Reports and Materials

Multifamily asking rents went up slightly during the first quarter, but significantly less than pre-pandemic standards. Growth has been highest in lower-cost Renter-by-Necessity assets, and midsize Midwest and Northeast markets are outperforming.

The national rent growth forecast for 2023 was revised downward again, largely driven by the downward revision of some large markets that have an outsize effect on the average, including Eastern Los Angeles County, Miami, the South Bay Area, Tampa and Manhattan.

Yardi Matrix rent growth forecasts were revised downward for year-end 2022 and 2023 amid falling asking rates and a slowing economy. However, some secondary and tertiary markets continue to outperform expectations.

Multifamily rent growth continued to decelerate in October, but much of that can be explained by typical seasonality. With consumer spending up, a tight labor market and favorable multifamily fundamentals fueling demand, Yardi Matrix forecasts a strong end to the year for rent and occupancy.

Most multifamily markets are showing decelerating rents, and it is becoming increasingly likely that we will be in a recession within the next year. As a result, we have revised our multifamily forecasts downward over the short-term.

July marked a significant slowdown in rent appreciation, but that is seasonally typical. Supply and demand fundamentals remain favorable for multifamily, marked by a strong job market, higher mortgage rates and an undersupply of apartments across the country. As a result, rent growth will remain solid through the end of the year.

Forty-year-high inflation is forcing the Fed to move quickly in raising interest rates, but the job market remains very strong. While the chance of a recession in the next 18 months has increased, we still see a less than 50% chance of that happening. Strong demographics and limited supply will keep apartment rent growth strong throughout the year.

Rent growth slowed somewhat in November but remains historically high as we approach the new year. And it is not the only area with notable increase. Though Omicron actually seems unlikely to cause severe disruptions, inflation is focusing all eyes on the Fed to guide the economy to a soft landing.

Rent growth is beginning to abate and is expected to return to more familiar territory next year. However, uncertainty persists due to a clogged supply chain, weaker-than-expected jobs growth and other pandemic-induced maladies.

Rent increases in higher-end buildings drives another month of record growth, but high volatility is expected to persist in the short term. However, upward pressure on lower-end wages should provide strong support for continued rent increases for workforce housing across markets.

Record-setting month-over-month rent increases in some markets seem likely to continue until fall. The gateway cities, which have been slower to recover, are showing signs of life again and should see rent growth acceleration into 2022. Mounting concerns of an extended inflationary period threaten to pump the brakes on a white-hot recovery.

Climate-related payouts have pushed many insurers to the brink, prompting insurance rates to jump for properties in states such as Florida and Texas. Exorbitant rate increases may lead to an increase in delinquencies and have prompted calls for reform of insurance requirements set by lenders.

Strong investor demand propelled self-storage transaction activity to its second-highest year ever in 2022. Market fundamentals and investor interest remain favorable, but the direction of deal flow in 2023 will depend on rising capital costs and pricing uncertainty.

Multifamily property sales continued to shift toward secondary tech markets in 2022, as volume waned in the fourth quarter due to rising acquisition yields and pricing uncertainty. This bulletin examines the prospect for deal flow in 2023 and what needs to happen for market activity to return.

Supply of new storage facilities for recreational vehicles and boats has failed to meet demand, as post-pandemic sales of the “adult toys” have reached record highs. Yardi Matrix’s first-of-its-kind database of RV/boat storage facilities demonstrates the segment’s outsize potential for rapid growth.

The recent increase in interest rates is forcing institutions to reassess growth strategies in the single-family rental market. Institutions have allocated tens of billions of dollars to the sector in recent years. Growth in the near future, however, may be concentrated on build-to-rent projects, which are being delivered at record levels.

Traditional drivers of multifamily rent growth were upended during the pandemic, first as shelter-in-place policies led to massive job losses and migration, and then as the employment rebound and loosening of restrictions caused demand to skyrocket. What are the implications for multifamily going forward?

The Federal Reserve will aggressively raise interest rates through the remainder of the year, but an extraordinarily tight labor market should provide protection from a deep recession. The war in Ukraine threatens to further exacerbate some supply-chain challenges and could keep energy and food prices at elevated levels, but fundamental supply and demand forces in multifamily will keep the sector strong.

Americans are buying recreational vehicles and boats at record levels, in part due to trends exacerbated by the pandemic. That’s creating a surge in demand for storage facilities that focus on servicing large vehicles. Yardi Matrix, the leading provider of data for the self storage industry, has stepped into the breach with the first national database of RV/boat exclusive storage facilities.

Usage of high-yield debt has increased in recent years, despite limited historical data and the high rate of defaults on mezzanine loans in the wake of the global financial crisis. A first-ever study of high-yield debt provides a glimpse into the sector’s performance and some insights for the real estate market going forward.

White-hot demand for housing across the country pushed multifamily absorption to an annual high just three quarters into 2021, according to Yardi Matrix data. The news is particularly good for gateway metros, which had negative absorption in 2020 due to the pandemic but have posted the highest absorption numbers so far in 2021.

Demand for industrial real estate has been transformed by the e-commerce revolution and growth in consumer spending. Total stock has jumped in recent years, while an unprecedented amount of new supply is in the pipeline. Will the key drivers of demand continue to support this growth, and what metros will see the biggest impact?

The COVID-19 pandemic has boosted demand for single-family rentals, prompting institutions to commit billions of dollars to the sector. Many institutions are finding SFR investments to be most efficient in large communities and are increasingly building their own. This paper highlights SFRs’ scope and property performance, collected by Yardi Matrix on more than 80,000 units.

The Q2 2021 BOMA International COVID-19 Commercial Real Estate Impact Study reveals that optimism around the return to the office is growing, mediated by tenants’ increasing clarity around the new normal of office and remote work practices. This is the second in a series of studies commissioned by BOMA International, underwritten by Yardi and developed by Brightline Strategies.

Environmental risk has been pushed to the forefront of commercial real estate by the growing number of weather disasters and concerns about climate change. Which markets pose the most risk to property owners? To find out, Yardi Matrix created a scorecard that grades metros on environmental factors and government response.

COVID-19 has transformed the office market, with empty spaces growing as companies implement flexible work schedules. Growing sublease space and shrinking demand have increased the U.S. vacancy rate by 240 basis points since April 2020, according to a new analysis by Yardi Matrix. What’s more, vacancy rates could rise significantly higher, depending on how companies handle return to work.

Multifamily rent growth was impacted as the pandemic forced work from home across many different industries. How soon will rents recover? This report evaluates the role of higher education in predicting market-specific rent growth prospects as the nation emerges from COVID-19.

Multifamily performance has rebounded quickly from the pandemic slowdown, with the exception of properties in urban gateway metro submarkets. According to a study of 78,000 properties in Yardi Matrix’s database, large occupancy declines in the last year have been concentrated in a handful of cities that may take years to recover.

Absorption of multifamily properties topped 250,000 units in 2020, an unexpectedly robust showing given the impact of COVID-19. Fast-growing secondary metros such as Dallas, Atlanta and Denver saw the highest absorption, while growth was negative in high-cost coastal metros. Although the industry faces challenges in 2021, the durability of demand is a good sign moving forward.

U.S. office property sales were heavily impacted by the COVID-19 fallout in 2020, dropping by nearly half year-over-year to $56.1 billion. However, the short-term loss of sales is likely just the beginning of the pandemic’s lasting impact on the office sector. There are numerous questions about future work-from-home trends and corporate office space needs, with the answers uncertain for now. Investors are watching closely to see where the sector lands.

Multifamily concessions rose sharply in the spring and fall of 2020 as multifamily demand waned due to job losses and social distancing measures. The impact was felt most in high-cost gateway markets, while secondary and tertiary markets benefited from the shift in demand. Concessions declined in the fourth quarter, raising possibilities that demand is recovering or rents are being reset.

Uncertainty caused self storage investment activity to stall during 2020’s second quarter, as’ with other commercial property types. The disruption appears to have been short-lived, however, as storage transactions began picking up again in the second half of the year.

After record multifamily transaction volume in 2019, sales plunged in 2020 due to COVID-19. The impact, however, wasn’t felt evenly across the country. A new white paper from Yardi Matrix looks at how sales activity changed, which regions were affected the most, and how investor demand will impact pricing and sales volume going forward.

Job losses during COVID-19 have varied greatly by metro. An analysis by Yardi Matrix found that metros with large tourism concentrations and high-cost Gateway metros fared the worst, while growing Sun Belt and Midwest markets lost the fewest jobs. However, the numbers provide hope for struggling markets to recover post-pandemic.