Much has been written recently about potential risks to overbuilding in multifamily—in fact, I commented on this issue last April in my NREI , column but I noted that analyzing the supply side is not enough. Demand for apartments will remain strong, and will rise further if economic growth quickens.
Apartment fundamentals have bounced back robustly since the recession ended in June 2009. Despite middling economic growth, the national vacancy rate dropped sharply from a peak of 8.0 percent at the end of 2009 to 4.6 percent in the third quarter of 2012. Vacancy rates that are this low have not been observed since late 2001.
Asking and effective rents have risen for 11 consecutive quarters and in many areas have surpassed previous peaks achieved in the third quarter of 2008, before the fall of Lehman Brothers. Landlords face little pressure to offer concessions given how tight rental markets are in most places.
Multifamily Fundamentals Do Not Face a Cliff via NREIonline.com
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