When you build “luxury” new apartments in big numbers, the influx of supply puts downward pressure on rents at all price points — even in the lowest-priced Class C rentals.

“In Florida — which continues to make itself a supply magnet with strong demand + the boost from the new Live Local legislation — three markets (Fort Myers, Sarasota, Daytona Beach) are seeing Class C rent cuts around 10-12%. “

via

Via Jay Parsons • Rental Housing Economist (Apartments, SFR), Speaker and Author

Yes, when you build “luxury” new apartments in big numbers, the influx of supply puts downward pressure on rents at all price points — even in the lowest-priced Class C rentals. Here’s evidence of that happening right now:

There are 12 U.S. markets where Class C rents are falling at least 6% year-over-year. What is the common denominator? You guessed it: Supply. All 12 have supply expansion rates ABOVE the U.S. average.

In Florida — which continues to make itself a supply magnet with strong demand + the boost from the new Live Local legislation — three markets (Fort Myers, Sarasota, Daytona Beach) are seeing Class C rent cuts around 10-12%. Not shown on this Top 12 list, but there are three large Florida markets with high supply also seeing Class C rent cuts of 4-5%: Orlando, Jacksonville and Tampa.

Other key markets nationally to highlight: Ultra-high-supplied big markets like Austin, Phoenix, Salt Lake City, Atlanta and Raleigh/Durham are all seeing sizable Class C rent cuts of at least 6%. Small markets on the list include Myrtle Beach, Wilmington NC, Boise and Colorado Springs.

Bear in mind that apartment demand is NOT the issue in any of these markets. They’re all demand magnets. Sure, they’ve seen some moderation / normalization for in-migration and job growth, but they’re still ranking among the national leaders for net absorption.

Simply put: Supply is doing what it’s supposed to do when you add an awful lot of it. It’s a process academics call “filtering” — which happens when higher-income renters in Class B apartments move up into higher-priced new Class A units … and then Class B units see vacancy increase, so they cut rents to lure up Class C renters. And down the line it goes.

But filtering works best when we build a lot of apartments. We didn’t see this phenomenon play out as clearly in past cycles when supply was relatively limited — and (crucially) failed to keep pace with demand.

Less anyone still in doubt, here’s another factoid: Where are Class C rents growing most? You guessed it (I hope!) — in markets with little new supply. Class C rent growth topped 5% in 18 of the nation’s 150 largest metro areas, and nearly all of them have limited new apartment supply. That list includes markets like: Midland/Odessa TX, Knoxville TN, Grand Rapids MI, Dayton OH, Wichita KS, Buffalo NY, Louisville KY, Little Rock AR, and Albany NY.

Among larger markets, Cincinnati and Chicago both saw Class C rent growth near 4% — and both ranked below the U.S. average for new supply.

Most new construction tends to be Class A “luxury” because that’s what pencils out due to high cost of everything from land to labor to materials to impact fees to insurance to taxes, etc.

So critics will say: “We don’t need more luxury apartments!”

Yes, you do. Because when you build “luxury” apartments at scale, you will put downward pressure on rents at all price points.

#multifamily #affordability #housing #rentsActivate to view larger image,

Tampa Retail Real Estate Market Report

Article via Bounat.com – Click Here for complete story and others similar to it.

The commercial real estate brokers at Bounat work diligently to compile a comprehensive list of the top commercial real estate activity in the Florida region on a frequent basis.

Retail leasing fundamentals in Tampa remain solid despite headwinds caused by continued disruptions in the supply chain and lingering concerns post-pandemic. However, these factors are being counterbalanced with the fact that Florida is the fastest growing state in terms of population in the country, and many people are moving to Tampa specifically.

In general, retail demand in Tampa has been consistently strong over much of the past decade, driven by solid population gains, wage growth, and steady consumer spending. Current vacancy is 3.3%, which is up +0.2% compared to Q3 2023, and the vacancy rate for retail real estate in Tampa remained steady over the past year and is well below the national average, estimated at around 4.5%.

Rent growth has accelerated in recent quarters due to strengthening overall leasing fundamentals following the lifting of some pandemic safeguards. Average asking rents as of Q4 2023 are at $25.56/SF, which is up $0.35 from Q3 2023 when the asking rate was $25.21/SF, up over 2% during the past 3 months (quarter to quarter).

There is currently 563,141 SF of new retail space underway, and nearly 1 million SF has been delivered in the trailing 12-month period. While the pace of new development is falling short of previous years, an uptick in demand bodes well for future development.

Retail investment sales activity over the last year has totaled roughly $1.6 billion in total transaction volume, fueled by considerable investment volume in Q4 and Q2 2022. Q1 2022, from a little over a year ago, still holds records for transaction volume with nearly $600M in retail property sales. It was the second highest quarter of retail real estate sales in the area, illustrating just how feverish investor appetite has been over the last year.

Retail investors continue to target deals in secondary markets like Tampa and Orlando as they seek higher yields, which is becoming harder and harder to achieve. Increased competition for assets is forcing an acceleration in overall retail pricing with the average price per SF growing by 10% year over year and by nearly 15% in the last two years. CoStar’s forecast calls for pricing to continue to rise through 2023 before beginning to level out in early 2024.

The most significant single-property trade over the last year took place in Q2 2023 when the Brandon Town Center (303 – 675 Brandon Town Court) sold for $220M at a price of $296/SF with a vacancy rate of 0% at the time of sale. The Tampa shopping center was built in 1995.

If you would like to discuss the Commercial Real Estate Markets or discuss your asset and its future, let’s connect.

http://www.DP-CRE.com

Top 10 Emerging Self Storage Markets in 2024

Article By Agota Felhazi

via Multi-Housing News

Using Yardi Matrix data, we pinpointed these geographically varied markets poised for improvement.

Once again, we’re looking at the top emerging self storage markets in the U.S., based on previous performance in the sector. The average annualized street rate per square foot was $16.6 nationwide for the combined mix of unit sizes and types, as of December. The street-rate performance continued to be negative, dropping 2.7 percent year-over-year. The nationwide under-construction pipeline included 64.4 million rentable square feet of space under construction and an additional 146.9 million square feet in the planning stages. Based on Yardi Matrix’s forecast, by 2028 developers are expected to add another 189.7 million square feet of storage space.

In the table below, we highlighted the top emerging self storage markets across the U.S. There are a number of Florida metros as the Sunshine State continues to be a major draw. To determine the ranking of these smaller but notable markets we looked at rent growth, development activity and demographic trends.

https://datawrapper.dwcdn.net/j8gig/1/

Rank	Metro	Total Inventory (Rentable Sq. Ft.)	Under Construction (Rentable Sq. Ft.)	YoY Pop Change – 3 Mile Radius	Annualized Rate PSF – Main Unit Types (NCC+CC)	Overall Score
1	Jacksonville	14,557,299	788,129	3	$15.84	635
2	Providence	7,135,030	932,330	3	$18.53	603
3	Sarasota-Cape Coral	20,150,971	1,936,990	−1	$16.66	603
4	North Central Florida	11,067,081	658,643	1	$15.71	597
5	Tacoma	12,150,820	410,282	2	$17.89	591
6	Reno	8,367,406	284,861	3	$15.62	588
7	Nashville	17,529,198	173,016	3	$15.82	572
8	Worcester – Springfield	6,905,938	1,085,716	2	$17.34	571
9	Boise	11,769,335	1,092,140	3	$12.63	567
10	Pensacola	10,961,212	487,160	1	$14.98	551

1.      Jacksonville, Fla.

The Sunshine State has remained among the top three growth states on the recent 2023 U-Haul Growth Index, which assessed one-way U-Haul truck traffic during the previous year. Florida placed second only to Texas, while North Carolina, South Carolina and Tennessee rounded out the top five.

Among several Florida metros on our list, Jacksonville came in first. In December 2023, the metro’s unemployment rate was 2.9 percent, up 70 basis points from the December 2022 rate of 2.2 percent according to FloridaCommerce. Based on the same source, Jacksonville added 32,512 new jobs during the same period, marking a 3.8 percent year-over-year increase. Education and health services created the most jobs over the year, adding 9,200 positions.

As of December, Jacksonville’s development pipeline included 22 projects totaling 1.8 million rentable square feet in the planning stages as well as 11 properties underway, encompassing 788,129 square feet. The pipeline amounted to 18 percent of existing inventory. Over the next five years the self storage stock is projected to increase by an additional 2.2 million square feet to undercut any demand for the metro’s growing population.

With a 14.6 million rentable square foot inventory Jacksonville offered residents 10.4 net square feet of available storage space per capita, above the national 7.2 average. Regarding rents, the average annualized rent per square foot for the metro was $15.8 for the combined mix of unit sizes and types. This remained below the national average of $16.6 and marked a 2.9 percent annual decrease.

I’m going to skip most of the location details and if you want to explore that information, you can click here for the complete article via MHN.

3.      Sarasota-Cape Coral, Fla.

Sarasota-Cape Coral had the largest self-storage footprint among the metros on our list amounting to 20.2 million rentable square feet. As of December, the area had 1.9 million square feet of space under construction with an additional 5.9 million square feet in the planning stage. The development pipeline accounted for 39 percent of Sarasota-Cape Coral’s existing inventory.

Despite the robust existing storage inventory of 10.5 net square feet per capita forecasts suggest further robust increases. By 2028 the metro’s inventory is expected to gain 6.8 million rentable square feet of space. Across Sarasota-Cape Coral the average annualized rent per square foot was $16.7 for the combined mix of unit sizes and types. Annual street rate growth marked the sharpest yearly decline among the metros on the list, down 8.2 percent.

4.      North Central Florida

During the five-year period between 2019-2023 2.4 million square feet of storage space came online in North Central Florida. While the metro’s total self storage stock added up to 9.2 net square feet available per person developers showed no signs of slowing down. As of December, the development pipeline included 658,643 rentable square feet of space under construction and 2.5 million square feet in the planning stages. The pipeline represented 28.5 percent of existing inventory. Expansion plans over the 2024-2028 period are expected to add another 3.6 million rentable square feet of storage space to North Central Florida’s footprint.

As of December, the metro’s average combined street rates per square foot fell to $15.7, marking a 5.2 percent annual decline. The national average annualized same-store asking rent per square foot was $16.6 for the combined mix of units and types.

Sarasota County Launches New Resilient SRQ Multifamily Affordable Housing Program

via wengradio – Click here for complete news article

SARASOTA COUNTY – The Resilient SRQ Multifamily Affordable Housing program invites nonprofit developers, for-profit developers, municipalities within the county and public housing authorities to apply for funding for new multifamily affordable housing projects. The Multifamily Affordable Housing program creates additional affordable units for low to moderate-income households.

The Multifamily Affordable Housing program contains $40 million in funding out of the $201.5 million Sarasota County will receive from the U.S. Department of Housing and Urban Development (HUD) through the Community Development Block Grant – Disaster Recovery (CDBG-DR). CDBG-DR funding supports recovery of continuing unmet needs following Hurricane Ian.

“This program will provide funding to develop new affordable housing in Sarasota County,” said Laurel Varnell, Resilient SRQ program manager. “The aftermath of Hurricane Ian presented an increased need for affordable living units, and this program is designed to help meet that need.”

Those community members who are interested in the Multifamily Affordable Housing program can apply online at scgov.net/ResilientSRQ. Applications will be accepted from noon on March 20 until 5 p.m. on May 1.

Interested applicants are encouraged to attend an information session to learn more about the program.

Virtual information session:

• Monday, March 25, 10 – 11 a.m.

In-person information session:

• Friday, March 29, 1 – 2 p.m. at 1660 Ringling Blvd., first floor training room.

Applicants can register for both sessions here. After registration, applicants interested in the virtual option will receive a link to join the virtual session via Microsoft Teams.

Program staff will review applications for CDBG-DR eligibility and make recommendations to the Sarasota County Board of County Commissioners. Commissioners will have the final review and selection of projects.

Applicants must meet all the following conditions for a project to be considered for funding:

• Project proposes more than five rental units and a minimum of 51% of the units are affordable.

• Applicant agrees to a minimum affordability period of at least 20 years.

• Project is located in Sarasota County.

• Project is an eligible CDBG-DR activity (rehabilitation, reconstruction and new construction of affordable multifamily housing projects).

• Applicant has secured or taken adequate steps to secure underwriting.

• Project includes mitigation measures.

If an applicant meets the minimum criteria, projects will be scored on their financial plan, leverage of funding, project readiness, project impact, period of affordability, the number of affordable units and a pre-award assessment.

Below summarizes the application process and review steps:

Step 1: Eligible parties will submit applications for projects to be considered.

Step 2: The Resilient SRQ team will review applications and make scoring recommendations to the Sarasota County Board of County Commissioners.

Step 3: Commissioners will review and make final selection of projects for approval.

Step 4: For projects selected by commissioners, applicants will be required to enter into a subrecipient agreement outlining project-specific requirements.

If you build it, they will come… for now.

By Jay Parsons, via Realpage.com

Follow the people. This is why you can’t look at supply alone when evaluating apartment markets. It’s supply AND demand. Not just supply. And when you look at the latest Census data on where people are going (and leaving), isn’t it remarkable how well it lines up with apartment construction trends?

The top 10 metro areas for population growth for 2023 are all located in the high-supply Sun Belt. Texas claimed four of the top spots (DFW, Houston, Austin, San Antonio), followed by Florida with three (Orlando, Tampa, Miami), and one each from Georgia (Atlanta), North Carolina (Charlotte) and Arizona (Phoenix). Other Sun Belt metros coming close to the top 10 included Jacksonville FL, Nashville TN, Lakeland FL, Raleigh NC and Charleston SC.

What do all of those metros have in common? Several things– including A LOT of apartment supply.

Huge supply (record levels in many cases) are causing short-term digestion headaches — with rising vacancy and falling rents. But the population growth trends rather obviously point to strong rebound down the road as supply inevitably dwindles or even normalizes. The demand tailwinds haven’t evaporated. They’ve moderated or normalized since the initial COVID boom, but they haven’t gone away and likely won’t any time soon.

On the flip side, the markets losing population are probably no surprises. All are low-supply markets, but also low-demand markets. This isn’t to say apartment investors can’t be successful in these metros (after all, real estate is always local, local, local), and many certainly are quite successful. But at a macro level, I’d be leery of overplaying the “low supply” story when it’s paired with a “low demand” story.

This is a big reason why many Wall Street pundits whiffed on their West Coast outperformance outlooks last year. They doubled down too heavily on the “low supply” story, overlooking the facts that 1) the supply numbers were still elevated relative to recent history in these markets and 2) the demand story was mostly lackluster. The “undersupply” story is more nuanced than many analysts want to admit.

BUT a handful of coastal markets did see solid population growth in 2023– led by Washington DC ranking 11th nationally. Boston saw decent growth, too. Not coincidentally, DC and Boston have been the most consistent coastal core apartment performers, too. Seattle saw some growth, too.

(As an aside: I’m not a fan of simple ratios like population-to-supply. They’re not especially useful or predictive, and this is why vacancy numbers don’t align with population change. You can lose population and still see vacancy hold steady or even tick down. That’s because of household dynamics. For example, one family may decide to move out of a unit they’ve shared with another family. On the flip side, two roommates may split up to get more individual space. So while population is important, don’t look at it in a vacuum.) But that said…

Follow the people.

hashtag#populationgrowth hashtag#multifamily hashtag#housing Activate to view larger image,

When you build “luxury” new apartments in big numbers, the influx of supply puts downward pressure on rents at all price points — even in the lowest-priced Class C rentals.

This is some fantastic research via Realpage.com and a first class guy, Jay Parsons. It hits the nail on the head especially since it touches on my hometown and some other neighboring cities.

Yes, when you build “luxury” new apartments in big numbers, the influx of supply puts downward pressure on rents at all price points — even in the lowest-priced Class C rentals. Here’s evidence of that happening right now:

There are 12 U.S. markets where Class C rents are falling at least 6% year-over-year. What is the common denominator? You guessed it: Supply. All 12 have supply expansion rates ABOVE the U.S. average.

In Florida — which continues to make itself a supply magnet with strong demand + the boost from the new Live Local legislation — three markets (Fort Myers, Sarasota, Daytona Beach) are seeing Class C rent cuts around 10-12%. Not shown on this Top 12 list, but there are three large Florida markets with high supply also seeing Class C rent cuts of 4-5%: Orlando, Jacksonville and Tampa.

Other key markets nationally to highlight: Ultra-high-supplied big markets like Austin, Phoenix, Salt Lake City, Atlanta and Raleigh/Durham are all seeing sizable Class C rent cuts of at least 6%. Small markets on the list include Myrtle Beach, Wilmington NC, Boise and Colorado Springs.

Bear in mind that apartment demand is NOT the issue in any of these markets. They’re all demand magnets. Sure, they’ve seen some moderation / normalization for in-migration and job growth, but they’re still ranking among the national leaders for net absorption.

Simply put: Supply is doing what it’s supposed to do when you add an awful lot of it. It’s a process academics call “filtering” — which happens when higher-income renters in Class B apartments move up into higher-priced new Class A units … and then Class B units see vacancy increase, so they cut rents to lure up Class C renters. And down the line it goes.

But filtering works best when we build a lot of apartments. We didn’t see this phenomenon play out as clearly in past cycles when supply was relatively limited — and (crucially) failed to keep pace with demand.

Less anyone still in doubt, here’s another factoid: Where are Class C rents growing most? You guessed it (I hope!) — in markets with little new supply. Class C rent growth topped 5% in 18 of the nation’s 150 largest metro areas, and nearly all of them have limited new apartment supply. That list includes markets like: Midland/Odessa TX, Knoxville TN, Grand Rapids MI, Dayton OH, Wichita KS, Buffalo NY, Louisville KY, Little Rock AR, and Albany NY.

Among larger markets, Cincinnati and Chicago both saw Class C rent growth near 4% — and both ranked below the U.S. average for new supply.

Most new construction tends to be Class A “luxury” because that’s what pencils out due to high cost of everything from land to labor to materials to impact fees to insurance to taxes, etc.

So critics will say: “We don’t need more luxury apartments!”

Yes, you do. Because when you build “luxury” apartments at scale, you will put downward pressure on rents at all price points.

hashtag#multifamily hashtag#affordability hashtag#housing hashtag#rents Activate to view larger image,

I am hearing from checking in with local property managers handling multifamily complexes along with seeing the concessions being offered by the Class A complexes, that this is playing out right now and right here. ~ Sean Dreznin, Dreznin Pappas Commercial Real Estate LLC

Neal Communities Sells 172-Unit BTR Community in Bradenton, FL

By Vicentiu Fusea via Multifamily Housing News

Single-Family RentalFinance & InvestmentNewsSoutheast

The Southwest Florida Coast continues to be a hotbed for rental transactions.

Marisol consists of 172 units with two-bedroom layouts, two baths and a den. Image courtesy of Berkadia

Neal Communities has sold Marisol, a 172-unit build-to-rent community in Bradenton, Fla., near Sarasota, in a forward sale. The buyer was an institutional investor advised by J.P. Morgan Global Alternatives. Berkadia represented the seller, while J.P. Morgan Asset Management led the acquisition team on behalf of the buyer.

Construction on the single-family rental property started in July 2022. Built on 39 acres, the community consists of two-bedroom layouts with bathroom parity and a den, ranging from 1,434 square feet to 1,524 square feet.

Each single-story home features private backyards, attached two-car garages and lanai porches. Common-area amenities include a swimming pool with sundeck, a dog park and direct lake access.

The property is at 16335 Coastal Crest Place, some 8 miles from the Lakewood Ranch master-planned community and 4 miles from the Lakewood Ranch Plaza shopping center. Downtown Sarasota is some 23 miles southwest.

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READ ALSO: What Will 2024 Bring for the SFR Market?

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The Berkadia team represented the seller. J.P. Morgan Asset Management led the acquisition team on behalf of the buyer.

Recent multifamily transactions in Bradenton

In October, Passco Cos. sold another Bradenton asset, the 400-unit ParkCrest Landings, for $102 million. Goldelm acquired the property with fundings from a $62 million loan originated by Arbor Realty Trust.

A few months earlier, a joint venture between Lennar and Wolfson BTR sold Cantabria Bradenton, a 184-unit single-family rental community for $59 million.

Four communities of more than 50 units each, totaling about 1,000 apartments, changed hands last year in Bradenton, amounting to nearly $300 million, according to Yardi Matrix data. In 2022, some 1,600 units traded for more than $200 million.

Florida’s Allure Supersedes Affordability Concerns

The Sarasota Area Emerges as One of the Fastest Mid-Size Markets in the US

By Lisa McNatt and Juan Arias
CoStar Analytics

Florida’s population grew by 5% between April 2020 and July 2023 as shifting work patterns and the allure of a better overall quality of life have fueled relocation interest to the state despite headwinds to affordability.

Even though concerns over escalating insurance costs – particularly in coastal areas – and elevated interest rates have forced many to hit the pause button, it has not stopped a flood of new residents from moving to Florida.

In terms of total migration in 2022, those relocating from New York comprised the largest share of the new population gained, with more than 91,000 residents choosing to become Floridians. California was next, with nearly 51,000 residents moving to the Sunshine State, and New Jersey rounded out the top three with 47,000 of its residents making the move South. The new residents from New York and New Jersey comprised 0.5% of the overall population of those states, as opposed to the 0.1% leaving California. Other states with outbound migration to Florida totaling more than 30,000 people include Georgia, Texas, Pennsylvania, Illinois and Virginia.

To be precise, the population change is not all due to inbound growth, however, as dwindling affordability has made Florida a less attainable long-term home for many. A report from Placer.ai found that roughly 14% of all in-migration to North Carolina came from Florida, perhaps a continuation of the “halfback” phenomenon, where residents relocate from New York to Florida and then move halfway back.

While the Orlando, Tampa and Jacksonville markets have attracted their share of attention for their rate of population growth since 2019, Florida’s real stalking horse market lies in the southwest part of the state. The Placer.ai report determined that growth in the North Port-Sarasota-Bradenton area is resulting in it emerging as one of the “fastest-growing midsize metropolitan areas in the nation.”

That being said, about 20% of the population migration into the area is being driven by residents relocating from other areas within Florida. Of those residents, the largest number are coming from the nearby Tampa area, at 7.6%, followed by Punta Gorda, at 4.2%, South Florida, at 3% and the Orlando area, at 2.5%. Many of these areas have experienced a surge in home prices in the past few years, resulting in diminished affordability.

Oxford Economics has also reported that one of the strongest levels of in-migration from seniors aged 65 and over has taken place in several Florida areas, including The Villages, Punta Gorda, Sebastian and Naples. The Jacksonville area also ranked in the top 25 areas in the U.S. for the fastest increase in its senior population over the past five years.

Despite seeing slower population growth than its northern peers, South Florida is expected to continue to gain residents over the next few years, many of whom are expected to relocate to the area as they retire after the age of 65. Still, population gains are set to slow from pre-pandemic growth of over 1% annually from 2010 through 2019 to less than 1% over the coming five years.

A lack of housing affordability, with South Florida ranking as the eighth-least-affordable single-family home market in the nation, according to the National Association of Realtors, along with above-average inflation, continues to affect demographic gains.

That said, Miami-Dade was the second most popular county in the nation to start a business in 2022, after Los Angeles, and South Florida’s labor market remains strong, with tight unemployment rates and continued labor force growth. Company relocations, along with elevated venture capital investment, continue to drive job growth in the area. In fact, according to the Miami-Dade Beacon Council, commitments from 57 companies looking to expand or relocate to the County were secured in 2022.

Going forward, a tight labor market, along with an inflow of high-net-worth individuals, will continue to place pressure on living costs in the area. Additionally, structural issues concerning housing availability will further bolster inflation above the U.S. average. Single-family home construction has remained limited over the last cycle relative to 2005-07 levels, and Miami continues to have the highest levels of vacation homes in the entire country, contributing further to the limited availability of housing for residents.

A rise in condo and apartment construction has tried to fill the gap between housing demand and availability, though most new condos are concentrated in luxury developments, and apartment rents have risen significantly since the pandemic. These factors will pressure lower-income households out of the South Florida area, as has been the case over the last few years, while those who decide to stay will continue to opt towards renting as homeownership in the area remains unattainable.

To visit this full article, CLICK HERE <—-

To learn more about acquiring income producing property on the Gulf Coast of Florida, CLICK HERE <–

Apartment Supply Surplus and Slowdown

Via Realpage.com and my main multifamily research man, Jay Parsons.

Here’s yet another sign that apartment supply will plunge in the second half of 2025 and into 2026: Multifamily permits continue to drop off, and in January 2024 hit the lowest levels since the COVID lockdown era. And there’s little reason to expect that storyline to change any time soon.

Permits had been somewhat stickily elevated through 2023, even if well below 2021-22 peaks. We heard many developers pushed forward on pulling permits for various reasons, primarily on projects that had been rapidly advancing to that stage prior to hitting the wall of rising rates, falling lease-up rents and diminishing capital interest in ground-up development. Some developers were pushing to be “shovel ready” once capital returned.

But that permitting pipeline is drying up. Total multifamily permits nationally fell below 34,000 units in January for the first time since April 2020 — which, of course, was during the height of COVID lockdowns, partially closed municipal offices and heightened uncertainty.

Starts also dropped off 40% in 2023 (compared to 2022), and developer surveys and declining permit volumes suggest even fewer starts in 2024. Some starts will continue (the pipeline isn’t totally dry), with many of those having some type of affordable housing or attainable housing component — where financing can still be available (though, of course, often quite complicated).

When will permits and starts take off again? Probably no time soon.

Think about what it would take. A material rise in permits and starts would first require rebounding apartment fundamentals — especially for lease-ups to stabilize and rents to start climbing again. Given peak supply hitting this year and early 2025, that probably won’t happen until mid-2025 at the very earliest… likely later. Additionally, construction lenders will need to see some eased regulatory pressure, and equity investors will want to see some decline in rates plus see market dynamics shift back where there’s better yield on ground-up development than on chasing recent lease-ups.

All that will take quite some time.

Bottom line: This is all more evidence apartment supply will drop substantially in the second half of 2025, into 2026 and likely into 2027. And that should give confidence to operators and lenders banking on a market rebound over that time period.

#multifamily #housing #apartments Activate to view larger image,

For information on Florida Gulf Coast markets and to discuss income producing asset information, visit DPCRE, LLC <—–

The Factors That help to Make Multifamily Real Estate Recession-Proof

(MENAFN– Evertise Digital) Sarasota, Florida, United States, November 22, 2023 – In real estate, where the winds of economic downturns can shift markets in unpredictable ways, one sector has proven to anchor stability: Multifamily Real Estate.

As investors navigate the complexities of the real estate market, the allure of multifamily properties becomes increasingly apparent, thanks to their remarkable resilience despite economic uncertainties. But what exactly makes them so recession-proof?

Here are just 5 reasons.

Demand and Essentiality

At the heart of the multifamily real estate’s recession-proof nature lies the perennial demand for housing. Irrespective of economic conditions, people require shelter, and multifamily units offer an affordable and adaptable solution to this fundamental need. This unwavering demand is not confined to a specific demographic, ranging from young professionals seeking flexibility to families and retirees desiring community living.

Moreover, the essential nature of housing provides a layer of insulation against economic storms. While other sectors may experience fluctuations in demand, the need for housing remains a constant, offering investors a reliable income stream. This consistent cash flow is a cornerstone of multifamily real estate’s recession resistance, acting as a financial buffer during challenging economic periods.

Cash Flow Consistency

Unlike some real estate investments that heavily rely on market appreciation, multifamily properties thrive on the steady cash flow generated through rental payments. This income stability provides investors a financial lifeline, allowing them to weather economic downturns more effectively. The resilience of cash flow in multifamily real estate is derived from the sector’s inherent stability – people always need a place to live, and renting multifamily units provides a cost-effective solution for a diverse range of individuals and families.

Furthermore, the consistency of cash flow contributes to a sense of predictability in the financial performance of multifamily investments. This predictability becomes a valuable asset in uncertain economic times, offering investors confidence and control over their financial outcomes. Counting on a reliable income stream enhances the appeal of multifamily real estate as a recession-resistant investment, providing a tangible advantage in navigating the ever-changing economic landscape.

Risk Mitigation Through Diversification

Another key factor contributing to the recession-proof nature of multifamily real estate is the strategic approach to risk management through diversification. Unlike single-family properties, where the financial fate is tightly linked to the economic stability of a single tenant, multifamily investments spread risk across multiple units and tenants. This diversification acts as a protective shield, minimizing vulnerability to the financial challenges of any individual tenant.

The diverse tenant base in multifamily properties, encompassing various demographics and income levels, adds an extra layer of stability. Economic downturns may impact specific industries or income brackets, but the broad spectrum of tenants in multifamily units ensures a more balanced and resilient investment portfolio. This risk-mitigation strategy is fundamental to why multifamily real estate stands strong even in tumultuous economic times.

Adaptability in Changing Markets

In the dynamic landscape of real estate, adaptability is a prized quality. Multifamily properties showcase a unique ability to adapt to changing market conditions. During economic downturns, the demand for homeownership may decline as potential buyers become more cautious. This shift in consumer behavior often increases demand for rental properties, particularly in the multifamily sector.

The flexibility of multifamily units to cater to varying lifestyle preferences positions them as a dynamic and responsive investment option. Investors can capitalize on this adaptability by adjusting rental strategies to meet evolving market demands. Whether providing shorter lease terms to accommodate a transient workforce or offering amenities that align with changing lifestyle preferences, multifamily real estate can pivot and thrive in response to market shifts.

The Financing Advantage

Financing plays a crucial role in real estate investments, and multifamily properties often benefit from more favorable terms, enhancing their recession-resistant profile. Government-backed loans and financing incentives are frequently available for multifamily investments, contributing to a more stable financial environment. This advantageous financing landscape reduces the upfront burden on investors and provides a buffer against interest rate fluctuations.

In times of economic uncertainty, interest rates can be a source of concern for investors. However, the financing advantages of multifamily real estate mitigate this concern, creating a more secure investment environment. Investors can easily navigate interest rate fluctuations, further solidifying the recession-resistant qualities of multifamily real estate.

This information was brought to you via MENAFN ( a PR service) by Rod Khleif pitching his current Real Estate teaching series/project. (see below)

Embrace the Knowledge to Thrive in the Multifamily Real Estate Market

To delve even deeper into the intricacies of navigating this resilient sector, consider exploring educational resources and courses tailored to multifamily real estate investments. And who better to guide you than the renowned multifamily investor and mentor, Rod Khleif ?

Rod Khleif’s courses and events are designed to equip you with the insights and skills needed to survive and thrive in any economic climate. Whether you’re a seasoned investor or just starting your real estate journey, Rod’s knowledge and practical strategies can elevate your understanding and success in multifamily real estate.

For those eager to expand their knowledge, Rod Khleif offers actionable advice and proven strategies for multifamily real estate success. Take the next step in your investment journey by exploring these resources, empowering yourself to navigate the real estate market with the guidance of a seasoned expert.

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