Multifamily is continuing to demonstrate strength throughout the halfway point of this year, but not everything is 'trending upwards,' as vacancy rates increased for the eighth straight quarter.
Tenenbaum notes the increase in vacancy rates is partly due to high unit deliveries and close to a million more apartments under construction. “Our expectation is for supply to continue outpacing demand next year.”
By the numbers, multifamily largely looks good. In the second quarter of this year, net absorption increased by 64 percent quarter-over-quarter and 62 percent year-over-year to 85,235 units, the report shows. While vacancy rates did climb, multifamily has been experiencing extremely high delivery numbers with 114,000 units hitting the market in the second quarter of 2023.
Annual rent growth numbers have shown an increase of 1.5 percent year-over-year and 2.2 percent year-to-date. It is likely that rental growth will continue to look weak as economic volatility factors in, however, year-to-date rental growth is so far largely mirroring the average of 2.4 percent over the last eight years. Further, negative seasonal rental demands are expected to regulate after reaching dramatic heights last year.
“In 2022 there was effectively twice the normal amount of seasonality to make up for the year before,” said Tenenbaum. “There will be some hiccups in the second half of this year in certain markets and certain submarkets but broadly speaking we expect more normal seasonal trends to take hold in 2023.”
Read the full article in Multi-Housing News.