Presented By: JPMorgan Chase
JPMorgan Chase Commercial Term Lending: ‘Port in the Storm’ for Multifamily Clients
When times are tough, building owners need to know they can rely on the companies with whom they do business. JPMorgan Chase (JPM) has been a mainstay for lending in New York City since 1799, and that dependable continuity has come to mean the world to its multifamily clients.
Commercial Observer’s Partner Insights team spoke with Brooke Richartz, regional sales manager for commercial term lending with JPMorgan Chase in New York City, about how the company has continued to serve this market throughout the COVID-19 crisis.
Commercial Observer Partner Insights: How did you develop an interest in a finance career?
Brooke Richartz: Finance has always been really interesting to me. It impacts so much of our world, in particular, with real estate and finance.
I took a cruise along the East River one night over 15 years ago. Looking at the skyline really solidified my wanting to pursue a career in real estate and wanting to help shape New York.
How did you develop an interest in multifamily?
That goes back to my seeing the Manhattan skyline. Home is where the heart is, and multifamily in New York houses the heart of the city. To be able to be part of that story, supporting the housing market in New York, really means a lot to me.
Tell us about your current role at JPMorgan Chase.
I’m an executive director in our commercial term lending department, focused on the New York City market. We provide term loans for multifamily apartment buildings. I’ve aspired to be in this role for a long time, and I’m very proud of the team I lead. Everyone here is really passionate about what we do to support our clients.
This has been a challenging year for a lot of folks. And we’ve been able to fund over $1.4 billion in New York City this year, with the large majority of that happening over that past few months.
Talk about the impact the pandemic has had on the New York City multifamily market. Is it seeing the sort of financial stress being felt by retail and office?
The multifamily market in New York is holding up relatively well, compared to retail and office. For September, we saw an estimated 87% rent collection rate. Retail is much lower than that.
Although we are seeing a migration of folks leaving the city for the suburbs because of the pandemic, some of it is temporary. I think we’ll see some of those folks come back as offices reopen. A lot of offices are holding off until 2021 to come back with their return-to-office plan, but some of that migration is more permanent.
We’ve seen a 44% increase in home sales in the suburbs. Westchester is at 112%, which is pretty significant. So, there’s definitely a change in multifamily and some concessions and rental declines, but comparatively, we’re holding up pretty well.
How does all of this compare with the effect of other downturns’ effects on multifamily, like the dot-com bubble or the global financial crisis?
This one is unprecedented, in that, it’s not just one industry that’s causing it. It’s impacting every business. The pandemic forced the downturn, and we’re starting to see the fundamentals of real estate react in a way that happens during any downturn. We’re starting to see vacancy rates [rise] and rents declining.
A lot of that ties back to what we prepare ourselves for at JPMorgan Chase. We know that business cycles are cyclical, so we focus on our fundamentals and preparing for a downturn by building our balance sheet and working with best-in-class clients.
Talk about how some of the key submarkets are faring right now.
Overall, multifamily has been pretty stable, and I think part of that is reflective of the necessity of real estate and housing. We’re seeing more volatility in higher, free-market rent areas, like near colleges or employment centers.
So, in areas like the Flatiron District or the Financial District in Manhattan, we’re seeing higher vacancy rates and more rent concessions. Manhattan, as a whole, is seeing a 5.7% vacancy rate, which is the highest it has seen in a decade.
But, at the end of the day, New York is resilient. After the financial crisis in 2008, we came back stronger. So, Broadway, all the museums, the diverse experiences, everything that makes up New York — it’s all going to open up again, and we’ll come back stronger for it.
How does JPMorgan Chase help its commercial term lending clients stay resilient in the midst of all this?
JPMorgan Chase is the port in the storm for our clients. We’re continually checking in with them to see how they’re doing and how their tenants are doing. We’re always working with them to understand and meet their needs.
So, for example, some of our best-in-class digital solutions have given our clients the ability to invoice their tenants, so their tenants can pay rent electronically. This has been huge for our clients and their tenants during the pandemic to make rent collections easier.
Talk about what JPMorgan Chase commercial term lending has to offer both large institutional clients and smaller businesses.
We make significant investments in our technology to help our clients be more efficient, so that helps clients big and small. But it’s not just about supporting our clients. It’s also about supporting our communities and our clients’ communities.
We recently announced that we’re committing $30 billion to advance racial equity, and specific to multifamily and housing, $14 billion of that is going toward expanding affordable rental housing in underserved communities.
Where exactly is that money going?
The $14 billion will be put toward the preservation of naturally occurring affordable rental housing, and the construction or creation of new, affordable multifamily housing for low and moderate-income households nationwide.
Why is JPMorgan Chase better positioned than its competitors to be able to guarantee to clients that business will continue to move forward during this perilous time?
JPMorgan Chase has been in New York since 1799. We have 221 years of serving our clients here.