Multi-family real estate is a building or group of buildings which houses multiple persons or families in separate units and, while residential in function, is considered commercial real estate. Multi-family status can range from five units to five hundred and more. The industry caters to many different demographics and lifestyles, including student housing, affordable housing, and luxury residential condominiums. Typically, the demand for multi-family fluctuates with the single-family housing market. When interest rates are low and the economy is growing, demand for multi-family declines as people move out of apartments in favor of owning a home. Likewise, when the economy slows or housing becomes too costly, demand for multi-family rises. The multi-family sector is one in which most residents lease their unit and pay rent to a landlord who owns the property. The only exception is the condominium resident who owns their unit but will pay condo association fees for maintaining the common areas of the building.
Information on this page provided courtesy of Cornell University Baker Program in Real Estate
Multi-family real estate will always be an essential part of the housing supply in the United States. Its major appeals are the flexibility of leasing, no property taxes, and the affordability of little out of pocket expense. The credit crisis increased demand for the multi-family sector, resulting in hiring across the multi-family platform. As more workers elect to go back to school during bad economic times, the demand for student housing will also increase as will rental options for seniors. Multi-family housing vacancies are expected to decrease over the next three years as apartment development fails to keep up with increased demand. Eventually credit will begin to flow back into the housing market, the economy will improve, and renters will again become buyers. It will be the multi-family owners and operators that cater to their target market and maintain quality properties that will continue to be successful in the years to come.