Multifamily, for instance, is not without itsweaknesses, which could have an effect onits recovery.
Indeed, the New York by Gehry is a storywith national, not just New York City, legs.
Inspired in part by the New York byGehry, Trepp searched for all multifamilyloans from private-label, US CMBS dealswhere occupancy had fallen more than15% from 2019 through partial-year 2020.It found about 50 loans totaling almost $1.5billion in outstanding balance. That totalrepresents about 3.8% of the loans thathave reported partial-year 2020 occupancy.
Since apartment tenants have one-year
or two-year leases, Trepp has previously
warned that dips in apartment occupancy
were expected to emerge much more slowly
than in the hotel sector. And even with this
data in hand, Trepp still believes “it’s too
early to make a call as to whether these
loans are a harbinger of more bad news to
come or that the relatively small number is
a hopeful sign for the market.”
Still, it cannot be ignored that the
vacancy rate increased 10 basis points in
Q3, according to Moody’s REIS, which put
it at 5.0% at quarter’s end. The long-term
average vacancy rate in the sector ranges
from 5.2% to 5.4%.
VACANCY, BUT NO DISTRESSIn particular, class A apartment deals arefacing a double whammy right now. Beforethe pandemic, there was a softness in someurban areas as construction deliveries rose.Then, COVID hit. With office employeesfree to work from wherever they wanted,many have decided to leave urban coreapartments in places like New York and SanFrancisco for cheaper housing with morespace. “The markets that are going to struggle are very tourist-driven or the urbancores, like downtown San Francisco and