| This afternoon, Johnson Capital's Dan Lisser told us multifamily cap rates are so tight they're forcing the sector to become a long-term game. Maybe we were playing it wrong, but we don't remember Monopoly involving LTVs. |
| Cap rates under 5% leave little room for leverage, he says, meaning the only way to make money is to underwrite for a long-term hold. Unlike DC, where multifamily has been hot long enough that some are already worrying about overbuilding (the stuff nightmares are made of for any CRE child), new construction is still minimal in Manhattan. That's because getting control of a site large enough to build a significant number of units and then working through zoning can take five years. |
| That's why Johnson Capital is doing a lot in Long Island City. Outlying areas like Hoboken, Jersey City, Williamsburg, and LIC are more affordable for tenants, offer better transportation access, and have newer housing stock. Yeah, but is land available out there? Dan says the East River Tennis Club site near the Pepsi sign is a great spot but is having some environmental/floodplain problems. |
MULTIFAMILY MONDAY: NO ROOM FOR DEBT
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Dan Lisser, Johnson Capital
