Surprisingly Low Vacancy Rate
Came across a very good article today focusing on the multifamily segment. The title is "Apartment Vacancy Rate Stays Low, Surprising Researchers" - obviously good news!
The lead paragraphs are:
Experts warned that hundreds of thousands of new apartments would open in 2016 and drive up the vacancy in the sector. But for most of this year, average vacancy rates stayed low.
“The market has proved to be incredibly resilient,” says John Sebree, first vice president and national director of the national multi-housing group at brokerage firm Marcus & Millichap “The apartment business is far more positive and far stronger than we expected to be at the beginning of 2016.”
Buried near the end of the article are a couple of paragraphs commenting on the vacancy trend in the B/C category (our typical asset class). These are the "workforce" housing units - suburban, garden-style apartments. Some very encouraging notes here:
The overall vacancy figures cover up a sharp divide in performance between luxury apartments and less expensive units. Since 2013, the percentage of vacant class-A apartments has increased to more than 5.0 percent national, from approximately 4.0 percent. But the vacancy rate for cheaper class-C apartments has improved to less than 5.0 percent, down from over 7.0 percent in 2013, according to Marcus & Millichap.
“Many properties that have historically experienced much lower occupancies are doing much better,” says Sebree. “Many of those Class-C owners are seeing much less turnover and the quality of the tenants moving in is better. Their credits scores and average income levels are higher.”
The entire article can be found here: http://nreionline.com/multifamily/apartment-vacancy-rate-stays-low-surprising-researchers.