Tackling the challenges in the current market and identifying opportunities were front and center at the recent Connect Midwest Multifamily event in Chicago. “I would say the biggest change forever that I think everybody in the room is experiencing, is that borrowing costs have increased. Lenders have pulled back on advance rates, and cap rates have expanded,” said Chris Coleman, Vice President of Development at Wingspan Development Group.

The event featured a dynamic panel discussion that discussed the obstacles in today’s market but also the areas of opportunity. “Over the past 12, 18 months, we’ve actually for what we do, we’ve been very busy for exactly the same reasons,” explained Julie Sommese, Managing Director with PACE Equity. “We’re still seeing developers out there trying to develop, but the the gap in the cap stack is just there.”

Commenting on student housing fundamentals, Brian Brodeur, EVP Development & Construction Management, Article Student Living, added, “It’s been kind of the bright spot in multifamily the last couple of years. We’ve seen a ton of rate growth.”

During the event’s discussion on multifamily investing, moderator Reid Bennett, National Multifamily Council Chair, SVN – Chicago Commercial, noted, “There’s $525 billion in multifamily loans that are set to come due by 2029, and approximately $62 billion of those loans are going to mature this year. That’s about 5%. Another $84.3 billion is going to mature in 2025, so another 13%.”

Jerry Brown, Attorney at Siegel & Callahan, P.C., added, “I think the affordable incentive program in Cook County is having a big impact on that. I worked with a lot of people even before the acquisition. In fact, I’ve had some clients put me in touch with their lenders to explain how the incentive works and how that incentive will lower the tax burden to a point where the deal is doable.”

The discussion also touched on the panelists’ thoughts on investment trends with Stratos Athanassiades, Regional Manager, Midwest Red Oak Capital Holdings, commenting, “We see a lot of individual investors in secondary markets looking to add value, buying a property, fixing it up, whether it’s just the units or a whole gut rehab job on it.”

Matthew McCormack, Senior Vice President of Originations at PACE Loan Group, added, “All of our deals are highly transactional. Whether that’s value add, adaptive reuse, gut rehab or development. For us, I would say our transaction volume is actually up because it’s all about opportunity cost, so folks are coming to nontraditional lenders like ourselves.”

The event’s final panel focused on what tenants want in terms of amenities and design. “More recently, those renter preferences when it comes to finishes and what they expect from their multifamily building is, is very, very different,” said Aaron Galvin, Founder of Luxury Living.

“I absolutely agree with everything he said,” concurred Ashley Lott, Senior Vice President at Campusville, a Farbman Company. “Student housing in many ways, depending on the market, they’re not far off from resorts.”