In terms of sales volume, multifamily is the largest asset class in commercial real estate, followed by industrial, office, and retail, per data from Real Capital Analytics. The segment currently has a national vacancy rate of 6.7%, according to CoStar, which projects that rent growth will moderate during the next 12 months from 3.7% to 1.8%. Still, many investors are standing by and watching as interest rates rise and recession fears swirl throughout the country.
Though it’s impossible to predict the future, multifamily has historically been known as a relatively safe investment compared to other commercial property types. Apartments, for instance, fulfill an ongoing need in society (giving workers a roof over their head!) and provide the potential of rent income from various streams, reducing overall risk. I often recommend it as a starting place for beginning investors looking to learn the ropes and build a portfolio.
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