In the fourth quarter of 2023, CBRE reported that new multifamily construction deliveries reached a record high of 140,800 units. This resulted in a slight increase in apartment vacancies and a slowdown in year-over-year net effective rent growth. However, net absorption was four times higher than the pre-pandemic average for Q4.
According to Kelli Carhart, leader of Multifamily Capital Markets at CBRE, this record-breaking construction was met with strong demand from renters. As we enter the second quarter and anticipate rate cuts from the Fed which will improve capital markets conditions, investment activity is expected to pick up. Additionally, an increase in loan maturities will create opportunities for investors focused on distressed properties.
While Yardi Matrix predicts that construction starts will continue to taper off this year,
the impact on deliveries won’t be felt until later due to existing projects still being completed.
Yardi Matrix also expects new constructions to remain moderate throughout 2024 while completions are expected
to stay elevated until early 2025 before bottoming out by 2026.
This article discusses how new apartments have reached record-high numbers as reported by CBRE.
The rise has led to some changes such as increased vacancies and slower rent growth but has also seen high demand from renters.
Experts predict that there may be more opportunities for investors looking at distressed properties due
to potential rate cuts and loan maturities creating transaction possibilities.
Despite expectations of decreased starts over time,
deliveries are predicted not see significant decreases until around late-early-mid-20s (depending on source).
