Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting cushmanwakefield.com to read:%0A%0A {0} %0A%0A {1}

Underlying Apartment Demand Remains Robust

Sam Tenenbaum • 10/17/2022
With apartment demand slowing from all-time peaks, it’s natural to expect underlying tenant weakness. That may be true – after all, it’s hard to argue that demand has been especially strong as households instead opt to remain in place given the economic uncertainty.
We looked at lease application data over the summer, but I thought it was worth revisiting this data as we see the market shift to see if there are any early indications of weakness. Much like the delinquency analysis we shared last week, there hasn’t been a significant falloff yet. Earlier in the summer, applications were down about 25% over a year ago, but in September, were only down 15%, indicating the market has held up better recently than it had earlier in the year.  

But two factors are reducing the availability of units: occupancies are still hovering around 10-year high and renewal rates are well above the average, especially within our portfolio where they’re averaging north of 60% compared to a low-50s 10-year average.  

With fewer units available to rent, it’s not surprising that applications are down. As we discussed over the summer, a better metric to examine incorporates the current occupancy of properties by looking at the number of applications per available unit.  

In this graph, the higher the number, the more applications there are per available unit. As we see on the chart, through most of this year, there are more applications relative to available units than last year. While these applications may be the result of tenants looking around to see what their options are, the fact is that the underlying demand for multifamily hasn’t dissipated as much as the media has portrayed.  

What does this mean for the market? 

With general economic uncertainty, it’s abundantly clear that most people have opted to stay in place. After all, it’s generally cheaper to do so – whether that’s because homeowners are locked in with low mortgage rates, or renters are renewing at below-market rents. As the market’s volatility evens out and inflation cools (depending on the economic damage done to get to that point), we should see multifamily absorption pick up as renters, who continue to apply to units, pull the trigger on forming new households.  
author / contact

 

sam tenenbaum
Sam Tenenbaum is Cushman & Wakefield’s Head of Multifamily Insights. In this series, he shares unique perspectives on today’s multifamily market, gathered from Cushman & Wakefield’s unique data on the lending environment, strong capital markets presence and the 175,000 units that we manage across the U.S. 

Multifamily Capabilities
Our Multifamily advisors help supercharge your portfolio, beyond the typical “where, why, and how” of investing in and managing multi-unit properties.
Learn more

Related Insights

Indi-5-Fast-Facts_Card-Image_Multifamily
Article • Multifamily

Indianapolis Multifamily Five Fast Facts

What You Need to Know in Today's Indianapolis Commercial Real Estate (CRE) Multifamily Market. 
Maggie Tillotson • 11/23/2022
Bella Apartments Generic Card Image
Article • Multifamily

Underlying Apartment Demand Remains Robust

With apartment demand slowing from all-time peaks, it’s natural to expect underlying tenant weakness. That may be true – after all, it’s hard to argue that demand has been especially strong as households instead opt to remain in place given the economic uncertainty.
Sam Tenenbaum • 10/17/2022
reasons-for-move-out-web-card-v2
Article • Multifamily

Sky-High Mortgage Rates Benefitting Multifamily

With mortgage rates approaching 7%, we wanted to see the material impact of the movement in the market. Using data from Cushman & Wakefield Asset Services, which looks at the self-identified reasons that renters are moving out, we’ve laid out the share of renters that have said they were moving out of our managed communities to buy a home, condo, or townhouse.
Sam Tenenbaum • 9/28/2022
Inland Empire
Article • Multifamily

Inland Empire Multifamily Five Fast Facts

What You Need to Know in Today's Inland Empire, CA Commercial Real Estate (CRE) Multifamily Market.
Jolanta Campion • 9/15/2022
odce-fund-allocation-web-card-v2
Article • Multifamily

ODCE Fund Allocations To Multifamily On The Rise

Here, we look at data on the flow of core institutional capital across asset classes. The data comes from NCREIF’s ODCE index.
Sam Tenenbaum • 9/12/2022
internal-ltvs-web-card-v2
Article • Multifamily

Multifamily Loan-to-Values (LTVs) are Lowest in CRE Today Investors Retreating To Lower LTVs

The volatility in the market has investors adopting a risk-off approach. It’s no secret that in today’s choppy market, buyers have been forced to bring more equity to the table. But this market is unique in modern history: at no point since the early 2000s have LTVs been as low as they’ve been this year.
Sam Tenenbaum • 8/29/2022
btr-starts-web-card-v2
Article • Multifamily

Housing Starts Down But Single Family for Rent and Built-to-Rent Remain Strong

The Census recently released second quarter starts data, and as expected, we continue to see a pullback in the single-family market. Overall housing starts continue to decline with single-family starts back to 2019 levels.
Sam Tenenbaum • 8/22/2022
122021GreenIsGoodSpotlightPt3webcard
Research • Multifamily

Green is Good Series

Across the commercial real estate (CRE) investment landscape, ESG-focused funds have been growing in popularity across institution types. 
Jacob Albers • 3/29/2022
5 Fast Facts Multifamily (image)
Research • Multifamily

US Multifamily Fast Facts

Read these five fast facts about Single-Family Rentals to learn what clients are asking about the most.
Kristina Garcia • 12/8/2021
Multifamily Webinar Replay (image)
Video • Multifamily

Webinar: COVID-19 Implications for Multifamily Investors

Watch Cushman & Wakefield’s webinar to learn about the impact of COVID-19 on the multifamily space and implications for investors.

Kristina Garcia • 4/16/2020

Interested in learning more?

Get in touch and we can assist with any additional information you need.

With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on  Cookies

More Options
Agree and Close
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All
SAVE SETTINGS