Is multi-family’s hot streak nearing its end?

by Dan Rafter

 

Multi-family has been hot for such a long time, it’s tempting to think of this commercial segment as being bulletproof. But is it? The latest multi-family research by ReisReports suggest that this segment might finally be slowing.

Victor Calanog, researcher for ReisReports, gives several reasons to believe that multi-family is nearing its long-due slowdown.

First, national apartment vacancies across the nation rose 10 basis points to 4.2 percent during the third quarter of the year. At the same time, nearly 200,000 new apartment units will have entered the market across the country by the time 2014 comes to an end. That’s a recipe for a cooling-off period.

Of course, cooling off isn’t the same as a crash. Even with the additional product, landlords have been able to increase both asking and effective rents. Calanog reports that both of these rose 1.1 percent during the third quarter of the year when compared to the same quarter in 2013.

The message? Multi-family is still strong. Just don’t expect it to remain as strong as it’s been forever … or even for too much longer.

 

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