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Vacancies up, Rents Moderate, but 2015 still Looks Solid for Multifamily

The
multifamily market outperformed many predictions in 2014; vacancy levels,
despite a flood of new properties, declined by 10 basis points from 2013 to a
13-year low of 4.2 percent. Revenue per unit rose, continuing the pattern that
has led to a 20 percent increase over the last five years.

Freddie
Mac’s economists are predicting that, while easing a bit from 2014, this year will
be another strong one for the sector. 
Its 2015 Multifamily Outlook
projects that demand, driven by the millennial generation, will remain strong
but construction of units in buildings with five or more will continue to trend
upward so vacancies will rise. 

Supply,
they say, could actually outpace demand this year and the vacancy rate will
probably rise
by 60 basis points to 4.8 percent by year-end.  This however is still below the historic
average of 5.4 percent.  This negative is
tempered by an unknown; how much pend-up demand will be unleashed as households
form that would have been formed earlier were it not for the recession.

 

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