Arbor Realty Trust, in partnership with Chandan, has measured the damage the coronavirus pandemic has wreaked to the multi-family sector in 50 U.S. cities a new report.
The Arbon-Chandan Opportunity Matrix assessed the performance of the economies and multi-family markets in these regions based on eight categories: the amount of large multi-family loan, the amount of the multi-family building, labor market size, labor market performance during COVID-19, mobility trends, tenant performance and mood, tenant preferences and rating of the COVID-19 risks.
With these indicators, Seattle took first place in the ranking. The city did well in key areas such as wage growth, employment growth and COVID-19 risk assessment.
Phoenix and Austin also fared well. Both locations offer above-average COVID-19 risk assessments, healthy multi-family supply lines and sufficient liquidity.
Regarding some of the individual indicators when it came to Covid risk assessment, using the Harvard Global Health Institute's COVID risk assessment model which records the number of confirmed positive cases over the past seven days per 100,000 people, the top performers in the opportunity matrix were New York, Pittsburgh, Phoenix, Seattle, and Hartford.
In terms of tenant performance, Omaha outperformed all other cities surveyed. The proportion of renters who said they made the previous month's rental payments was 93.3%, while the San Francisco Bay Area came in second. Multi-family investors were most common in Dallas, while Houston and Phoenix ranked second and third. According to the report, the Dallas rental collections have reportedly performed better than expected and the local apartment market is already exiting its 'wait and see' mode as deals are back on the rise. "
As part of the rental collections study, the Opportunity Matrix looked at per capita loan volume and found that Orlando and Denver were ahead.
Ultimately, the report states that when owners and investors can look beyond short-term challenges, they will see that the multi-family segment has a bright future.
“The coronavirus will continue to present a number of unique challenges for multi-family operators and investors for the foreseeable future. Where there is change and disruption, there are of course opportunities, ”said Arbor and Chandan.
"Metropolitan areas with healthy labor markets and developing economies to support horizontal, well-designed residential communities are strategically positioned to add supply that captures migratory demand," the report continued. "While headlines suggest urban households are flocking to the city for alternatives, many highly urbanized metropolitan areas, led by Seattle, are improving fundamentals and results despite macro headwinds."