CIM Group: Compelling opportunities in multifamily amid market disruption

The convergence of multifamily cap rate correction, record quantities of maturing debt, and a constrained commercial real estate (CRE) financing market has created a compelling environment for multifamily investment, writes CIM Group in its latest white paper.

During the past 12 months, the CRE market has wrestled against a rising federal funds target rate, the failures or near failures of several regional banks, and a potential looming recession. These factors have contributed to reduced liquidity and tightening lending standards in the CRE capital markets.

The credit markets have seen a sharp increase in rates with commercial mortgage rates on seven- to 10-year fixed product sitting at 6.8 percent in June 2023, up 330 basis points (bps) from a near-term low in third quarter 2021. Cap rates have also risen for all major property sectors during the last year. The increases have generally ranged from 25 bps to 60 bps, but the central business district office-asset class