As the love for Midwest multifamily grows, who is raising the capital?
I’m not sure if you’ve heard, but it is hard raising money for real estate in the current environment. It is even harder raising it for multifamily.
However, some geographies seem to be getting more interest than others, and one keeps coming up in my conversations: the Midwest. Institutional and wealth investors are looking more closely at Midwest multifamily, and bidding on deals is picking up. One Chicago multifamily deal went from three bidders to around twenty in a year.
Coastal investors have long called it flyover country. Lately, they seem to be reading up on it. That leaves Midwest sponsors with a practical question: if the capital is coming, who is in place to raise it?
The map
We started with the Francis King market map, which tracks more than 4,000 real estate fundraisers across the US by level, channel and location. Of those, 559 capital raisers and investor relations professionals are based in the 12 Midwest states.
We then checked each of the 312 firms they work for against its own website and company data, and sorted them into five groups:
- Multifamily only: sponsors and developers that invest only, or almost only, in market-rate multifamily.
- Multifamily within a wider strategy: managers that invest in multifamily alongside other property types such as industrial, retail or office.
- Multifamily lending: lenders and credit managers with a large multifamily loan book.
- Other housing: student housing, senior living, affordable and tax credit housing, manufactured housing and build-to-rent homes.
- No multifamily: firms focused on industrial, net lease, retail, data centres and other property types.
Sixty-five of the 559 work outside real estate investing, at brokers, consultancies and the like. The figures below cover the remaining 494.
The grouping describes each person’s firm rather than their own role. Someone at a diversified manager may raise for any of its strategies.
Where they sit
Chicago alone is home to 238 of them. Outside Illinois the market is spread across a handful of hubs: Minneapolis-St Paul (42), Indianapolis (36), Milwaukee (18), Kansas City (17), St Louis (11) and Detroit (9).
Ohio is the exception, with no single centre. Its 57 fundraisers are split almost evenly between Columbus (18), Cincinnati (15) and Cleveland (14).
A sponsor outside Chicago is choosing from a small local pool. Hiring someone to cover the region from Chicago is often the practical answer.
Who they work for
Half work for diversified managers where multifamily sits alongside other property types. The largest employers in this group are Chicago names such as Inland, Heitman, Harrison Street and LaSalle.
The 56 multifamily-only firms employ 105 fundraisers between them, and most run lean: 36 have just one fundraiser on our map. The largest teams belong to firms such as Waterton, BAM Capital, Roers Companies, Origin Investments and Continental Properties.
Outside Illinois the picture changes. Two-thirds of the region’s multifamily-only fundraisers (70 of 105) work outside the state, and they make up around a third of the market in Indiana, Ohio, Wisconsin and Minnesota.
In Chicago, multifamily sponsors compete for talent with some of the largest diversified managers in the country. Elsewhere, they are a much bigger part of the local market.
Seniority
The market is top-heavy. Of the 494, 190 hold Head of or Partner titles, while only 15 sit at VP level and 37 at Manager level. Another 89 have titles we could not place on a level.
Multifamily-only firms follow the same pattern on a smaller scale, with 30 people at Head of or Partner level. That leaves a thin middle for sponsors looking to hire below the top.
Part of this reflects how smaller sponsors are run, where a founding partner often leads the raise. At the diversified managers, 103 of the 246 sit at Head of or Partner level.
The wealth gap
Fifty-two of the 494 raise money through the private wealth channel: financial advisers, broker-dealers and family offices. Only two of them work at a firm that invests solely in multifamily.
The rest are spread across diversified managers (32), other housing firms (7), firms with no multifamily (6) and lenders (5). For multifamily sponsors hoping to tap rising wealth demand, the people who know that channel mostly work somewhere else.
The channel is also concentrated. Thirty-four of the 52 are based in Illinois, and nearly half (25) are at Head of or Partner level. The largest wealth team on our map belongs to a student housing developer.
What it means for Midwest sponsors
- Outside Chicago, your peers are your talent pool. Multifamily-only firms employ around a third of the fundraisers in Indiana, Ohio, Wisconsin and Minnesota, against 14% in Illinois. If you are based in Indianapolis or Columbus, the fundraisers around you are more likely to have raised for multifamily already, and you are mostly competing with other multifamily sponsors for them rather than the large Chicago managers.
- A mid-level hire is the hardest to find. Of 494 fundraisers, only 15 are at VP level and 37 at Manager level, against 190 at Head of or Partner. If you want someone to support a founder or senior raiser, the pool is small, and firms often promote from associate level or look beyond the region.
If it is useful, I am happy to share the breakdown for your state.
Related reading: Where Is the White Space in US Real Estate Capital Raising? · Real Estate Debt Fundraising Market Movement Report