Apartment market fundamentals continued to be rock solid through the second quarter, becoming the first CRE property sector to make the full transition from recovery mode into expansion and see increasing rents, declining vacancy and a burst of new construction.
Of the four major property types, apartments possess the best recovery story with vacancy rates compressing by 190 basis points since the beginning of 2010. Rents have recovered in 30 of the 54 largest U.S. markets.
“Apartments continue to have very solid fundamentals. There’s no lack of demand, and we’re starting to see supply coming online,” commented senior real estate economist Erica Champion this week during CoStar’s Mid-Year 2012 Multifamily Review and Outlook.
“Investors have to be very cognizant of the markets and submarkets they play in, but it’s a very strong story,” added Champion, who presented the midyear update along with PPR director of multifamily research Luis Mejia.
Multifamily market conditions held fast through the second quarter, despite tepid job growth and the ongoing questions about the health of the single-family housing market — two important components of multifamily demand. The condition of the economy should become clearer after the November presidential election and the resolution of the “fiscal cliff” involving taxes and government spending policies that the U.S. faces before the end of the year, Mejia said.
The U.S. political situation, the Eurozone crisis and volatile energy prices have disrupted investor confidence this year (see related news report, “Déj