLean Va. bank that provides financing for multifamily investors and developers. The bank took the temperature of participants at the 2014 RealShare Apartments Conference held in October at the Westin Bonaventure Hotel in downtown Los Angeles. It found that 73 percent will need acquisition or construction financing, with only 20 percent needing refinancing. Break those numbers down further and the single biggest category in demand was acquisition financing at 52 percent. What’s more, 42 percent of all survey participants said they expect renovations and modernizations to be the leading type of development project next year. And for new development, 44 percent saw the greatest value in urban infill, compared to 23 percent who predict suburban markets will flourish. That’s a whole bunch of numbers, but the bottom line appears to be that commercial multifamily action will be centered on buying and renovating urban infill buildings, as opposed to new construction in the suburbs – but that’s not going away either. That is, unless the biggest fears of the participants play out. While interest rate increases came in as the biggest bogeyman among 24 percent of those surveyed, a full third feared flare ups around the world even more. “Despite uncertainty with the global economy, we’re hearing that multifamily professionals have an optimistic outlook,” said Kristen Croxton, a senior vice president at the bank. Let’s keep our fingers crossed. – Laurence Darmiento

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