ATLANTA, GA) – More than two years after its recovery began, the U.S. multifamily market continues to roll.
That was the consensus of show host Michael Bull (top right photo) and his guests during the most recent episode of “America’s Commercial Real Estate Show,” which provided an enlightening look at the apartment sector’s performance during the second quarter and in-depth analysis of its future.
On a national basis, the sector’s vacancy rate dropped to 4.8 percent during the second quarter, a dip of 30 basis points from first-quarter 2012 and 320 basis points from the market’s bottoming out in 2009, according to Greg Willett (middle left photo) vice president of research and analysis for MPF Research.
Effective rental rates nationwide climbed 1.2 percent in the second quarter when compared to the first three months of the year and 4 percent from the same period in 2011, Willett added.
While still strong, rental growth has abated somewhat recently, according to Willett. “Renter retention is still really high when you compare it to the long-term norm but you are getting more folks that are moving from one property to another,” he said.
Still, “as we look over the next 18 months or so, we think the story is pretty much more of the same,” Willett said. “We don’t see that the vacancy rate is going to move too much.”
While the sector overall is thriving, property performance can vary quite a bit, noted Tom Walsh middle right photo), senior vice president at Grandbridge Real Estate Capital.
“The A/B market is fairly straightforward in most markets in the country. You have occupancy that’s at 90 percent or above,” he said. “The C market is the mysterious gray area: We will see C properties leased at 97 percent and having some rent growth, and we will see a C property that is 60 percent occupied and struggling.”
“Management is critical,” echoed Ernie Eden (lower left photo), a senior vice president with Bull Realty’s Apartment Group. “We see some C properties at 99 percent and others down the street at 70 percent.”
Also, with the housing market continuing to exhibit depressed purchase prices and record-low mortgage interest rates, more renters are likely to take the home-purchasing plunge,said Aaron Goldman (lower right photo), a principal at Perennial Properties.
“It’s going to be very, very hard for residents of apartments with good incomes and good jobs to ignore [the single-family market] when rents are increasing 8, 9, 10 percent year after year,” he said.
Contact
Stephen Ursery
Wilbert News Strategies
404.965.5026
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