Facing a Pandemic and Shutdown, Multifamily Fundamentals Impressed

The multifamily market weathered the pandemic much better than other commercial real estate sectors. While rent growth fell below historical averages, average monthly rent collections remained above 93 percent every month last year, according to the National Multi Housing Council Rent Payment Tracker.

Moreover, overall vacancy remained within historical norms. Facing a global pandemic and an unprecedented national economic shutdown, multifamily fundamentals impressed.

Moving into 2021, the distribution of the vaccines allowed a relaxation of many of the pandemic restrictions and a return to near normalcy throughout most of the country. That ignited an accelerated recovery of the multifamily market, driving occupancy and rent growth up, and market cap rates down. The nationwide shortage of both for-sale and rental housing has created a frenzy of demand that has far overrun supply. The compelling market fundamentals have drawn a flood of investment capital into the sector with more than $130 billion in multifamily transactions closed through third quarter 2021, almost double the total 2020 volume, according to a report by Kidder Mathews.