Morningstar DBRS has released a comprehensive analysis of the North American multifamily rental market, aimed at property owners and operators from a credit risk perspective. The three-part research series delves into the intricacies of the sector and provides a detailed examination of the current and future state of the market in Canada and the United States.

In the first published part, the group claims that strong multifamily fundamentals in key underserved North American rental markets will continue to provide multifamily owner/operators with the opportunity to grow revenues despite rising construction costs, high land prices and a shortage of skilled labor. In addition, it warns that larger rental operators with strong ownership, liquidity, robust access to capital and a balanced capital structure will be better able to withstand economic fluctuations and maintain favorable credit ratings – in other words, smaller regional operators will have a smaller competitive advantage.

“While the North American multifamily leasing sector will face numerous challenges in the short to medium term, including economic uncertainty, cost inflation in services, taxes, insurance, high interest costs and a difficult labor supply, experienced multifamily owner/operators should be well equipped to mitigate these and other risks,” said Aniruddha Jadhav, Assistant Vice President – North American Corporate Real Estate Ratings.

The full report, “The Metamorphosis of the Multifamily Market: Examining North American Multifamily Leasing Using Real Estate Methodology,” can be found here: dbrs.morningstar.com