Market corrections in Florida and California contributed to a month-over-month increase of average asking rents nationally by 41 basis points in May, states the latest Multifamily Forecast from Yardi Matrix.  It was a decrease from the 44-basis-point MoM increase recorded in April and was prompted by actual decreases in asking rents in two regions: Florida markets that saw unbelievable growth during the pandemic and now face affordability problems, and California cities still struggling to find their post-pandemic footing. Five of the 10 worst-performing markets were in Florida (Southwest Florida Coast, Miami, Orlando, Jacksonville and West Palm Beach), and of the remaining markets that saw month-over-month declines, six were in California (metro Los Angeles, Sacramento, Eastern Los Angeles County, the East Bay, Orange County and the Inland Empire). Strong growth continues in many Midwestern and Northeastern markets: Portland, Maine, and Scranton–Wilkes-Barre both grew more than a full percentage point month-over-month. White Plains, Detroit, Urban and Suburban Chicago, Manhattan, Milwaukee, Rochester, Central New Jersey and Syracuse all saw asking rents grow more than 90 basis points from the previous month. The average apartment asking rent nationally was $1,726 in June, according to the Yardi Matrix National Multifamily Report. The update forecast lowers rent rate expectations for many larger markets in the West and Southwest and raises them for many midsize markets throughout the Midwest, Northeast and parts of the South. “The stalled-out return-to-office movement is putting a significant drag on Western markets with large numbers of knowledge-based workers, and economic uncertainty will continue to limit demand in those markets that have largely been driven by high-paying tech jobs,” states the report. As for those cities whose outlook improved: “As affordability continues to be a concern across the country and economic uncertainty prevails, these smaller markets will...

Multifamily rents continued to increase through the first half of 2023, despite challenges for the sector and continuing economic uncertainty. But job growth has remained robust and new households keep forming, creating apartment demand and ongoing rent growth. “We anticipate that rents will continue to increase modestly over the course of the year as demand has firmed, albeit at a more moderate rate in line with historic growth levels,” say Yardi Matrix experts in a newly released U.S. Multifamily Outlook. Through the first five months of 2023, U.S. asking rents rose $17, or 0.9 percent, with year-over-year growth falling to 2.6 percent. “We expect continued deceleration, with rent growth of 2.5 percent for the full year,” states the outlook. The average U.S. apartment rent reached an all-time high of $1,716 in May. Challenges for the sector include slowing demand, growing issues with affordability, slower population growth and competition from a large number of new units coming online through 2024. The capital side of the industry has suffered due to heightened interest rates, which show little sign of decreasing in the near-term. Property values are down 15-20 percent from their peak and are still declining due to the higher cost of capital. New deliveries will be high at least through the end of 2024, as the 1 million units under construction come online. New starts are now declining, however, because debt is more expensive and fewer banks are financing construction. Household formation, which drove the 22 percent cumulative growth in U.S. asking rents over 2021 and 2022, has slowed but remains positive. Although some pandemic demographic trends are moderating, the desire for more space to balance living, working and family appears to have staying power and should continue to drive demand. Demand is also boosted...

Self storage street rates were solid in May, with several unit types and sizes improving on a monthly basis and sequential growth staying to trend, according to the latest National Self Storage Report from Yardi Matrix. The self storage market continues to be resilient, despite headwinds to demand caused by a slowing housing market. National street rates for standard-size 10×10 non-climate-controlled (NON CC) units and 10×10 climate-controlled (CC) units both increased $1 month-over-month in May, to $128 and $143, respectively. Across all rate types tracked by Yardi Matrix, smaller-size units performed the strongest in May, as national rates for 5×5 units increased 1.8 percent for NON CC units and 1.7 percent for CC units on a monthly basis. Year-over-year, national street rates for 10×10 NON CC units decreased 3.8 percent, while rates for 10×10 CC units fell by 4.7 percent. Although year-over-year street rate growth has turned negative, net operating income continues to increase as operators push rates. That has come at the cost of a slight hit to occupancy rates, but demand is still above pre-pandemic levels. “The outlook for the sector remains optimistic, although concerns persist about how the slowdown in home sales and potential weakening job market caused by higher interest rates will impact storage demand, street rates and occupancy levels in the second half of 2023,” state Matrix experts. Learn more about the state of the self storage sector nationwide. Yardi Matrix tracks a total of 4,799 self storage properties nationwide in various stages of development — including 807 under construction, 1,959 planned and 646 prospective properties. Matrix also maintains operational profiles for 29,744 completed self storage facilities across the United States, bringing the total data set to 34,543. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment...

Multifamily asking rents rose for the third straight month in May, according to the latest National Multifamily Report from Yardi Matrix. Despite the threat of a slowing economy looming, average U.S. asking rent rose $7 in May to $1,716, while year-over-year growth decelerated to 2.6 percent. That was the lowest level since March 2021. For the year to date, rents are up $18, or one percent since January 1. The seasonal outline of growth is not far off a typical pre-pandemic year, although the rate of increase is lower. “While performance displays resilience, the data is not unambiguously positive as it has been for most of the last two years,” states the report. “Rent growth has turned negative year-over-year in several metros as occupancy rates weaken amid slackening demand and rapid growth in new deliveries.” Overall market attitudes remain positive. Renting is still cheaper than owning, and first-time buyers are renting longer. The stickiness of high-income renters likely contributes to the recent resurgence in high-end Lifestyle properties, in which rents rose 0.4 percent in May. The average single-family unit rent reached $2,100 for the first time in May, about a year after topping the $2,000 mark. Year-over-year growth fell 40 basis points to 2.1 percent. SFRs are boosted by waning home sales attributed to high interest rates and limited inventory. Gain more insights by downloading May’s Multifamily...

The impact of remote work on the housing market has been significant. In a webinar by Yardi Matrix, Jeff Adler, Matrix vice president, brought up several notable shifts. The full recording and presentation slides are available online. Let’s explore the big-picture impact of remote work on housing and communities. There are myriad cultural changes from the pandemic from an economic standpoint, but one of the most significant transitions is the prevalence of remote work. Working remotely offers more opportunities for household formation. In addition, with remote working becoming more prevalent, some employees are no longer tied to living near the offices. This has increased interest, particularly in suburban areas like Charlotte and Phoenix, where households can enjoy more space, lower living costs and a quieter lifestyle than in urban centers. Additionally, some businesses have chosen to leave high-cost cities for lower-cost ones, such as San Francisco to Austin, New York to the Carolinas and Chicago to Nashville. “I think Huntsville is a great market for many businesses, but it’s just now beginning to have a lot of supply hit,” said Adler. “Any place where you got to have a supply response will run through some struggles for the next couple of years as it gets absorbed.” In addition, research found that remote work has led to a surge in household formation, counterbalancing population loss in dense cities. First-time homebuyers are becoming priced out of the market, which encourages renting, especially while mortgage rates are at the highest level in more than 13 years. Household formation could stall as renters move in with family or roommates to cut costs. Remote work has given homeowners and renters more flexibility in choosing where to live. This has resulted in shifts in migration patterns. People are moving from...

The 44th edition of one of the real estate industry’s most closely followed reports is out, offering a sweeping look at conditions in the U.S. and Canadian property management and investment arenas. 2023 Emerging Trends in Real Estate, an annual collaboration between PwC and The Urban Institute, reports that amid rising interest rates and some signs of economic distress, most professionals contributing to this year’s report remain “reasonably upbeat” about longer-term prospects. Here are some key trends outlined in the report, which incorporates input from several hundred experts including Peter Kolaczynski of Yardi Matrix: Vertical markets such as residential and industrial could weaken due to diminishing pandemic tailwinds and the potential for a cyclical economic downturn, while others – including hotels and retail – might heat up. Some pandemic-driven structural shifts remain. Online spending, for example, is receding from its pandemic peaks but probably won’t revert to pre-pandemic levels. The same is true of business travel, with the lodging, dining and convention facility sectors facing challenges for the foreseeable future. Although real estate sales volume in the first half of 2022 was 38% higher than over the same period last year, capital is still heading to the sidelines or to other assets. “The recent surge may well reflect a last gasp to get deals done before the expected increase in interest rates” that would make acquisitions and construction debt more expensive, Emerging Trends says. Housing affordability has fallen to its lowest level in over 30 years, with prices, mortgage rates and rents soaring relative to incomes. With “a growing share of households priced out of the for-sale market, demand for rental units is far outstripping new supply,” the report says, with the growing number of younger adults choosing to live alone also a factor....

Multifamily asking rents rose for the second straight month in April, according to the new National Multifamily Report from Yardi Matrix. Despite economic headwinds, the market continues to demonstrate resilience. The average U.S. asking rent rose $5 in April to $1,709, while year-over-year growth decelerated to 3.2 percent, down 80 basis points from March. Solid demand has kept rents rising, but at a slower rate than previous years. Demand is buoyed by a tight job market and healthy household budgets, although economists are scrutinizing how much longer those conditions will persist. A recession is still forecast for later this year. “Rent growth is broadly positive nationally, but regional differences are emerging. High-demand Sun Belt metros are feeling the impact of reduced affordability and robust deliveries, while primary metros have less supply growth and some benefit from rebounding immigration,” states the new report. Multifamily rent gains remain positive year-over-year everywhere but Phoenix and Las Vegas, but the top-performing markets are different each month. In April, Indianapolis (7.7 percent) and Kansas City (6.4 percent) led the top 30 Matrix metros in rent growth, while primary metros New York, Boston and Chicago round out the top five. Single-family unit rents also hit a new all-time high in April, averaging $2,089, but year-over-year rates once again decelerated, dropping 60 basis points to 2.3 percent. Occupancy rates decreased in March to 95.5 percent but have stabilized after peaking at 97 percent in 2021. Gain more insights by downloading April’s Multifamily Report. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, industrial, office and self storage property types. Email [email protected], call (480) 663-1149 or visit yardimatrix.com to learn...

Self storage street rates continue to fall off of last year’s historic highs each month, according to the latest National Self Storage Report from Yardi® Matrix. However, sector fundamentals remain strong. Year-over-year street rate growth was negative in March for the sixth straight month, with national average rates for standard-size 10×10 units down 2.3 percent year-over-year for non-climate-controlled (NON CC) units at $127 and 3.4 percent for climate-controlled (CC) units at $142. “Although street rates are negative on an annual basis, rates remain relatively steady sequentially, with some unit types and sizes registering increases on a month-over-month basis,” say Matrix analysts. “Operators largely remain optimistic about demand despite the volatility in the financial markets because storage performance has repeatedly proven to be stable during times of economic volatility.” Most of Yardi Matrix’s top 31 metros recorded negative street rate growth last month compared to March 2022. Year-over-year, rates for 10×10 NON CC units were again negative in the majority of the top metros, with 25 experiencing decreases. Nashville was the only metro with positive YOY rate growth in March for both 10×10 NON CC and CC units, and the only city tracked without a drop in rates for CC units. Learn more about the state of the self storage sector nationwide. Yardi Matrix tracks a total of 4,735 self storage properties nationwide in various stages of development — including 817 under construction, 1,896 planned and 656 prospective properties. Matrix also maintains operational profiles for 29,299 completed self storage facilities across the United States, bringing the total data set to 34,034. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, industrial,...

Multifamily asking rents rose slightly last month as demand stayed strong despite economic challenges, according to the new National Multifamily Report from Yardi Matrix. The average U.S. asking rent rose $3 in March to $1,706. Year-over-year growth fell to four percent nationally, 90 basis points less than February and the lowest level since rents started an unprecedented climb in April 2021. Single-family rental rates increased in March by $5 to $2,079, while the year-over-year increase fell by 80 basis points to 2.8 percent. “The first quarter produced no gains for multifamily rents for the first time in a decade, but the results come as somewhat of a relief,” say Matrix experts. “Multifamily demand held up well despite the attention given to the Federal Reserve-induced economic slowdown, bank failures and the deceleration from the outsize rent gains of the last two years. Rents and occupancy are stable as the market heads into the growth season.” Rents and the national occupancy rate were unchanged during the first quarter of 2023, and 21 of the top 30 Matrix metros recorded rent gains in March. Gain more insights by downloading March’s Multifamily Report. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, industrial, office and self storage property types. Email [email protected], call (480) 663-1149 or visit yardimatrix.com to learn...

Self storage street rates were flat in February as consumer relocation trends and demand revert to pre-pandemic levels, according to the latest National Self Storage Report from Yardi Matrix. Growth of the average national street rate for all unit sizes was -2.8 percent year-over-year, unchanged from January. Rates for standard-size 10×10 units fell by 3.1 percent year-over-year for non-climate-controlled (NON CC) units and 4.1 percent for climate-controlled (CC) units. Despite lack of rate growth, the industry is in a comfortable position as the typically busy spring leasing season approaches. “Although fundamentals softened slightly in the fourth quarter owing to normal seasonal patterns and some customers balking at increasing rates, demand is strong and occupancy remains ahead of where it normally is this time of year,” states the report. “We’re seeing good demand from new customers coming into the system,” Public Storage’s chief financial officer, Tom Boyle, said recently. “Move-in volumes through the (winter) are up double digits.” Self storage-foused REITs are forecasting mid-single digit net operating income growth in 2023. Annual street rate growth continued to be negative for most of the top 31 metros in February. Only three of the top 31 Matrix self storage metros had a year-over-year increase in street rates for 10×10 NON CC units, while rates were negative in 25 of the top metros. Learn more about the state of the self storage sector nationwide. Yardi Matrix tracks a total of 4,730 self storage properties nationwide in various stages of development — including 823 under construction, 1,885 planned and 662 prospective properties. Matrix also maintains operational profiles for 29,221 completed self storage facilities across the United States, bringing the total data set to 33,951. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders...

Multifamily asking rents remained the same for a second straight month in February, at a national average rate of $1,702, according to the new National Multifamily Report from Yardi Matrix. As the economy continues to adjust in the post-pandemic period, year-over-year growth continued its ongoing decline. It is now 4.8 percent nationally, down 70 basis points from the previous month and its lowest level in nearly two years. Asking rent growth remains positive year-over-year in almost every major metro, but 23 of Matrix’s top 30 metros recorded negative growth over the last three months and 17 were negative in February. “Multifamily rents are playing a waiting game, as rents have essentially leveled over the seasonal winter slowdown,” state Matrix analysts, noting that February has historically recorded minor rent growth gains. “The big question is whether demand and rents pick up as normal in the spring. Demand has come down from 2021 levels, though it remains positive in most markets.” Average U.S. asking rents in the single-family rental market were also flat at $2,071. The year-over-year increase fell by 80 basis points to 3.4 percent, far below the 14.8 percent growth rate a year ago. “Near-term performance will hinge not only on demand-supply dynamics at the local level but affordability and the economy,” the report states. Gain more insights by downloading February’s Multifamily Report. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, industrial, office and self storage property types. Email [email protected], call (480) 663-1149 or visit yardimatrix.com to learn...

A new Yardi Matrix Bulletin focuses on the rising cost of commercial property insurance, especially in climate-affected states like Florida and Texas. These increases are a growing problem for commercial property owners and beginning to threaten new development and property sales. Although rates are rising nationwide, the problem is most acute in states that are experiencing frequent extreme weather events like hurricanes, winter freezes and wildfires. Hurricane Ian, for example, resulted in over $50 billion in damages in Florida last September. Weather-related payouts have left some insurers insolvent, while others are avoiding high-risk states. This translates into higher rates and less coverage for property owners. “The rate environment for real estate-specific property is severely challenged, especially in Florida and Texas and along the Gulf Coast,” said Danielle Lombardo, the chair of Lockton Global Real Estate, a New York-based advisory firm. “This has caused a bifurcated market between catastrophe-exposed and non-catastrophe-exposed business, with the highest double-digit increases in properties that have negative risk attributes, such as older frames, a challenged loss history or undervalued assets.” Many reinsurance companies, which property insurers use to move portions of risk off their own balance sheets, are quitting high-risk states, and those that stay are raising rates by 45-100 percent. Lombardo said. “Reinsurers are running away from Florida,” she said. “Something has to be done differently.” Learn more in the new bulletin from Yardi Matrix. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, industrial, office and self storage property types. Email [email protected], call (480) 663-1149 or visit yardimatrix.com to learn...

Fewer Americans are relocating, and that’s led to a period of stabilization, including rate declines and lessened transaction activity, for the self storage industry. Those were among the takeaways from a March 1 Yardi Matrix webinar presented by Jeff Adler, vice president of Yardi Matrix, and Paul Fiorilla, editorial director. You can view the session recording here.  “Storage benefits from the movement of people, and the movement of people has moderated,” Adler stated. Other trends that led to record level demand for the sector in 2021 and the first half of 2022 were many millions of Americans working from home (WFH) for the first time, and the country’s aging population base. “WFH demand has been durable, but we’re not going to see a dramatic increase in it at this point,” Adler said, especially as many companies call workers back to the office at least some of the time. The self storage sector, typically a haven for savvy investors, experienced skittish investors last quarter. Despite recording its second-highest annual sales total in 2022, sales volume dropped sharply to close out 2022. Investment activity is expected to remain light in the near-term due to uncertainty in pricing and yields. Self storage property sales totaled $10.0 billion in 2022, down 18.7 percent from $12.3 billion in 2021 – which was the all-time high. “Despite the decline, sales activity was more than double any year prior to 2021. Institutional investor demand has grown in recent years, owing to the sector’s high returns relative to other property segments over the last two decades, recent strong fundamentals performance, and the prospects for growth,” says the latest Matrix Self Storage Transaction Bulletin. “This is a great sector. There’s really no question about the sector performance being poor. It’s been really good. It...

Continuing steady demand signals stability for the U.S. self storage sector even as street rates declined in January, according to the February 2023 National Self Storage Report from Yardi Matrix. Year-over-year street rates for 10X10 non-climate-controlled units slid by $7 to $126 in January, a 2.3% drop from their peak of $133 in the summer of 2022. Only five of the top 31 metros tracked by Matrix recorded rate growth in January. Despite this typical seasonal slowdown, “average street rates [for climate-controlled and non-climate-controlled units] remain healthy compared to historical levels,” the report says. The new-supply pipeline increased by 10 basis points month-over-month in January, accounting for 3.7% of completed inventory. In 2022, the number of households using self storage reached 14.5 million, an increase of about 970,000 since 2020. “As a result of the record demand, the self storage sector appears to be well-positioned to withstand potential economic headwinds in 2023,” according to the report. Get the latest on self storage supply, rent trends and more in the new Yardi Matrix report. Get even more details in a webinar on March 1. Yardi Matrix tracks 4,626 self storage properties nationwide in various stages of development. Matrix also maintains operational profiles for 29,072 completed self storage facilities, bringing the total data set to 33,698. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, industrial, office and self storage property types. Email [email protected], call 480-663-1149 or visit yardimatrix.com to learn...

Multifamily rents were flat in January as a strong jobs report indicated that fears of a significant economic recession may be overblown. U.S. asking rents averaged $1,701, unchanged from the prior month, according to the latest Yardi Matrix National Multifamily Report. Continuing late 2022 patterns, year-over-year growth continues to decline, and is now 5.5 percent, down 70 basis points from December. The single-family rental (SFR) market remained strong amid ongoing volatility in home sales. The average U.S. asking rent increased $1 in January to $2,070, while the year-over-year increase fell by 85 basis points to 4.2 percent. “Participants at the late January National Multifamily Housing Council conference in Las Vegas were generally optimistic about demand fundamentals, but concerns centered around issues such as the wave of proposed rent control measures, increasing expenses and high mortgage rates,” say Matrix analysts. However, the creation of 517,000 new jobs in January is a significant bright spot and help ease fears of an imminent economic downturn. The unemployment rate dropped to 3.4 percent last month and wage growth shows no signs of spiraling. “Concerns about a hard-landing recession that would reduce household formation are being alleviated by the continuing stellar performance of the job market,” states the report. Gain more insights by downloading January’s Multifamily Report. Last year, U.S. multifamily rents increased by 6.4 percent after peaking near 16 percent in 2021, according to Yardi Matrix. Those were record figures, the highest seen in a century. The 2023 Yardi Matrix Multifamily Outlook expects that rent growth will be closer to its historical average in 2023. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing,...