Q&A: Talking NYC Multifamily with JPMorgan Chase’s Kurt Stuart

After the economic upheaval of 2020 and resulting uncertainty in New York City’s multifamily market, 2021 brought greatly needed recovery and stability in the form of rent growth, lower vacancy rates and improved cash flow.

Looking to 2022, we caught up with Kurt Stuart, Head of Commercial Term Lending Northeast at JPMorgan Chase to chat about what’s ahead for the New York multifamily sector.

Q. As a multifamily specialist based in New York City, what opportunities do you see for investors?

A. First and foremost, New York is the largest multifamily market in the country with over 2 million apartment units. New York has a diversity of economic opportunities, experiences, and it’s a cultural melting pot. Finally, people are migrating back to New York, which is shoring up fundamentals.  All these factors set the stage for a multifamily investor.

We view the current environment as an opportunity for us to grow organically both with our existing client base, as well as through the acquisition of new relationships. In addition to the existing solutions we offer, we used the pandemic as a time to look for additional ways to serve customers. For example, we have a new treasury and cash management product purpose built for real estate owners and operators that has been well received in the marketplace. We have a growing presence in the agency space where we can supplement our balance sheet offerings with that solution set.  And we’re always looking for ways to improve the financing experience for our customers. That includes things like closing loans virtually and offering a concierge-type experience that is only available at JPMorgan Chase. As a firm, we spend over $12 billion annually on technology and digital capabilities which directly or indirectly impacts the client experience.

Q. What are you doing at JPMorgan Chase right now to capitalize on the opportunities available?

A. One of the core tenets we have is to never lose sight of the client experience. It’s at the center of everything we do. We start with the question of “how does what we are contemplating benefit the client?” when thinking about doing something new. That mindset leads to better processes and banking experiences. It also leads to new ideas for solutions, like our cash management solution. We’ve taken a set of treasury solutions and spoke with clients about what features they would use, what they are looking for in a bank and how we can better serve them. And most importantly we have bankers that understand their business. We’ve also added agency lending as a core capability with experts like Vince Toye, who bring decades of agency experience.

However, there is also a larger opportunity for us to better serve our communities.  We launched an Affordable Preservation Program in March of 2021 as part of our firmwide Racial Equity Commitment.  We’ve always been a large provider of liquidity to the workforce housing segment of the multifamily space and this program allows us to do more there.  Our clients are passionate about providing clean, safe, and affordable places to live, many of which are in communities adversely impacted by the pandemic.  This program allows us to support that passion alongside them, and the market reception for our program has been positive with over $6 billion in loans to preserve 60,000 units as of September 30. Finally, we’ve expanded our capabilities to provide additional liquidity to an important segment of the market; we’ve constructed simple balance sheet term lending solutions for multifamily assets that are permanently rent restricted through programs such as HAP, Article XI, and assets tied to Low Income Housing Tax Credits. Our website has more about our Affordable Housing initiatives and firmwide Racial Equity Commitment

Q. Would you say that the multifamily market in New York City is stable right now? What are you seeing in terms of rent growth, occupancy and overall development?

A. The multifamily market and really the commercial real estate market in New York and more broadly on a national basis is recovering or, in some cases, has fully recovered. Commercial real estate fundamentals are tightening, cash flows are improving, rents are recovering or increasing, vacancy continues to decline. The development pipeline is healthy, but new supply in housing has not historically kept up with demand. The U.S. is truly underhoused. Every major city, including  New York, does not have enough housing. It is one of the reasons we created and introduced our Affordable Housing Preservation Program.

Q. What is your overall outlook for 2022?

A. In a word, healthy. With improving fundamentals, a strong demand for assets, which has buoyed valuations, and a constructive interest rate environment, lenders have a strong investment thesis for 2022. Throughout 2020 and into 2021, was a period where most operators were focused on their assets, trying to figure out how to plug holes, fix problems, maintain values and cash flows, and work with tenants to maintain occupancies. Sponsors weren’t as focused on refinancing or acquiring assets. In 2022, we should see more acquisition volume and increased refinancing volume, and we’ll be ready to support our clients for both of those activities across all of our markets.