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Key takeaways

  • 55% of commercial real estate leaders believe a recession is likely in 2023
  • Our experts believe a recession would be relatively mild
  • Lowering costs can help multifamily investors prepare for an economic downturn
  • Multifamily investors should aim to position themselves as buyers during this period

More than half of commercial real estate leaders—including those with multifamily property rentals—believe a recession is likely this year, according to JPMorgan Chase’s 2023 Business Leaders Outlook: Commercial Real Estate.

We asked three experts—Al Brooks, Head of Commercial Real Estate for JPMorgan Chase, Victor Calanog, Head of Commercial Real Estate Economics for Moody's Analytics, and Ginger Chambless, Head of Research for Commercial Banking at JPMorgan Chase—to weigh in on the impacts of a possible recession on the multifamily property market.

An economic downturn could have wide-ranging effects across commercial real estate. 

They all agreed: Recent economic data has been mixed. And uncertainty is one of the few things you can count on in the current economy.

Why the economy is teetering on a recession

"The economy is continuing to expand," Brooks said. "But we're also not getting inflation tamped down as much as we'd hoped." As a result, interest rates are likely to rise even further.

"We expect the cumulative effects of the Fed's interest rate hiking cycle to more broadly slow economic momentum in the coming months. The U.S. could enter a mild recession later in 2023," Chambless said.

The good news? "Consensus expectations still suggest a recession in 2023 will last anywhere from three to six—at most, nine—months," Calanog said, "and won't be particularly deep."

"Surveys of most CEOs suggest that any planned layoffs to manage margins will be targeted to position firms for a quick recovery, given how tight the labor market is," he said.

Despite layoffs in the tech sector, more than half of commercial real estate leaders expect to maintain current headcount, according to the 2023 Business Leaders Outlook: Commercial Real Estate.

"If CEOs do end up making strategic job cuts versus wide-scale layoffs, the recession could be mild. We might even avoid a recession altogether. " - Victor Calanog, Head of Commercial Real Estate Economics for Moody's Analytics

How a recession could impact multifamily rental properties

"I think multifamily housing is absolutely where you want to be as an investor," Brooks said. The multifamily rental market may still feel the impact of a recession, but the effects could be mild depending on the downturn’s severity.

"Moody’s downside scenarios for either a minor or major recession have multifamily vacancies rising to 5.5% to 6.0% from its current 4.4% at the national level," Calanog said. "It's reasonable to expect some pullback in performance metrics, but multifamily is in a much better spot to weather any downturn compared to property types like office and retail."

A recession could also impact multifamily rental properties in other ways.

  • Lowering construction costs: While construction slows, its costs may also drop. With improved supply chain management and lower construction prices, well-capitalized apartment developers could bring newly constructed buildings to market at a lower cost.
  • Postponing home purchases: In January 2023, existing-home sales decreased1 for the 12th straight month. That number may decline further if a recession occurs, causing more potential single-family homeowners to rent and driving up demand for multifamily properties.

Other factors to consider

"There are a few reasons we expect an upcoming recession could be relatively shallow, including strong household and business balance sheets and tight labor markets," Chambless said. "In addition, there has been discussion of recession for the past nine months, which has given consumers and businesses plenty of time to prepare."   

To become recession-ready, investors can: 

  • Streamline operations: By scrutinizing operations, owners and investors can identify problem areas and inefficiencies. For example, a closer examination may show that processing rental payments delays deposits, while shifting to digital rent payment solutions may save significant time and money. 
  • Keep an eye on economic data: "Household formation is the ultimate driver of demand for multifamily rental units. Through the cycle, the U.S. still has favorable fundamentals," Calanog said. "Household formation is intimately linked to whether jobs are being created in specific geographies, and rising incomes determine whether rent growth will be healthy."
  • Maintain a fortress balance sheet: "The most important thing multifamily investors can do is not overleverage themselves," Brooks said. "Investors should position themselves to be buyers in a difficult economic period versus having to sell."

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JPMorgan Chase Bank, N.A. Member FDIC. Visit for disclosures and disclaimers related to this content.



© 2023 “January Existing-Home Sales.” National Association of REALTORS®. All rights reserved. Reprinted with permission. February 28, 2023,

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