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New Apartment Supply Weighs on Pricing Power
Multifamily investors took a breather in Q1 2017, with acquisition activity cooling, as reported in CBRE’s Q1 2017 U.S. Multifamily MarketView Snapshot. Activity totaled $26 billion, and reflected a 35.4% decline from the previous year.
While that comparison may overstate the slowdown given the near-record volume of Q1 2016, the most recent quarter’s total is also below the 2012-2017 average of $30.7 billion, say CBRE researchers.
The most active buyers so far this year are private buyers looking for value-add opportunities. Institutional investors and buyers of core product have been less active.
CBRE says, factors contributing to the lower sales volume in Q1 included: pre- and post-election uncertainties, the rise in both long-term and short-term interest rates in Q4 and early Q1, some lack of transparency on pricing directions and less-stellar property market fundamentals than in recent years.
Deliveries are expected to increase over the next few quarters before subsiding in mid-2018. More than half of Q1 deliveries were in nine U.S. metros, led by New York (4,800), Washington, D.C. (3,400), Dallas/Ft. Worth (2,600), and the San Francisco Bay Area (2,600).
Key Highlights
- Vacancy rate up 4.9% from previous year
- Net absorption steady at 208,700 units for the year
- Rentable completions up to 252,100 units
- Acquisitions volume down to $146 billion
For comments, questions or concerns, please contact Dennis Kaiser
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