Future Cities
Multifamily Sentiment Favors Big Cities
Chart of the Week
August 15, 2024 2 Minute Read
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CBRE’s bi-annual Cap Rate Survey (CRS) asks market participants to forecast cap rate movement over the coming six months. For multifamily assets, the H1 2024 survey may represent an inflection point, as most respondents expect cap rates for this asset type to slightly decline or remain unchanged.
Sentiment, however, varies across markets. For top Gateway markets (New York, Boston, Washington, D.C., Los Angeles, San Francisco and Seattle), for example, nearly 90% of survey respondents believe yields will decline over the next six months. This optimism is rooted in the impressive post-pandemic multifamily recovery in many highly-amenitized urban neighborhoods.
This is a stark contrast to high-growth Sun Belt markets (Raleigh, Charlotte, Atlanta, Nashville, Dallas, Austin, Phoenix and Denver), where multifamily construction boomed until recently. Most survey respondents believe cap rates will be flat in these markets, likely owing to a persistent new supply overhang.
The new CRS gauges sentiment before the onset of recent market volatility. And while the 10-Year Treasury yield’s decline is welcomed news for multifamily values everywhere, Gateway markets’ edge is likely to persist.
Figure 1: Share of Multifamily Cap Rate Survey Respondents Who Expect Yields to Decline During the Next Six Months (%)
Contacts
Dennis Schoenmaker, Ph.D.
Global Head of Forecasting and Strategic Insight, Head of Data Centre of Excellence
