Multifamily investment volumes hit a new record in Q1 2022
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The first quarter of 2022 was the largest quarter on record for the multifamily sector with $63 billion in transactions and a 56% increase in investment volumes year-over-year. This figure reaches $374 billion on a rolling year basis according to CBRE Research . The sector accounted for 37% of all commercial real estate transaction volume, followed by office (21%) and industrial (20%).
Housing absorption, too, is at record levels over the past 12 months, with the first quarter of 2022 accounting for 695,100 units, up 12% from the last quarter of 2021 and more than 77% from its previous annual record in 2000 of 393,000. The net absorption of 96,500 units also represents the highest first quarter since the turn of the millennium.
The sector's rental vacancy rate fell by 0.2% in one quarter and by 2.5% over one year to reach a record level of only 2.3%, while rents rose by 15.5% nationally over the same period.
CBRE tracked data from 69 cities across the U.S., and all of them showed rent growth. 56 of the 69 cities even showed double-digit growth. The southeastern U.S. still leads the way, with Florida posting 20% rental growth in the first quarter.
According to Yardi Matrix, the average single-family home in the U.S. rents at $2,018 per month. The Sun Belt region (including Florida) is expected to continue to see rents increase but at a slower rate than in 2021.
"Strong multifamily fundamentals persist with favorable migration trends, numerous household formations, and a robust job market that continues to fuel demand. An abundance of private and professional financing sources remain available in the market, despite the Fed raising rates." Explains Brian McAuliffe president of Multifamily Capital Markets for CBRE. "While investors have strong beliefs about the fundamentals of the sector, there is supply returning to more normal levels in the market and yields are beginning to rise as debt volatility impacts pricing."
More lots have also been delivered to the market in the last four quarters than since 1987 (with the first quarter counting 292,500 units delivered to the market). More than 400,000 units are also under construction, leading CBRE analysts to predict an even busier year than 2021.
Source: CBRE, GlobeSt
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