Despite Rising Vacancies, Apts. Still Strong
IRVINE, CA— “This is still a tight vacancy level, so rents will enjoy growth averaging about 3.6% per year” between now and 2018, predicts Ten-X’s Peter Muoio in this EXCLUSIVE interview about the future of the apartment sector.
“This is still a tight vacancy level, so [apartment] rents will enjoy growth averaging about 3.6% per year” between now and 2018, predicts Ten-X’s chief economist Peter Muoio. The firm’s May’sapartment-sector Nowcast was up 0.7% in May from the previous month, the strongest across all five major CRE sectors. In fact, the apartment sector has averaged month-over-month gains of 1.7% over the past three months and is now up 7% year over year. We spoke exclusively with Muoio about how expects this sector to change as we move further into the cycle.
GlobeSt.com: How is the apartment sector changing as we get further into this cycle?
Muoio: Development has picked up in most markets. As a result, even though demand has remained very healthy, vacancies have begun to edge up nationally. There is still a lot of variation by market: some markets are seeing vacancies increasing rapidly and others have stable vacancy rates, while some others are still seeing tightening. Most markets, whichever of those categories they belong to, still have very low vacancies, though, and this is generating ongoing rent growth. But the complexion of this has started to change as well, with rent growth slowing in some markets as vacancies increase.
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