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Multifamily Demand Sets Record in Q3

Source: CBRE

  • The multifamily market set a new quarterly absorption record of 251,500 units in Q3.

  • The overall vacancy rate fell by 1.2 percentage points quarter-over-quarter and 1.5 points year-over-year to a record-low 2.9%, while average net effective rent increased by 6.2% quarter-over-quarter and 8.4% year-over-year.

  • Average rents now exceed their pre-crisis levels in allbut four of the 69 markets tracked by CBRE: New York City, Oakland, San Francisco and San Jose.

  • New construction deliveries of 68,800 units in Q3 brought the year-to-date total to 190,000. Record net absorption of 450,100 units so far this year has easily outpaced new supply.

  • The ongoing economic recovery, job creation, wage growth, household formation and the eventual reoccupation of workplaces will support multifamily demand over the next year.

  • Despite being the most negatively affected markets by the pandemic-led downturn, New York and the San Francisco Bay Area are near fully recovered. Urban submarkets in general are also nearing full recovery to pre-crisis rents and occupancy.

  • Multifamily investment volume increased by 31% quarter-over-quarter in Q3 to $78.7 billion. With investment volume totaling nearly $179 billion year-to-date, the market is on track to well exceed 2019’s record total of $193 billion.

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