by Dan Rafter
Michael Finn, senior vice president and regional manager with the commercial real estate division of Associated Bank, says that the multi-family market across the Midwest is a strong one. And the best news? He told Midwest Real Estate News that the market isn’t about to slow any time soon. Here is more of what Finn told us about the booming multi-family market.
Midwest Real Estate News: How strong is the multi-family market today in the Midwest? Are you seeing more construction and more multi-family deals this year than in the recent past?
Michael Finn: The multi-family new-construction market remains robust with projects in the city and also in the suburbs remaining equally active. Nationally, we are seeing many major cities citing vacancy or less than 5 percent of total units. This shows a likely increase in demand for units well into the future.
MWREN: What are some of the reasons behind the multi-family boom?
Finn: The main for the boom in multi-family is Millennials. As a group, Millennials prefer the flexibility of rental properties versus the commitment of homeownership. Increasingly, higher-quality and modern amenities found in new apartment projects, the appeal of maintenance-free living and the need to be mobile in a tough job market have made renting more attractive to people, especially Millennials.
MWREN: When it comes to multi-family properties, what is attracting the most demand from tenants? What amenities and features are tenants looking for?
Finn: Millennials are looking for luxury. With a renter’s market, they can often find higher-end finishes including stainless-steel appliances, granite countertops and outdoor entertaining space, in an apartment easier than they could in a home. Renting also gives them more flexibility with their changing tastes.
MWREN: What do companies like Associated Bank look for when deciding whether to lend money to developers for apartment projects? What factors will increase developers’ chances of landing financing for their proposed apartment projects?
Finn: Associated is a true relationship lender. Key to Associated Bank’s underwriting process is the project’s sponsor experience and capacity, in addition to the fundamental economics of the project. Developers are who are able to demonstrate experience and credit-worthiness are more likely to receive better terms and conditions. Each project is underwritten on fundamental basics such as demand-rent comparables, expense ratios and a very watchful review of leasing absorption as well as the pace of absorption.
Michael Finn is senior vice president and regional manager with Associated Bank. He is also team leader for the Wisconsin Commercial Real Estate Division. He is based out of Milwaukee.