Commercial News » Atlanta Edition | By WPJ Staff | November 5, 2024 7:10 AM ET
Based on CBRE's latest research, the U.S. multifamily market is showing signs of recovery as the vacancy rate fell in the third quarter of 2024 for the first time in more than two years and renter demand outpaced record new supply deliveries.
The multifamily vacancy rate dropped 0.2% quarter-over-quarter to 5.3%, reflecting a diminishing supply pipeline and strong renter demand. These factors are expected to push vacancy down to its long-run average of 5.0% in coming quarters.
Positive net absorption, which measures the change in the number of occupied units, of 153,300 units was one of the strongest third quarters since 1985. Quarterly demand surpassed new completions for the second consecutive quarter, further shrinking the completions-over-demand gap on an annual basis.
Average monthly rents in Q3 2024 rose 0.3% compared with the same period in 2023, reaching $2,203. Rent growth is expected to accelerate as construction completions slow and positive net absorption continues.
A total of 473,300 new units have been delivered over the past four quarters, a record level. However, construction starts have slowed markedly, portending an easing of supply pressure in coming years.
"The first drop in vacant units in more than two years signals a crucial turning point in the multifamily sector. This boost will lead to increased investment activity in 2025 as improving fundamentals continue to drive investor confidence in capital deployment," said Kelli Carhart, leader of Multifamily Capital Markets for CBRE.
Other Q3 2024 Multifamily Sector Highlights: