Garrett Karam is Chief Investment Officer at Embrey, a vertically integrated multifamily developer established 52 years ago, specialising in the Sun Belt and Mountain West regions. At Embrey, Karam oversees a portfolio of 16,000 residential units and, since joining twelve years ago, has acquired over $5 billion in development capital, primarily from institutional partners.
In an interview, Karam spoke about his career, the current condition of the multifamily market, the potential development of Treasury yields, and his positive assessment of Real Estate Private Credit. His career began after studying finance at the University of Texas, Austin, where he was drawn to development early on. He wanted to work on tangible projects that influenced communities and which he could 'feel, touch, and see grow from the ground up'.
After graduating in 2003, he worked for a mid-sized developer in Nashville until the global financial crisis. There, he observed growth in the Sun Belt and recognised the diverse opportunities in the real estate sector. Originally from San Antonio, Karam joined Embrey, a company founded in 1970 by Walter Embrey Jr. and now led by his son, Trey. Karam describes Embrey as an organisation characterised by integrity, team spirit, and an excellent relationship with investors.
Strategy and Market Outlook
Embrey's investment strategy consistently puts investors first. The company operates predominantly in the Sun Belt and Mountain West, aiming to create maximum value for itself and its partners. Karam emphasises the tactical approach: "The national multifamily supply is a perfect example. We've gone from over 500,000 units completed per year in the rental housing industry to an anticipated circa 300,000 for the next few years." Even more important, however, is the micro-location – the specific street, corner, and competitive environment. He is convinced that Embrey does an excellent job here by selecting the right locations and creating value. A customer-centric approach, viewing residents as part of a community, leads to maximising value across the entire spectrum of stakeholders.
The development of 10-year and 30-year Treasury yields to 52-week highs has challenged the market since April 2022. Karam explains that rapid interest rate movements complicate development, even if Embrey can create value in any interest rate environment. He views the current rise in long-term interest rates, which increased from 3.95 per cent in February to almost 5 per cent, as a short-term phenomenon and not a fundamental shift in the long-term interest rate environment.
Opportunities in the Current Market Environment
Karam sees the best opportunities in the multifamily segment in the fundamental dynamic of demand exceeding supply, particularly in the Sun Belt and Mountain West. This leads to rising in-place rents and higher market rents. Additionally, Embrey is observing a decrease in concessions in submarkets, which positively impacts the portfolio. Despite seasonal fluctuations in winter, Karam expects a very strong spring and summer in the coming year. He is convinced that the greatest opportunities currently lie in new project developments.
