Dallas, TX

Record-Breaking Start to 2022 for U.S. Multifamily Market

Strong Multifamily Fundamentals Benefit Red-Hot Sun-Belt Markets

May 11, 2022

multifamily housing complex

Media Contact

Cole Mortland

The U.S. multifamily sector saw strong momentum at the start of 2022, with robust demographic trends underpinning record leasing activity, rent growth and investment during the first quarter, according to CBRE’s latest report.

Investment in the multifamily sector increased by 56% year-over-year to $63 billion in Q1 2022—the strongest first quarter on record and bringing the trailing 4-quarter total to $374 billion. Multifamily accounted for 37% of total commercial real estate investment volume in Q1 2022, followed by office at 21% and industrial at 20%.

The multifamily market set a record four-quarter absorption total of 695,100 units in Q1 2022—up 12% from the previous quarter and 77% higher than the previous annual record of 393,000 units in 2000. Net absorption of 96,500 units was the highest Q1 2022 total since 2000.

“Strong multifamily fundamentals persist, with favorable migration trends, high household formation, and strong wage and job growth contributing to continued demand. An abundance of equity and debt capital remains available, albeit at significantly higher rates than enjoyed in the past few years,” said Brian McAuliffe, President of Multifamily Capital Markets for CBRE.

“Looking ahead, while investors continue to have strong convictions on market fundamentals, bidder pools have reduced due to the increase in the number of offerings in the market and we are experiencing upward movement in cap rates as debt volatility impacts pricing,” added Mr. McAuliffe.

The overall multifamily vacancy rate fell by 20 basis points (bps) quarter-over-quarter and 2.5 percentage points year-over-year to a record-low 2.3%. Average net effective rent increased by 15.5% year-over-year to $2,007 per month. Average rents now exceed their pre-pandemic levels in all but two of the 69 markets tracked by CBRE (San Francisco and San Jose).

New construction deliveries of 66,400 units in Q1 2022 brought the four-quarter total to 292,500—the highest amount since 1987. With more than 400,000 units currently under construction, 2022 deliveries are expected to eclipse 2021.

Q1 2022 Market Highlights:

  • Dallas/Ft. Worth was the leading metro for multifamily investment over the past four quarters with $29.2 billion in total volumedouble the amount from a year ago and accounting for 7.8% of the U.S. total. Atlanta had the second highest total of $21.4 billion, up by 150.1% from Q1 2021, followed by New York with $17.7 billion.
  • New York, Houston, Dallas, Austin and Washington, D.C. were the top five markets for new deliveries over the past four quarters, accounting for 28.7% of the national annual total and 29.8% in Q1 2022. Texas markets were among the most active over the past four quarters, with 59,700 units delivered and 122,300 units absorbed in Houston, Dallas/Ft. Worth, Austin and San Antonio.
  • The top markets for net absorption in Q1 2022 were New York (17,200), Houston (6,700), Chicago (5,900), Dallas (4,600) and Washington, D.C. (4,000).
  • All 69 markets tracked by CBRE had positive rent growth year-over-year, with the increase reaching double digits in 56 markets. Average rents now exceed their pre-pandemic levels in all but two of the markets tracked by CBRE.
  • Seventeen markets had vacancy rates below 2.0%, led by Newark (1.0%), Madison, WI (1.1%) and Providence (1.2%). Only 11 markets had vacancy rates above 3.0%, down from 20 in Q4 2021. Those that dropped below 3% in Q1 2022 were Seattle (2.9%), San Jose (2.9%) and Chicago (2.8%).

Read the full report here.

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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.