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Ed Padilla

Of the commercial real estate sectors, there’s little doubt that multi-family today is the top performer. I was talking about that this morning with Ed Padilla, chief executive officer of Minneapolis-based NorthMarq Capital. He told me that multi-family was outperforming all other commercial real estate assets in every conceivable measurement.

Why is this?

Here’s what Padilla told me: During an economic downturn, people are more likely to rent than they are to buy. For investors, multi-family properties simply have less potential downside than do other property types. The hospitality and office markets, for instance, experience sometimes dramatic swings. We’ve all seen this with retail, too.

“Apartments have proven to be more stable,” Padilla said. “In a volatile economic environment there is more confidence in the multi-family sector.”

At the same time, multi-family today is attracting more capital, thanks to its stable nature.

Of course, the multi-family market, like all commercial sectors, is facing its share of challenges in today’s economy. But Padilla’s seeing good news here, too: Effective asking rents and effective net operating revenues for the multi-family sector are still down. But they’re starting to improve.

Tags | Ed Padilla, Minneapolis, Minnesota, multi-family, NorthMarq Capital

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