The multihousing vacancy rate in 2011 isprojected to be 5.5 percent (on an annualized basis), down 60 basis points (bps) from a year ago and 190 bps from its 2009 peak.
“Apartment demand is benefiting from slight job growth as well as an expanding pool of potential renters,” said Gleb Nechayev, senior managing economist, CBRE-EA. “With gross revenues surpassing their pre-downturn levels in Q3 2011, the U.S. apartment market has entered an expansion phase. Considering the strong pace of recovery in rent and occupancy, it is not surprising that new multihousing construction activity is also beginning to gain some momentum. We expect that multihousing completions in the U.S. will surpass 200,000 units in 2012. While the new supply will still be well below the historical norm, the improvement in vacancy will pause until the labor market becomes more robust.”
“The third quarter is traditionally the strongest, but even after adjusting for seasonal effects, the market is essentially back to normal now,” added Nechayev. “There is still a fairly wide variation in market conditions, however, with rents still flat or even down slightly in some areas and rising by almost 15 percent in others.”
CBRE-EA forecasts that top-performing multihousing markets will be weighted toward areas with concentrations of hightech employment. Over the next two years, metro areas such as San Francisco, San Jose, Austin, Denver, and Seattle will be among the top-performing markets for rent growth. Phoenix, a metropolitan region that was among the hardest-hit by the housing bust, is also expected to be among the top performers over a two-year horizon, as rents recover from the cyclically low levels.