Low interest rates give cap rates more room to compress while also cheapening the cost of capital for multifamily borrowers.

The combination of strong fundamentals, low interest rates and intense interest from investors should make for another white hot year for the multifamily sector.

Although 2020 faces its fair share of uncertainty with worries of a potential recession, a volatile geopolitical picture and ongoing trade wars, investors looking for low-risk returns could still flock to the sector.

Low interest rates provide a double stimulus for multifamily investment. The fact that yields on Treasuries are falling means that cap rates can tighten a bit more and still offer an attractive spread. Meanwhile on the debt side, the cost of capital is lower.