Matt Jones anticipates another banner year for the buying and selling of apartment properties in Michigan and around the Midwest. Jones, the founder and president of Beacon Realty Group LLC, a boutique commercial real estate brokerage practice focused on the multifamily sector, largely foresees a period of continued slow growth with some potential pressure coming from rising interest rates.
“We don’t foresee any drastic changes in the economy in 2018, more of a straight-line progression from 2017. The Fed has committed to raising rates in 2018, which will have some impact on the financing side of our business but should have minimal impact overall. The biggest impact will come from the proposed tax reform and whether it is passed and in what iteration, as it pertains to capital gains and carried interest. There continues to be more capital chasing deals than there are deals, so we expect that values and competition will remain high on assets that hit the market, regardless of tax reform. Investors will continue to chase yield in secondary markets like West Michigan, which will result in more and more capital entering the market from the core markets on the coasts and driving prices up … The fundamentals in the multifamily sector remain strong, with low vacancy and sustained rent growth. As interest rates rise, we may start to see downward pressure on pricing, but I don’t expect velocity will slow as a result. … While technology serves as an amenity in many apartment properties, it will not replace the physical space of ‘home’ or the desire of the general population to have a clean, safe place to live. This makes the multifamily sector a favorite among investors because of its low risk and aversion to outright disruption by technology.”