Jeff Tucker – Managing Partner
In January 2020, the Mesa team attended the National Multifamily Housing Conference in Orlando and came away energized for the year ahead. The overall sentiment for the industry was nothing but bullish with the expectation of a record-setting year for multifamily investment. By March, everything had changed.
Much like every other firm in our sector, Mesa was taken by surprise at the rapid onset of the novel coronavirus and subsequent government shutdowns. As layoffs continued to mount and unemployment skyrocketed, a real sense of concern gripped the industry for the first time in over a decade, driven by a fear of mass tenant default. However, as the months went on, we were pleasantly surprised by the resiliency of the multifamily market, in addition to the ongoing lease-ups of the Mesa portfolio.
While we have been encouraged by the performance of the market, Mesa will continue to take a conservative approach to underwriting and investment in the near-term. By and large, the Payment Protection Program (PPP), direct individual stimulus, and rent assistance programs contributed to the stabilization of the multifamily sector and the overall American economy. It is impossible to ignore the significant positive effect that government stimulus has had on tenant performance, but this assistance will inevitably come to an end.
Looking ahead, Mesa remains extremely bullish on Sunbelt suburban multifamily for the next decade due primarily to strong regional economies, population flight from traditional urban core markets, and continued macro-demographic trends, all in combination with an accommodative Federal Reserve. In 2019, forty-four million households in the United States were rental households, representing approximately 36% of the population. We believe that this figure will inevitably rise as a result of Covid-19. Combined with the fact that the U.S. housing market is already undersupplied by nearly 3.3 million units, we expect a favorable supply/demand imbalance from a development standpoint for years to come.
While we remain extremely bullish on the investment outlook, we at Mesa Capital Partners believe that we are also in the business of providing our residents with a home, and that some of these individuals may be struggling due to this crisis. We recognized early on that we would need to be sensitive to the challenges that our residents were going to face and that the best practice, both as a company and individuals, was to accommodate and work with those residents who needed help. For us, our residents are not simply names on a rent roll, but an extension of the greater Mesa family, and we will always work to help our family. It’s just the right thing to do.