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.