Multifamily Sector Still Going Strong, Can Expect More Modest Rent Growth

Michael Bull

 ATLANTA, GA – After several years of almost head-spinning improvement, the U.S. apartment market still faces a bright future, but the sector has entered a phase of more modest rent growth and stabilized occupancy levels.

 That was one of the market insights provided on the most recent episode of the “Commercial Real Estate Show” radio program, hosted by Michael Bull of Bull Realty. The episode provided an enlightening look at the U.S. multifamily sector, as Bull and his guests discussed a number of topics, including rent increases, occupancy rates, investor interest and operational challenges.

 The national apartment occupancy rate was 94.9 percent at the end of the first quarter, said Greg Willett, vice president of research and analysis for MPF Research, a division of RealPage. “Looking at occupancy numbers, we have been essentially full across the country for right at two years,” he said.

Gregg Willett

 Nationally, the average rent has increased almost 11 percent since the end of 2009 and is now 5 percent higher than its pre-recession peak, according to Willett. Annual rent growth came in at 2.6 percent during the first quarter, down a bit from the 4.8 percent annual rent growth the sector experienced during its post-recession peak, Willett said.

 Looking forward, “we think we have a couple of years where the occupancy rate pretty much stabilizes where it is, maybe drifting down just a tiny bit,” Willett said. “We’ve also reached the stage in the cycle where we would expect to see rent growth holding around the long-term norm, which is 2.5 to 3 percent.”

Ernie Eden

 The single-family home market has started to improve, but any negative impact that may have on the multifamily sector should be blunted by the entry of more and more Millennials into the workforce and the strict down-payment requirements on single-family home purchases, said Marvin Banks, a corporate advisor to Cortland Partners, a firm that owns and develops apartments, and a director of the Private Bank of Buckhead.

Referring to Millennials, Banks said, “There’s so much demand coming [into the multifamily sector], and [demand is] not going to be much of an issue for a number of years … The demographics are undeniable.”

Marvin Banks

Ernie Eden, a senior vice president in Bull Realty’s Apartment Group, and Bull both noted that investor competition for apartment assets remains fierce and therefore bidders must present organized and detailed offers to sellers. “Get your money organized ahead of time and be able to show the seller where the money is, who you are and why the seller should do business with you,” Eden said.

 “You’ve got to show up with a great offer, and you better be able to show proof of funds,” Bull added.

 The entire episode on the U.S. multifamily market is available for download at www.CREshow.com. The next “Commercial Real Estate Show” will be available May 16 and will examine smartphone applications for the commercial real estate industry.

 For a complete copy of the company’s news release, please contact:

Stephen Ursery

The Wilbert Group

404.965.5026

sursery@thewilbertgroup.com