APARTMENT MARKET LOSES STEAM

Today, The Wall Street Journal reports Apartment-Rental Market Loses Steam. The article states the vacancy rate has risen for three consecutive quarters. Also, the rate of increase in average rents was lower in Q1 2016 as compared to Q1 2015. The article indicates “The apartment-rental market cooled in the first quarter, according to reports from three research companies, suggesting a six-year boom…might be coming to an end…the data suggest the bull market for apartments, which began in 2010, is on  its last legs.” Please refer to the article in its entirety for more detail.

 

The article does not portend a major correction as being imminent. In most markets across the country rent growth is simply declining, while vacancy rates climb, from levels not seen in 15 years. Jay Parsons, V.P. with MPF Research, states “The past few years everything you touched was gold in the apartment industry, and that’s not going to be the case this year…partly because, over the next three years, developers are expected to build almost one million apartments…”. That’s in addition to nearly 900,000 units constructed during the previous three years.

 

Key metrics measuring the state of the Jacksonville Beach Apartment Market continue to be healthy; in fact several properties have recently sold, and others are currently on-market for sale (you may contact Patrick Whitney for details regarding these Comparables). However, should investor demand alter as the year progresses toward 2017, an imbalanced shift to more sellers than buyers could influence velocity and valuations.

 

You may contact Patrick Whitney at 904-575-8008 to discuss how these factors may impact the value of your commercial real estate “CRE” assets, and for additional information regarding Mr. Whitney’s capabilities and how you may benefit from utilizing his brokerage, capital markets, research, and advisory services to assist you in achieving your CRE investment goals today.

Patrick Whitney
Director, Multi-Family Housing
PH/ 904.575.8008
EM: pwhitney@cbcbenchmark.com
Professional Bio