Near-Record Multifamily Deliveries Will Mean Oversupply Only in the Short Term
The coming glut of new apartment deliveries will create an oversupply in the multifamily market, but that period of oversupply is expected to be brief, CBRE reported. Longer-term, the near-record delivery of 716,000 units over the next two years will be necessary to maintain healthy fundamentals in the sector.
“While a multifamily development surplus in the next 18 months may weigh on market fundamentals in the short-term, new deliveries will be limited beginning in 2025 and will ultimately lay the foundation for a healthy market throughout the next cycle,” said Kelli Carhart, leader of Multifamily Capital Markets for CBRE in the U.S.
The surge in construction is expected to push multifamily’s overall vacancy rate above equilibrium to a peak of 5.2% from 4.6% by year-end. While this may be surprising, given an overall housing shortage in the U.S., the lack of supply is predominantly in single-family homes and not apartments.