Institutional Investors Rush to Snap Up SFR Properties
Updated: May 4
By Melea VanOstrand
February 28, 2022, at 09:04 AM
“Institutional investors are coming out of the woodwork. Everyone is setting up some sort of vehicle to get access to this particular asset type,” Americas Nuveen Real Estate’s Shawn Lese said.
All across the country, the multifamily investment market is booming.
“It’s never been better,” said Shawn Lese, managing director, chief investment officer, and head of funds management at Americas Nuveen Real Estate, who spoke at the GlobeSt. MULTIFAMILY SPRING event in Hollywood, Florida.
With big returns, the investment market is driven by demand with some of the top 35 markets seeing the highest absorption they’ve ever seen. And 30 of the top 35 markets also saw the lowest vacancies in the country.
In many markets, institutional investors are buying up single-family properties.
“Institutional investors are coming out of the woodwork,” said Lese. “Everyone is setting up some sort of vehicle to get access to this particular asset type.”
One investor strategy includes the build-to-rent concept, where communities are built with single-family lots or townhouses with larger space for the tenant and amenity packages.
“You’ve got an age cohort right now that’s basically millennials,” said Lese. “That age cohort is going through the rental phase of their lives. They’re renting apartments now, they’re starting families at a later point, getting married at 30 instead of 25, they’re having kids at 35 instead of 30. And they’re saying, ‘We need to get out of the apartment situation with some kind of yard.”
The downfall, Lese says, is that it can be hard to find places to build, obtain approvals and create the type of buildings that people want. There hasn’t been much new housing built in the last 10 years, which means there’s a large number of potential residents with nowhere to go.
Look Out For South Florida
Lese said he believes retail centers with open-air centers and grocery stores will pick up for U.S. investors, as sales levels are “off the charts.” Foreign investors are eyeing multifamily investments as well.
“South Florida is the hottest market,” said Lese.
In Lese’s view, the multifamily market will remain strong as property values continue to rise and many potential residents have more money available, having reduced their spending during the COVID-19 pandemic.