NAREE Special Report: Multi-Family’s New Trajectory via Commercial Property Executive

Despite growing rents and occupancies, there is still room for improvement in the multi-family sector, Mark Obrinsky observed during the panel discussion “Multi-Family Boom: When Will This Hot Segment Sputter?” at the National Association of Real Estate Editors’ real estate news conference in Denver. The chief economist for the National Multi Housing Council noted that although rents increases have risen between 4.5 and 5 percent, real rates (after expenses) are actually up 1.5 to 2 percent. While still good, the national average at the last peak, in the third quarter of 2011, was still 6 percent lower than increases in 2006. “By some measures, there’s still some recovery to come,” he said.

And with vacancy rates significantly improved over the past couple of years, landlords can work to make that rent recovery happen. The national average vacancy rate in the first quarter was 5.1 percent, Obrinsky noted, a far cry from 2009’s 15 percent and closer to the range of 4 to 5 percent in 2006-07. “Landlords have pricing power,” declared Adam Fruitbine, managing director for Alliance Residential Co. Both rents and vacancies vary by market, but all the markets have come through the downturn and snapped back very quickly, he maintained. At the same time, don’t underestimate the impact of the economy, warned AIMCO CEO Terry Considine: “How the capital markets play out is the biggest threat to multi-family.”

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