Top Trends Across Cushman & Wakefield’s Multifamily Portfolio

As one of the nation’s largest third-party property managers, Cushman & Wakefield Asset Services has access to unique data and insights not available from third-party sources. This information is invaluable to our clients. Using this proprietary data, we will explore trends across our portfolio and what they may mean for the year ahead.  

Many trends from the U.S. Multifamily MarketBeat were reflected in our portfolio’s third quarter performance. Demand remained robust, producing steady occupancy improvement while rent growth slowed. Instead of revisiting the MarketBeat data, this report dives deeper into loss to lease, concessions and renter finances.

The Cushman & Wakefield Asset Services team manages over 167,000 units nationwide, making our team one of the largest third-party management providers in the country. This scale generates a wealth of data and analytics, which we share regularly through articles like this and our multifamily newsletter, Multifamily Digest. Because this data is proprietary to our clients, we do not share aggregate levels for most metrics. However, broader trends offer valuable insights into market performance.

Leading Leasing Indicators Are Still Healthy

 

Each metric is up considerably from this point last year. These indicators collectively point to a market that is outperforming typical seasonal expectations and maintaining momentum as we close out the year.

A Deeper Look at Renter Move Outs

We can learn a great deal about the state of the renter by looking beyond occupancy and demand metrics. With so much economic uncertainty this year, many expected renter demand to pull back through doubling up with roommates, moving in with parents or largely maintaining the status quo. Historically, volatility has brought stagnant demand.  

The left chart shows a long-term view of the two reasons residents move out: evictions and “cost.” The former is straightforward. The latter aggregates the myriad reasons residents provide, which we then categorize. If residents tell us they can’t afford the rent, it can indicate financial strain. Both metrics point to a consistent theme: residents’ financial health is largely in a healthy state.

 

The right chart provides a longer-run look at renters who are moving out to buy a home. This data helps explain why national apartment demand has been so robust over the past two years. While other data describes the affordability challenges in the for-sale housing market, this is the primary evidence: Our portfolio has seen a sharp decline of renters moving out to purchase homes.

The Slowdown in Rent Growth Hasn’t Permeated Concessions

While owners have prioritized occupancy over rent growth in the past six months, this appears to be manifesting via asking rents rather than an increased use of concessions to lure would-be residents. Although lease-ups tend to command the bulk of the concessions, certain supply-heavy markets have used them to compete with new deliveries. However, the concession rate among our properties is down to very low levels—below 1.5% in aggregate across our portfolio.  While the overall concession rate is up slightly from this time last year, the difference is negligible.

With more than 167,000 units managed nationwide, the Cushman & Wakefield management team is constantly diving into the data gleaned from our boots-on-the-ground experience and operational expertise. Analyzing trends like these and hosting thoughtful discussions with industry leaders help our clients make informed decisions about their assets, monitor performance with a trusted partner and take a predictive approach to underwriting. Recent episodes of our podcast The Multifamily Minute featured conversations with several leaders from our multifamily property management team as well as a discussion on the qualitative insights that can be gleaned from the data analyzed in this article. We’re excited to see what the data reveals next quarter and look forward to sharing those insights.

Signs of Life in Loss-To-Lease  

While year-over-year rent growth continues to struggle, we have seen steady improvement in loss-to-lease, including a slight increase in September. It’s possible that this is a one-time, short-lived increase. However, it may point to the start of a rent growth cycle, pushing up loss-to-lease across our portfolio.

With more than 167,000 units managed nationwide, the Cushman & Wakefield management team is constantly diving into the data gleaned from our boots-on-the-ground experience and expertise in operations. Looking at trends like these allows our clients to make smart decisions with their assets, monitor performance closely with a trusted management partner, as well as be predictive in their underwriting. We’re excited to see what the data shows us next quarter and look forward to sharing those insights.