Mike Jehle knows it’s an old story. As Midwest regional director based in the Bloomfield Hills, Mich., office of Arbor Commercial Mortgage, Jehle watched the multi-family sector of the commercial real estate industry boom during the days of the Great Recession.
And he’s watched as it’s continued to thrive even as the country still struggles with a sluggish economy.
“I was thinking as I was shaving this morning just what new I was going to talk about when it comes to multi-family housing,” Jehle said.
And this may be a problem for Jehle long into the future. Jehle, like many commercial real estate pros, doesn’t view the multi-family rise as a boom. He looks at it as a long-term trend.
The reason? There’s been a fundamental shift in the way people, especially young people, are looking at housing today.
Jehle points out that many young people today have seen their parents struggle with making their mortgage payments. They’ve seen their parents’ homes lose value. Many have even seen their parents lose their homes to foreclosure.
Think this makes these young buyers want to rush out and buy a single-family home or condo?
Today’s young buyers want flexibility, Jehle said. They no longer view housing as the solid investment that so many older consumers once did.
“The good multi-family operators out there are realizing incredibly low vacancy rates,” Jehle said. “They are charging higher rents. And this doesn’t look like something that is going to change in the near future.”
All of which means one thing: Expect a steady stream of stories pointing out that multi-family remains the strongest commercial real estate sector across the country.
(If you’re interested in reading more about Jehle’s thoughts on the multi-family financing business, be sure to check out our August issue. Multi-family finance is our lead story this time around.)
— Dan Rafter