As the pandemic lockdowns hammered offices and retail properties, investors abandoned those assets and plowed cash into apartments and warehouses, both of which witnessed robust rent growth and appreciation as the economy reopened.
But in many cases, apartment investors tapped ultra-cheap, variable-rate financing to overpay for multifamily properties, expecting rental rates to continue to climb and help the deals pencil financially. While in large part rents have grown — albeit not at the same double-digit level seen during 2021 and early 2022 — buyers often made the deals with too much optimism and failed to account for potential risks or often, at least, under-appreciated them.