Rent growth in some metros such as Boston, Washington, D.C. and New York is cooling down as those markets are doused by a wave of new supply from developers. Other areas of the U.S., such as the San Francisco Bay Area and Silicon Valley, remain red hot, while in still other markets like Southern California, St. Louis and Salt Lake City, apartment vacancies have tightened to the point where rents are starting to increase again.
By any measure, the apartment sector has enjoyed the strongest rebound of any of the four major CRE property types, and can now be considered fully recovered, observed CoStar Senior Real Estate Economist Erica Champion who, along with Director of Research-Multifamily Luis Mejia and Real Estate Economist Francis Yuen, recently presented CoStar’s latest analysis of the multifamily market as part of a 2012 Review and Outlook presentation to clients.
Overall apartment vacancies have compressed 220 basis points from their late 2009 peak and are 50 bps below the 10-year average. Average rents have risen 3.2% above the prior cycle’s peak, and three-quarters of the top U.S. metros surveyed by CoStar and its economic forecasting firm, Property and Portfolio Research have fully regained their prior peak levels.