Quick Take: One of the most common questions we receive at Origin Investments is: “Why only multifamily?” The answer comes down to two structural advantages — essential demand and constrained supply — that were stress-tested during COVID-19. While office and retail faced sustained demand shocks, multifamily rent collections remained remarkably stable at 90–95% throughout 2020. This article explains why we believe the evidence supports concentration in multifamily rather than diversification across property types.
Introduction
One of the questions we hear most often at Origin Investments is some version of: “Why only multifamily? Why not diversify across office, retail, or industrial?”
It’s a fair question. The answer comes down to two structural convictions — and a real-world stress test that resolved any remaining doubt.
Pillar One: Shelter Is a Need, Not a Want
Most real estate sectors are, at their core, bets on discretionary behavior. Retail depends on consumers choosing to spend. Office depends on employers choosing to gather teams in person. Hotels depend on travelers choosing to take trips. When economic conditions tighten, these choices change — and the real estate that depends on them suffers.
Multifamily occupies a categorically different position. Shelter is not a preference. It is a legal and physical necessity — as fundamental to human life as food or clothing. Renters do not elect to need a place to live. They need it regardless of GDP growth, employment trends, or consumer sentiment.
For investors, the practical implication is significant: multifamily rents are not a discretionary line item. In most households, rent sits at the top of the payment stack — ahead of credit cards, auto loans, and discretionary spending of any kind. That inelasticity is not a footnote; it is the foundation of the asset class.
Pillar Two: America Has a Structural Housing Shortage
If demand is resilient, supply is constrained — and has been for more than a decade.
The United States is currently short an estimated 3.7 million housing units. This deficit did not emerge suddenly. It is the accumulated result of a prolonged period of underbuilding that began after the 2008 financial crisis, when construction activity collapsed and never fully recovered to levels consistent with population growth and household formation (Freddie Mac).
Today, the country requires approximately 1.5 million new units annually to keep pace with demand. Actual completions run closer to one million. That gap of roughly 500,000 units per year persists not because builders lack the will to close it, but because structural barriers make it extraordinarily difficult:
- Restrictive zoning laws in most American cities limit density and multi-unit construction
- Entitlement processes are lengthy and unpredictable, adding years to project timelines
- Construction costs have risen sharply, compressing development feasibility
- Skilled labor shortages constrain how quickly the pipeline can respond
When new supply cannot respond efficiently to demand, the assets that already exist hold pricing power. Rents are supported, and values have historically appreciated over time.
The Empirical Test: COVID-19
“Every asset class claims resilience in theory. The pandemic stress-tested that claim in practice.”
COVID-19 was not a normal recession. It was a sudden stop — mass layoffs, forced business closures, and an eviction moratorium that removed landlords’ primary enforcement mechanism. If there were ever a moment to expect widespread rent non-payment, this was it.
And yet, something striking happened. Data from the National Multifamily Housing Council (NMHC) Rent Payment Tracker — which surveyed more than 11 million professionally managed units — showed that roughly 90–95% of renters made full or partial rent payments each month throughout 2020, with a full-year average of 93.8%. (NMHC Rent Payment Tracker, 2020–2021)
That outcome was not accidental. It reflects the fundamental truth that housing is a first-priority expense. Households cut travel, dining, entertainment, and discretionary retail spending almost entirely. Office buildings emptied. Retail foot traffic collapsed. But rent payment behavior remained remarkably stable.
Even when tenants could not be evicted, the overwhelming majority still chose to pay. This reinforces a core truth: housing demand is inelastic, and multifamily sits at the intersection of necessity and scale.
Multifamily vs. Other Property Types
| Multifamily | Office | Retail | |
|---|---|---|---|
| Demand driver | Non-discretionary — shelter is a legal and physical necessity | Behavior-dependent — employer and employee choice | Discretionary — consumer spending decisions |
| COVID rent collections | 90–95% throughout 2020; full-year avg. 93.8% | Leases technically in place but utilization collapsed | Widespread deferrals, abatements, tenant failures |
| Structural demand shift | None — housing need unchanged | Sustained — hybrid/remote work permanently reduced space requirements | Accelerated — e-commerce permanently reduced in-store traffic |
| Policy response | Household income support flowed directly to rent | No systemic backstop for work pattern changes | No systemic backstop for consumer behavior changes |
| Recovery profile | Durable — demand resumed as restrictions lifted | Prolonged — vacancy elevated; values declined in most markets | Uneven — commodity retail impaired; experiential partially recovered |
Multifamily vs. Office: Essential Use vs. Behavior-Dependent Demand
While multifamily collections held firm, office faced a sustained structural demand shock. As remote and hybrid work models took hold, office utilization fell sharply and never rebounded to pre-COVID levels. Vacancy rates climbed across nearly every major U.S. market. Values declined meaningfully as cash flows weakened and leasing risk repriced.
Critically, this was not a cyclical disruption. Unlike multifamily — where tenants still needed housing — office demand itself changed. Space was no longer required in the same quantity or, in many cases, at all. Multifamily maintained cash flow despite a congressionally mandated eviction moratorium. Office struggled even though leases technically remained in place.
Multifamily vs. Retail: Necessity vs. Discretionary Revenue
Retail experienced an even more immediate shock. Mandatory lockdowns and mobility restrictions caused sharp declines in in-store sales, widespread rent deferrals and abatements, and elevated tenant failures — particularly among discretionary and apparel retailers. In many retail portfolios, collections fell meaningfully below historical norms, forcing landlords into negotiations simply to keep tenants operating.
Institutional multifamily, by contrast, saw modest and temporary collection pressure largely concentrated in lower-income segments — while continuing to collect the vast majority of rents throughout the crisis. The distinction is straightforward: retail rents are funded by discretionary consumer spending; housing rents are funded by necessity.
Policy Response Reinforced the Divide
Government response amplified this divergence further. While eviction enforcement was paused, income support surged. Stimulus payments, enhanced unemployment benefits, and emergency rental assistance programs flowed directly to households — and much of that money flowed straight to rent.
There was no equivalent systemic backstop for office or retail demand. Governments stabilized households, not work patterns or shopping behavior. That distinction matters: in periods of genuine crisis, housing is treated as systemically important infrastructure.
Not All Multifamily Was Equal — And That’s the Point
Rent collections were strongest in professionally managed, institutional-quality multifamily — particularly workforce and middle-income housing. Smaller, non-institutional properties experienced more volatility.
This reinforces a critical investment insight: scale, asset quality, and operational execution matter. Institutional multifamily didn’t just benefit from favorable policy conditions — it converted that support into durable cash flow. The asset class creates the conditions; disciplined management determines the outcome.
The Convergence
What makes multifamily distinctive — and what drives our exclusive focus on the sector — is the convergence of two structural realities: essential, inelastic demand on one side, and a persistently undersupplied market on the other.
The COVID pandemic didn’t just affirm our thesis. It stress-tested it under conditions most asset classes have never faced: immediate income shocks, suspended enforcement mechanisms, and an exogenous disruption with no financial precedent. Multifamily demand was not impaired. Office and retail demand was.
We do not diversify across property types because we believe the evidence supports concentration in the sector best positioned to deliver durable, risk-adjusted returns over time.
That sector is multifamily — where people do not merely want to live, but need to.
There is a private real estate investment strategy for virtually every investor.
FAQ
Why does Origin invest exclusively in multifamily real estate?
Origin invests exclusively in multifamily because of two structural convictions: shelter is a non-discretionary need, and the United States has a persistent housing shortage estimated at 3.7 million units. Together, these fundamentals support durable demand and pricing power that Origin believes are not reliably available in other property types.
How did multifamily real estate perform during COVID-19?
Data from the National Multifamily Housing Council Rent Payment Tracker — which surveyed more than 11 million professionally managed units — showed that roughly 90–95% of renters made full or partial rent payments each month throughout 2020, with a full-year average of 93.8%. This occurred even during an eviction moratorium, reflecting the fundamental truth that housing is a first-priority expense for most households.
Why is multifamily more resilient than office or retail real estate?
Multifamily demand is non-discretionary — renters need a place to live regardless of economic conditions. Office and retail depend on behavioral choices: employers deciding to gather teams in person, and consumers choosing to spend in stores. When conditions tighten, those choices change. Housing need does not.
What is the U.S. housing shortage and why does it matter for multifamily investors?
The United States is currently short an estimated 3.7 million housing units — the result of a prolonged period of underbuilding that began after the 2008 financial crisis. The country requires approximately 1.5 million new units annually to keep pace with demand, but actual completions run closer to one million. When new supply cannot respond efficiently to demand, existing assets hold pricing power and rents are supported.
Does asset quality matter within multifamily real estate?
Yes. Rent collections during COVID-19 were strongest in professionally managed, institutional-quality multifamily — particularly workforce and middle-income housing. Smaller, non-institutional properties experienced more volatility. Scale, asset quality, and operational execution determine whether favorable structural conditions translate into durable cash flow.
Sources
- Freddie Mac — “Housing Supply: Still Undersupplied.” 3.7 million unit deficit estimate. Freddiemac.com, 11/26/24
- NMHC Rent Payment Tracker — Full-year 2020 multifamily rent collection data. 11M+ professionally managed industry-wide units surveyed; full-year average 93.8%. Nmhc.org
