KEY TAKEAWAYS

  • Population growth and social trends such as urbanization, falling homeownership rates, later marriage and lower birth rates create long-term unique structural advantages for the multifamily sector.
  • Occupancy rates are near historical highs. While we expect them to drop slightly, market conditions will likely remain fundamentally sound.
  • Capitalization rates for apartments averaged 5.4 percent in Q3 2016, the lowest of any property type, reflecting strong investor confidence in these assets.
  • Rents have risen much higher than household incomes in recent years and some of the more expensive markets are nearing the limit of what renters can bear.
  • While the rate of multifamily growth is expected to slow, we believe supply-demand fundamentals and capital market forces will remain favorable for some time.