Rental Inventory Review: Small Asset Multifamily Consolidation Reverses Course
Reversing the trend of consolidation from the previous year, occupied small asset multifamily inventory expanded in 2017, according to new data from the U.S. Census Bureau 2017 American Community Survey (ACS).
Multifamily Dominates U.S. Rental Inventory Base
Using data from the recently released 2017 ACS, this blog post provides a comprehensive and updated look on the state of the nation’s rental market for both asset composition and share changes.¹
While an oversupply of units in higher-end large multifamily assets, especially in primary urban centers, has impacted the growth of all other rental classes, the latest U.S. Census Bureau data shows a reversal in this trend.
Growth in large asset multifamily decelerated as of year-end 2017 when compared to the previous year.¹ Meanwhile, inventory growth picked up in small apartment buildings.
Multifamily assets continued to dominate the U.S. rental inventory base, with single-family and duplex-quadruplex units forming relatively smaller shares of the total market.
As shown below, multifamily rentals made up slightly more than 45% of total U.S. rental inventory, of which 32% were small multifamily assets and 13% were large multifamily assets.
(Please click around for detailed chart information)
Single-family rentals, which emerged as a popular rental option during the post-crisis period, accounted for roughly 36% of the U.S. rental base, with duplex-quadruplex units forming the remaining 18%.
Small Asset Multifamily Increases Share of Total Rental Inventory
Recent reporting points to localized oversupply of luxury large multifamily units, following the frenetic pace of construction starts during the post-crisis boom years, which has begun to undergo a modest correction.
As shown below, while the large asset multifamily share of occupied units grew by 56 basis points (bps) from 2015 to 2016, this expansion tapered off to only 30 bps from 2016 to 2017.
(Please click around for detailed chart information)
On the other hand, while there was a material shift away from small asset multifamily from 2015 to 2016 (a share decline of 36 bps), small asset multifamily slightly increased its share of total rental inventory from 2016 to 2017, rising 11 bps.
The latest Census data also indicated a comparative softening in demand for single-family rental units and duplex-quadruplex units.
1 All data is sourced from the American Community Survey (ACS), unless otherwise stated. ACS statistics are sample-based estimates of the compositional profile of the total population in the given year of data collection, and include a margin of error.