Los Angeles, December 3, 2012 – The U.S. multi-housing market vacancy rate is expected to rise modestly to 5.3% in 2013, according to a new analysis from CBRE Group, Inc. The increase, from a rate of 4.5% in Q3 2012, will be driven by new construction completions and a slight tapering off of demand from historically robust levels in recent years. CBRE forecasts that the multi-housing vacancy will fall back to 5.2% in 2014.
The multi-housing vacancy rate is projected to be 5% for 2012, down from 5.4% in 2011 and from 7.3% at its 2009 peak.
“It is a great time to own multi-housing properties: apartment demand is benefiting from the slowly recovering economy as well as rapidly expanding pool of renter households,” said Gleb Nechayev, Senior Managing Economist, CBRE Econometric Advisors.
Rents have now surpassed previous peaks in most markets and vacancy rates are below historical averages. The market entered an expansion phase in late 2011 and since then fundamentals have continued to improve steadily. New supply has also picked up considerably as a result of strong fundamentals. Completions are on track to return next year to the 1998-2008 annual average of about 190,000 units. At the same time, CBRE anticipates that growth in demand will slow leading the vacancy rate to tick up back to its historical average of 5.3%.
CBRE forecasts that top-performing multi-housing markets will be those with heavy concentrations of high-tech employment, such as San Francisco, Denver, Austin, and Atlanta well as those markets where total employment has already surpassed pre-recession peaks, including Houston and San Antonio. Strong cyclical recoveries in rents are also expected to begin in some of the markets hit hard by the housing bust – including Phoenix and Orlando. These markets will lead the nation in rent growth.
To speak with Mr. Nechayev or another CBRE-EA expert, please contact Robert McGrath (212.984.8267 or Robert.McGrath@cbre.com).
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2011 revenue). The Company has approximately 34,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our Web site at www.cbre.com.