Multifamily lending and investment sales volumes in New York City remain muted amid a challenging market weighed down by elevated interest rates, regulatory pressures and a gap between buyers and sellers.

Still, deals are getting done, fueled by forward-thinking investors who work with relationship lenders. This allows them to find financing structures tailored specifically to the underlying assets, said Christopher Mitchell, senior vice president and senior banking officer at Northern Trust.

Mitchell spoke at Bisnow’s New York Multifamily Development & Investment Conference on March 6. Bisnow spoke with him to get his take on the particularities of multifamily in New York, the importance of finding the right property management firm and the dynamics of relationship banking.

Bisnow: What is your 30,000-foot view of NYC’s multifamily market?

Mitchell: Inventory continues to be hard to come by, especially in Manhattan. It’s a quick market that turns fast. It’s also a regulated market, with elected officials dictating what portion of new construction projects need to be set aside as affordable housing. Nevertheless, it’s a market where many people want to own.

It’s not an easy market to break into. We have one Chicago-based client who has been looking at deals here for probably 10 years and has still not pulled the trigger.

Bisnow: What are your expectations for the market in 2025?

Mitchell: Unlike in the rest of the country, we’re not seeing as much in terms of commercial real estate transactions coming through our desks in New York City. Florida, yes. Tennessee, yes. Also in the Carolinas, but less in New York.

We’re expecting transaction volume to pick up when the low interest rates that folks locked in in 2019-2021 start to mature.

Bisnow: What are other challenges your clients face when considering New York assets? 

Mitchell: The hyperlocal nature of the market, which varies block by block. We get asked questions by out-of-town buyers like, “What’s the difference between an asset on the Upper East Side and an asset in Central Harlem?”

The answer is: The difference is huge. The prospective renter base is different, the commuting options are different. We work hard to give appropriate, on-the-ground advice to our sponsors. As I said, New York City is a complex market.

Bisnow: What’s some advice you can share about the New York City multifamily space?

Mitchell: When we work with multifamily buyers, our focus includes having conversations to ensure the client has the proper infrastructure in place from a property management perspective.

It’s one of the most important aspects of multifamily investing. Do you have a super on staff? What about a porter? How are you handling rent collection? There are property management companies that handle this. Some are good, some are not so good.

Bisnow: What do readers need to know about underwriting multifamily deals, which happens to be a focus of your Bisnow panel? 

Mitchell: People are rate sensitive right now, but we want people to know that we are a relationship lender. We can offer pricing that accommodates the type of relationship they want to build with us.

When we underwrite, obviously higher cash flow leads to lower interest rates. Our underwriting also factors in the client’s balance sheet, the dry powder that they have and their contingent liabilities. If the contingent liabilities are higher, that might lead us to price more aggressively to be compensated for that risk. Or, we may come up with a different type of structure that protects us while helping the client achieve their goal.

Investors don’t like to utilize recourse. However, right now, the right structure that includes recourse and is priced accordingly can lead to financing with a very accommodating covenant structure. We look at who the individual is behind the deal and how we can support them from a deal structure standpoint.

Bisnow: What does Northern Trust bring to the table that differentiates you from other lenders?

Mitchell: We’re a private bank first and we only have three divisions, and one of them is wealth management, where I sit. Our deals are relationship-driven, and because of that, we can get deals done that might “have some hair on them,” meaning they might be more complex, might not have initial cash flow.

But because the client has an existing relationship with us — perhaps we’re managing some other assets for them — we make the transaction work. We’re able to do the deal that makes sense for the client.

This article was produced in collaboration between Northern Trust and Studio B. Bisnow news staff was not involved in the production of this content.

The Northern Trust Company is an Equal Housing Lender. Member FDIC.

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