The Real Estate Rebound

As vaccine distribution continues, we are able to begin the rebound from the COVID-19 pandemic and the economy’s slow road to recovery. HALL Structured Finance vice president Mike Canning discusses the evolution of the multifamily and hotel industries in the wake of COVID-19 while sharing his outlook for the rest of 2021.

Multifamily: Looking Ahead

While the multifamily industry experienced a lot of uncertainty early on in the pandemic, the sector fared better than most. And as history has shown, even in previous recessions, the housing market proves to be resilient and one of the most important industries to our economy. The world quickly learned that you could – albeit temporarily – survive without office space, in-person dining and other shared amenities, but the need for housing is absolute. The first half of this year was a real test for the multifamily industry, and as waived rental fees, concessions and deferred payments are coming to a halt, the sector is gaining momentum, giving us an optimistic outlook for the rest of 2021. Areas like DFW are showing tremendous post-pandemic growth and emerging with renewed strength as a result of in-migration and the reopening of the economy.

CBRE forecasts a return to pre-COVID vacancy levels in multifamily complexes, a continuation of low interest rates and a full market recovery by early 2022, with Class A buildings making a slower recovery than Class B and C properties. We see this as a short-term change while we anticipate that buildings with a focus on health and wellness will emerge as industry leaders. There will also be a new draw to suburban markets with more affordable housing as the single-family home market continues its hot streak and companies continue to allow workplace flexibility.

Vantage Apartments | St. Petersburg, FL

Hospitality: Regains its Footing

As one of the industries most adversely affected by the pandemic, the hospitality sector is forecasted to significantly improve this year, but not quite up to 2019 occupancy levels. Drive-to and vacation-market hotels fared the best and STR, a division of CoStar, predicts the U.S. hotel industry won’t reach demand levels comparable to 2019 until 2023. With vaccines being widely distributed and people itching to travel, we have seen hotel occupancies continue to slowly increase. It is encouraging to see that Hospitality Net reported occupancy levels reached almost 60 percent in mid-March, the highest level in the U.S. since early 2020.

Our own portfolio of hotel loans remains strong, and we are seeing the same performance improvement within our portfolio that is being seen across the sector as a whole.

Copperwynd Resort by Marriott Autograph | Scottsdale, AZ

A New Era of Hotels

Many hotels are re-opening and welcoming guests with new technology incorporated, such as reduced touchpoints, self-service check in kiosks, voice-activated assistants, in-room fitness offerings and mobile apps that navigate guests throughout the property. Enhanced cleaning protocols will remain, and these new technologies will reinvent and shape the industry’s success moving forward.

Our Lending Programs

HALL Structured Finance continues to fill a gap in the market as one of the only active lenders in the hotel construction industry. As an entrepreneurial private lender, we are willing to adapt and offer flexible solutions. Throughout the year, our company has remained competitive by tailoring our programs in multifamily and hotel construction lending and hotel bridge lending. Our existing portfolio is healthy, with well-conceived projects in strong markets, and we are looking to do $600 million in new construction loans this year.