What Do You Think The Future Of Investing In Apartment Buildings Looks Like?

The following Q&A was completed as part of our conversational Commercial Real Estate FAQ Interview Series, we hope you find it helpful.

The way the future is going as it pertains to investing in apartment buildings, be prepared to see investments get bigger. While the older apartment units of the mid-century era might have 20 or 30 units, you’d be hard pressed to find a building built in 2005 or later with fewer than 300 units. This allows us to believe that going forward you’re going to see those big 20 to 100 million dollar deals becoming more common. 

Richard Wilson: And you’ve bought almost half a billion dollars, or a little bit over half a billion, of multi-family real estate over your career. So you’ve seen changes in the industry, you’re on top of trends, you’re on podcasts, you’ve written a book, so you have a good view of the forest compared to a lot of people who might just passively invest or are getting started. So what do you think the future of investing in apartment buildings looks like? 

Brian Burke: The future is probably a lot of larger transactions, and redevelopment opportunities are probably the biggest ones. What you’re seeing right now which is interesting and unique to this pandemic we’re in the midst of is people buying hotel type properties that are struggling as a result of the reductions in travel and converting them to multi-family use. Because we’re still in a housing crunch, we still have people moving to areas that don’t have enough housing to accommodate them, but yet they have empty hotels or empty office buildings. So redevelopment and repurposing is going to become an increasingly larger piece of the landscape. But larger transactions, you know, it’s interesting how you look at 1960’s built properties – you can find 20 units, 30 units, 50 units all day long, but if you look at something that’s built in 2005, if it’s smaller than 300 units, it’s very unique! They would call it boutique, because the economy scale needed to construct these assets nowadays, it’s demanding these transactions get larger in size. You’re going to see a lot more bigger deals, 20, 30, 40, 50, 100 million dollar deals are going to become increasingly common. 

Richard: Sure.