Newmark Creates SFR Team In Anticipation Of Investor Comeback
Newmark is the latest of the global commercial real estate brokerage firms to jump into servicing the single-family rental market.
Newmark has formed a single-family rental group, which will focus on investment sales, joint venture equity placement, debt and structured finance, the New York-based firm announced Wednesday. The group is being led by Newmark Vice Chairmen Chad Lavender and Ryan Maconachy, and will be a division within the firm’s multifamily capital markets group.
"With Newmark's significant presence in the multifamily and alternative real estate sectors, and a growing institutional interest in the SFR space, formalizing this practice was a logical next step as we continue to enhance our full-service capital markets offerings to our clients," Lavender said in the release.
Newmark directors Leland Manning and Josh Francis also will be working in the SFR group. Newmark, which said in the release it arranged the second-largest volume of multifamily deals this year, is the latest of the big brokerage shops to tap executives to specialize in the SFR space, including CBRE and Cushman & Wakefield.
In November, JLL expanded its national SFR team with Senior Director Jamie Smithson and Director Conor Welton out of Atlanta.
But the SFR investment market has cooled over the course of 2022 as the Federal Reserve hiked interest rates. After reaching a peak in February, when 28% of all home purchases were made by investors, the percentage of single-family houses bought by investors dropped 8% between the first and second quarters, according to CoreLogic.
But experts contend that, once interest rates settle again, institutional investors will come roaring back as buyers of single-family houses, especially as demand for housing far eclipses new supply. Experts say that the national housing supply is short by 3.8 million units.
“Over the next five years, we anticipate demand for approximately 7.5 million additional housing units, 10% above the average annual growth observed over the last ten years,” Green Street researchers said in a report. “Approximately 810,000 new households are expected to sign leases for single-family rentals, 1.5 times higher than the number of new apartment renters.”
Institutional investors have allocated over $100B into the single-family rental market, according to Newmark.
"With increased rental housing demand, renters are seeking more space and the privacy of a detached home without the demands of a mortgage, especially considering interest rate increases," Manning said in a statement. "This, in combination with the rise in SFR-earmarked capital, underscores the expectation that SFR supply will increase in coming years."