As the U.S. commercial real estate market continued its recovery from the COVID-19 pandemic-related recession in 2021, the multifamily and single-family rental sectors proved their resilience. Throughout the year we continued to provide unique research and insights into these markets. Here’s a look at our top Arbor Chatter posts from 2021, in case you missed them.
Inflation concerns, new virus variants, tighter monetary policy and high construction costs are among the top factors set to impact multifamily in the year ahead. Read on for the full lookahead from Arbor and Chandan Economics.
Current data on single-family rental construction costs lacks the ability to track build-for-rent properties. Based on a new Arbor and Chandan Economics methodology, our findings show single-family construction starts totaled 86,000 (47,000 BTR and 39,000 BFR units) as of the year ending in the third quarter of 2021.
The single-family rental sector is firing on all cylinders, with key indicators reflecting a healthy inflow if investment capital and tenant demand.
Smaller metro markets continued to outperform larger gateway markets in the third quarter of 2021, notching more small multifamily cap rate compression than gateway markets.
In Q3 2021, small multifamily assets continued to retain the stability that has become the hallmark for the sector. Here’s a quick look at Q3 2021 small multifamily investment benchmarks.
Panelists during eCore21 noted their surprise at multifamily’s quick recovery from the pandemic, with surging rent growth and robust demand in many markets. Here are five key takeaways from the event.
A new report series from Arbor and Chandan Economics explores the many facets of affordable housing and the major trends shaping the market. It’s a critical time to focus on affordable housing, as pandemic-related headwinds and longstanding structural forces have impacted housing affordability.
The ongoing inventory consolidation in the multifamily market is resulting in higher quality assets. This is illustrated in the steady annual increases in rents, especially in small apartment properties. Average Rent Levels Across Asset Type The current consolidation in the multifamily market, characterized by steady large building inventory expansion and a slight contraction in small building units, is helping retain better performing assets with higher rents. The above contraction in small building units comes in the backdrop of rising competition between large apartment buildings and single-family homes for Millennial rental demand. As shown below, based on the latest data from the American Community Survey (ACS), the average monthly gross rent (total housing expense) of small apartment property units reached around $1,040 in 20161. This is an increase from $1,000 in the previous year. In comparison, US average monthly gross rent in large building units increased from $1,200 in 2015 to $1,240 in 2016. At the other end of the market, the rent for single-family homes was slightly above that of large buildings. Duplex-quadruplex units were the least expensive rental option Read the full article…
Buoyed by the favorable economic outlook, a robust labor market and higher inflation, small balance multifamily lending in Q1 2018 was $44.5 billion, improving on Q1 2017.
After standing out as one of the stronger performing markets in the country during 2017, Dallas continued its momentum during the first quarter of 2018. Rent growth and investment activity remained strong, while vacancy rates held at historically low levels despite a high volume of new supply added to the market. Rental Market According to data from Reis, the average asking rent in Dallas finished Q1 2018 at $1,141/unit. This figure is up 0.9% since the end of 2017, and has risen in every quarter since year-end 2009. Year-over-year asking rent increased 5.6%, which ranked 15th nationally. Rent for Class A properties increased 5.4% year-over-year, while the Class B/C average rose 4.4%. Reis forecasts overall asking rent to grow 4.7% during 2018 and slow to 1.9% by 2022. We observed previously that Dallas led the nation with 17,200 new multifamily units completed during 2017. Although demand has been strong, it has not quite been able to keep up with the pace of new supply, as absorption totaled only 11,100 units for the year. That trend continued in the first quarter, Read the full article…
At year-end 2017, we took a look at the Los Angeles multifamily market. We noted then that Los Angeles stood as one of the stronger markets nationally, with low vacancy and high investment volume. As we look at results from the first quarter of 2018, market fundamentals remain strong, although signs of weakness continue to be observed.
Complementing the recent review of household composition and living arrangements, a closer look at householder age indicates the steady graying of small asset apartment demand.
A closer examination of household composition, including single renters and families, as well as living arrangements reveals distinct patterns across rental asset classes.
While rental housing costs remain high, the accelerated improvements in the U.S. economy have resulted in incomes that are rising slightly faster than rents.
While renters are gaining economic confidence, the issue of affordability still weighs heavily when considering a path to homeownership. According to Freddie Mac’s recent Profile of Today’s Renter report, a staggering 67% of renters consider renting as a more affordable alternative than homeownership.
As primary markets get increasingly expensive for housing, young adults at the beginning of their careers are moving into regional hubs. This movement is providing new growth opportunities for small asset investments.
One way to look at the drivers for Millennial demand across US metros is to consider their concentration. Their concentration is shown here as an index of the Millennial share in small properties (5 to 49 units) to their share in the wider metro population.