The “extend and pretend” trend of multifamily loan forbearance will lead to a wave of maturities in a year or so, according to Gray Capital. The private equity real estate company has published a new report on an emerging wave of loan maturities in the multifamily market.

“Extend and pretend is coming to an end, and as lenders are increasingly incentivized to cease these practices, opportunities to invest in distressed properties will be elevated, but at the individual asset level rather than sector-wide,” said Spencer Gray, president and CEO of Gray Capital.

Gray Capital’s new report follows its previous research on loan maturities in 2023 and seeks to explain how the lending market handled last year’s wall of loan maturities and how the blunted effects of 2023’s loan maturity wave have been pushed forward. That’s due in no small part to the loan extensions, accommodations and workouts commonly referred to as “extend and pretend.”

Based on data from CoStar and the New York Federal Reserve, Gray Capital projects a new wave of loan maturities in late 2025, early 2026.

“Multifamily-specific data from CoStar shows an October 2025 spike in loan maturities that’s 25% larger than the October 2023 surge, which suggests that some of these 2023 loans were extended, contributing to that spike in October 2025,” said Matt Bastnagel, communications and marketing director at Gray Capital.

Even as net lease retail inventory has expanded significantly, growing from $9 billion in 2022 to more than $24 billion today, quick-service restaurants have outperformed expectations and outpaced many other categories within the space, Northmarq says in a new report. “In fact, they are now some of the most sought-after assets for private investors, particularly those seeking reliable cash flow in an otherwise uncertain financial environment,” write Northmarq’s Bryn Feller, Isaiah Harf and Christian Tremblay.

Cap rates for QSR assets have remained relatively stable, hovering between 5% and 6%, even as cap rates for other retail segments have inched higher, Feller, Harf and Tremblay write. “This demonstrates the strong investor appetite for these properties.”

The Northmarq report cited key factors in the strong performance of QSR properties, including low price points that often put these properties “into the sweet spot for private investors with available cash.”
Reduced dependence on 1031 exchange investors is another factor, along with “very long lease terms
and reliable ease of ownership” and a lack of online competition. “You can’t get a fresh, hot burrito
delivered via Amazon, and that’s a major comfort for investors,” the report states.

With 2023 now behind the retail sector, the current year nonetheless continues some of the headwinds that blew across the previous one. However, says Placer.ai in a new report, “every challenge also brings with it new opportunities, and many retailers are adapting to meet their customers’ changing wants and needs.” 

Titled 10 Top Brands to Watch in 2024, the white paper analyzes location intelligence and consumer demographic insights to identify 10 retailing brands gearing up for growth. The brands vary in their approach, as do the product categories they carry. 

“Some, like low-cost apparel and home furnishing stores, are benefiting from consumer trade-down,” according to Placer.ai. “Others are expanding into rural or suburban areas to meet customers where they are.” And although Macy’s recently made headlines by announcing plans to close approximately 150 underperforming locations, the white paper identifies a department store that is poised for growth this year. 

While some of the tax-deferred “goodies” offered by Opportunity Zone investments have long expired, the interest in these vehicles has not. According to a report by Novogradac, Qualified Opportunity Funds (QOFs) tracked by the company raised $3.53 billion in equity during 2023. This increased the total amount of Qualified Opportunity Zone (QOZ) equity raised to $37.6 billion.

Because Novogradac’s figures don’t include private funds owned and operated by their principal investors, the actual QOZ investment is likely higher than the Novogradac total.

Novogradac reported that during Q4 2023, QOFs raised $414 million in equity, which followed strong second and third quarters. But the annual amount raised was lower than the totals of the three previous years, which surpassed $9 billion.

“At least part of the reason for the slowdown was the general state of the economy, specifically a decrease in multifamily housing construction, which ended December 2023 with the lowest annualized figure for permits since 2017,” the report noted.

QOFs are the investment vehicle used by taxpayers to defer capital gains. Novogradic obtains numbers on a rolling basis from QOFs that provide information and data from public sources, including Security and Exchange Commission filings and press releases.

Approximately 80% of known QOF investment is focused on developments that include multifamily housing. In quoting RealPage, Novogradac said the number of apartments built in QOZs tripled from 2016 through 2022, then doubled again in 2023. The RealPage data also indicated that 20% of all delivered apartments in 2023 were in a QOZ. However, Novogradac anticipated the slowdown in multifamily permits in 2023 will be felt in late 2024 or 2025.

Novogradac also reported that:

• QOFs with at least some focus on housing raised $30.93 billion, $8.10 billion of that focused solely on residential property

• QOFs with some focus on commercial investment raised $24.93 billion; $2.20 billion was raised by funds focused only on commercial activity

The coronavirus pandemic created a work-from-home revolution that may lead to a decline in tax revenues from commercial properties, and cities will suffer as they cannot provide important services to residents, a new report warns.

If current trends persist, demand for commercial real estate space could drop by 12% to 25% in key cities, leading to a correlated drop in assessed values, and thus in city property tax revenue. The full effects haven’t yet been felt because federal funding from the American Rescue Plan has so far cushioned the blow, but city leaders should prepare.

That’s the takeaway from a new report titled “Impact of Work From Home on Commercial Property Values and the Property Tax in U.S. Cities,” commissioned by the Communications Workers of America.

The pandemic could result in empty workspaces.

The report was authored by researchers from the City University of New York and the University of Illinois at Chicago and released Thursday by the Institute on Taxation and Economic Policy.

“Though magnitudes vary somewhat across cities, all face significant fiscal risks,” the report says.

Researchers focused on eight cities — Atlanta, Austin, Charlotte, Chicago, Los Angeles, Miami, New York and San Francisco — where commercial real estate accounts for an average of 37% of property taxes, ranging from 26% in LA to 56% in Atlanta. A high proportion of white-collar jobs in these places can be performed out of offices and have a ripple effect on the economy.

Using data from the Bureau of Labor Statistics Quarterly Census of Employment and Wages, the researchers tracked employment changes in 2020 by city and industry. Even with no change in space per worker, employment effects alone will cause the value of commercial real estate to fall by an average of 6% — from 1% in Austin to 13% in San Francisco — they found. With two days or less of work-from-home, that number rises to 12%, and three or more days of work-from-home, it’s 25%.

The report found that New York and San Francisco are the most vulnerable of the eight cities, with predicted commercial price drops ranging from 25% to 43%.

“Declines are smaller, but still significant, in the other cities,” the report says. 

Using a special database on city finance, the researchers translated the decline in CRE property values into effects on property tax and city revenues. Larger cities with diversified revenue structures won’t feel as much impact, but smaller cities like Austin and Miami, which are more dependent on property tax, will have to adjust.

The analysis found that Atlanta will have the largest revenue effect, with an estimated 5.7% loss. Austin, New York and San Francisco face revenue losses between 2% and 4%.

Cities and states have gotten fiscal relief this year under the federal American Rescue Plan, but those funds will phase out between 2022 and 2024. The report’s authors say that one future solution may be to divert funds away from suburbs to city centers most affected — but warn that any reallocation is likely to draw “furious resistance” from jurisdictions that would be the perceived losers in any such shift.

The authors said there’s a “paradox” in cases like Florida and Texas. Political leaders tout low taxes and no income tax, but those states will soon see economic detriment in their major cities as they face negative impacts from the increase in working from home.

Some leaders have long predicted these problems. In Texas, lower taxes, light regulation and cheap housing lured 4.2 million people and hundreds of corporations in the past decade, but left little revenues for infrastructure improvements and social services — deficiencies that were evident during a winter storm and a massive power outage last winter.

“We are not sufficiently looking down the road. And we’re not sufficiently investing,” former Houston Mayor Annise Parker, who led the city from 2010 to 2016, told Bisnow in February.

“The bill will come due,” University of Houston Political Science professor Brandon Rottinghaus told Bisnow.