Research

A growing share of older renters is living alone, with small asset properties experiencing robust gains from this demand segment.

While a large share of millennials still lives with roommates, this age group is beginning to move out on their own or starting families as they age.

Smaller multifamily properties have grown their share of non-family households. On the other hand, large properties are appealing most to married couples. The share of renters living with roommates continues to rise across all apartment property types.

Las Vegas led the nation in rent growth in 2018, at 8.6% year-over-year. This strong performance was largely driven by strong population growth and a high concentration of prime-age workers. The addition of new supply to the market resulted in a slight uptick in the vacancy rate, but it remained among the lowest nationally.

Rental demand for Baby Boomer-Senior renters is most concentrated in affordable, amenity-rich large apartment properties in smaller metros.

The U.S. multifamily market further solidified itself as the premier real estate asset class in 2018. Rent increases continued and vacancy rates remained low, despite high levels of development activity. Investment sales reached record-high volume levels, amid low cap rates and rising prices.

Panelists at Ariel Property Advisor’s recent Coffee & Cap Rates℠ event in New York City reflected on the city’s rental market performance in 2018, as well as the factors and trends set to impact the sector this year, including interest rate volatility, as well as market and regulatory uncertainty.

Smaller metros offer a balance of affordable apartment rentals and growing economic opportunity that is increasingly catching the eye of transient Millennials. Millennials comprise an increasing share of the adult rental population moving from larger to smaller urban centers across asset types.

The Las Vegas multifamily market led the nation with the highest rent growth during 2018, driven by strong migration trends and a high concentration of prime-age workers. A rise in new construction bolstered a slight increase in the vacancy rate, yet it remained among the lowest nationally.

The U.S. multifamily market further solidified itself as the premier real estate asset class in 2018. Rents increased for the third consecutive year, while vacancy rates remained low despite historically high levels of development activity. Low cap rates and rising prices didn’t restrain investment activity. Given the favorable demographics surrounding the sector, multifamily investors can expect these trends to continue in 2019.