Scott Veloso, sales associate for Residential Properties Ltd., as part of the Bessette Veloso team, is ranked as one of the top multifamily brokers in the state of Rhode Island. Veloso has also made some of the biggest commercial sales this year in the Ocean State, including 43 Poplar St. in Cranston, the city’s largest-ever commercial property sale, which sold for $14 million in March. The property is the fully renovated former Cranston-Johnston Catholic Regional School, transformed into 20 new, modern apartments.
Veloso was also behind the sale of 170 Pawtucket Ave., a commercial apartment building that sold for $1.98 million earlier this year, the highest commercial sale in the city since 2020, according to Rhode Island Statewide Multiple Listing Service data.
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PBN: How has the multifamily market been in terms of its level of activity, given how you’ve said interest rates have increased quickly in Rhode Island over the past year?
VELOSO: Year to date in 2023, the market for larger apartment buildings, 12-plus units, is still very active. Most of the deals we are seeing are low leveraged, which makes the financials work even with the increase in interest rates.
PBN: How are banks reacting to lending on multifamily stabilized assets since the interest rates have increased so quickly over the past year?
VELOSO: Banks have definitely tightened their lending. Banks are still lending to experienced owners that have an existing relationship with them but are reluctant to lend to new clients. Having a good banking relationship is crucial in the current market conditions.
PBN: What are the prices like for multifamily properties right now, and are they balancing out in response to the bank activity regarding interest rates?
VELOSO: Currently, they are not. Sellers’ expectations have not changed regarding price. This is typical in both commercial and residential real estate when the market shifts.
PBN: Where do you see the multifamily market heading in 2024?
VELOSO: I believe in 2024 you will see multifamily cap rates increase as sellers realize the market has shifted. I think the beginning of 2024 will see a decrease in multifamily transactions but believe that will pick up as the year goes on and sellers come to terms with the new market.
PBN: How are multifamily property owners responding with rent rates? What do you think will happen with rent growth as a result of all we’ve talked about here?
VELOSO: I think this is relative to the market one is in. In our market, we are seeing rent growth but at a much slower pace than previously. I think you will continue to see small rent growth over the next few years driven by the lack of housing. Currently, we are seeing more demand than apartments available.
Marc Larocque is a PBN contributing writer. Contact him at Larocque@PBN.com. You may also follow him on Twitter @LaRockObama.
