After a year ravaged by disease, division, job losses and economic hardship, expectations for the multifamily industry in 2021 are the subject of a new Yardi Matrix outlook. “While there does appear to be light at the end of the tunnel, it will take some months to get most of the country vaccinated and get businesses operating as normal,” states the report. Job growth has been mostly positive since the summer, but the economy remains nearly 10 million jobs off its peak. Millions of renters continue to struggle to make monthly payments. The $900 billion stimulus package passed at the end of 2020 provided some relief, especially the $25 billion renter assistance, $25 billion for Housing and Urban Development (HUD) programs and $300 per week supplemental unemployment. “However, another package is likely to be needed in 2021 to keep many families and property owners afloat,” the report’s authors opine. Nationally, rent growth fell only slightly in 2020, but there was a huge variation among metros. Rents and occupancy levels fell sharply in high-cost gateway markets, as renters left crowded and expensive coastal centers. More affordable markets in the Sun Belt, Southwest, Midwest and Mid-Atlantic saw modest rent growth. In 2021, the expectation is that gateway markets will continue to struggle, and the industry will have to deal with weak rent collections, eviction bans, forbearance requests, lobbying for renter aid and new federal mortgage oversight protocols. Despite the challenges, capital flow remains strong. Sales activity dropped about 35% in 2020, but investors are still looking to buy apartments. Agency lenders have had their allocations clipped slightly, but debt availability is also strong. Construction has slowed, with less than 300,000 deliveries in 2020. With more than 750,000 units under construction now, new supply should stay in...

Confidence in self storage remains high as the sector demonstrates ongoing strong street rate performance despite COVID-19’s continued impact across the U.S., reports the latest Yardi Matrix National Self Storage Monthly report. National street rates for standard 10×10 non-climate-controlled (NON CC) units increased 1.7% last month compared to November 2019. While year-over-year street rates nationwide for 10×10 climate-controlled (CC) units did not increase, the flat performance reflects an improvement over the first nine months of 2020. From October to November, national street rates for 10×10 NON CC units also saw an increase of 0.9%, while nationwide rates for similar-size CC units remained unchanged. Annual street rate performance was negative in only about 19% of the top markets tracked by Yardi Matrix for 10×10 NON CC units in November. Rates for this unit type were hit the hardest in Minneapolis, which saw a 3.5% decrease year-over-year. Experts caution that despite several months of rosy reports, there still could be challenges ahead. “While self storage has established itself as a strong performer in difficult market conditions, it could face a tough slog ahead as another round of COVID-related lockdowns and restrictions emerges this winter,” states the report. Nationwide, Yardi Matrix tracks a total of 2,136 self storage properties in various stages of development—comprising 590 under construction, 1,134 planned and 412 prospective properties. The national new-supply pipeline as a percent of existing inventory increased by a minor 0.1% month-over-month in November, and the share of existing properties in various stages of development accounts for 8.3% of existing inventory.  Yardi Matrix also maintains operational profiles for 26,351 completed self storage facilities across the United States, bringing the total data set to 28,487. Read all the highlights for self storage in the latest National Self Storage Monthly...

The COVID-19 pandemic has been inconsistent in the way it has affected the U.S. employment market, creating a wide disparity between metro and job segments. This is the main conclusion of the latest special employment report from Yardi Matrix. Leisure and hospitality was by far the biggest employment sector loser, with 3.8 million jobs lost. In contrast, only 1.8% of the jobs in financial services have been lost since the start of the pandemic. However, the overall impact varied greatly depending on the city. Metros with the best job performance include those with relatively small leisure and hospitality industries and those that have lost relatively few jobs in the segment (Indianapolis, for example, lost only 6.5%). One outlier, Austin, has added 8,200 professional and business services jobs and 7,300 financial services jobs since February. While the size of a metro’s leisure and hospitality segment is a key in the extent of job losses, a more significant factor is how thoroughly the metro shut down to stop the spread of COVID. Few of the top 10 metros in the percentage of jobs lost since February are among the leaders in leisure and hospitality jobs, but all are at or above the average proportion of jobs lost in the segment. New York City, for example, has a relatively small leisure and hospitality segment (9.8% of all jobs), but a whopping 42.3% of those jobs disappeared. “The data does show hope for the future for the gateway metros that have been hard hit, because the core industries in those metros, such as finance and professional services, remain viable,” states the report. “Once a vaccine is available and people feel safe going back to entertainment venues, restaurants and the like, gateway cities (like New York, San Francisco, Boston...

It’s a tale of two outlooks for the industrial and office real estate sectors, reported the experts from Yardi Matrix and CommercialEdge in a commercial real estate webinar presented on Nov. 11. As the end of 2020 nears, each market has a different trajectory. For owners and investors in the office sector, the full impact of the pandemic and its impact on the way employees work, especially in the knowledge and technology sectors, has yet to be unveiled. Major office properties tend to operate on long leases, so while rent remittance has been generally solid this year, as leases come to term in 2021 things could change. The big question, said Yardi Matrix vice president Jeff Adler, is what use of office space looks like in the future. One thing 2020 has taught us is that it likely doesn’t look like the old model of spending five days a week in a cubicle. “There is a re-evaluation of ‘what is the purpose of space?’ Was the purpose of that space that people got things done there? Or was it a culture purpose? If it was simply to do a task, it’s become clear that task can likely be done at home. How space is used, why space exists and why you need it in the first place is going to be reimagined,” Adler said.  “What kind of office footprint do you actually need to achieve the business goals that you have?” The answers to those questions will determine the floorplans and lease terms of offices post-pandemic. Also at play: where they’re located (public transit use is still dramatically decreased) and how many workers will come to the office on any given day. Right now, going back to a 5-day office work week seems highly...

The number of Americans who have moved since February 2020 wasn’t unusual compared to typical U.S. mobility trends, but there has been a distinct shift in where they are relocating, according to the latest Yardi Matrix multifamily webinar. In brief, big urban cities like New York, Chicago, San Francisco and Miami are out, while second tier markets and tech hubs like Austin, Kansas City, Sacramento and Boise are in. “What we really have seen is a movement of people that is different from what we have seen in the past,” said Jeff Adler, vice president of Yardi Matrix, who delivered the analysis. A webinar on the commercial real estate market with valuable insight for that sector will take place on Wednesday, Nov. 11. You can register here. The Nov. 4 multifamily session, which is now available to view on demand, summarized the trendlines for the apartment market nationwide. It has been relatively resilient despite the economic fallout caused by the COVID-19 pandemic. For example, in the month of October, 94.6 percent of apartment households had paid rent as of Oct. 17, according to NMHC’s Rent Payment Tracker. However, small owners and managers of less than 50 units are suffering. These owners typically hold small balance loans, or SBLs. “Because SBLs are typically used to finance apartments with less than 100 units, each resident that has trouble paying rent has a more significant impact on the property’s cash flow,” stated the Matrix summary. The bulk of the 16 million Americans who have moved since February, though, are working from home and seeking a relocation situation that will be advantageous during the remaining months of the pandemic. They’re seeking out apartments or single-family homes where they have more space and eschewing the walkable urban lifestyle that...

During every Yardi Matrix webinar, vice president and presenter Jeff Adler shares the big picture of current economic conditions and conundrums – also known as the Yardi Matrix House View. Here’s how the view is looking from the Matrix vantage point these days: “We had a deep recession. We’re in the middle of a recovery. That recovery is likely to be choppy,” summarized Adler to close out Thursday’s Matrix update on the self storage sector. A recording of the presentation is now available, and you can view that here. But for those invested or interested in the self storage market, the seas are not looking quite so rough. Of all commercial real estate sectors, storage had a brief negative impact from COVID-19’s rise in the U.S., and then quickly recovered. “Storage is actually doing quite well,” said Chris Nebenzahl, editorial director for Yardi Matrix. “The demand for storage has been consistent and is stronger than some of the other asset classes in commercial real estate.” Key factors for the sector’s resiliency include: Relocations and population migration. Americans are leaving congested big cities like New York and Los Angeles for second-tier markets where they have more space. Residential volatility. For example, college students have faced ever-changing mandates about whether they would resume classes in person and online, prompting quick moves that often involve a need for storage. Economic hardship. Job losses for millions of Americans are contributing to relocations and downsizing. According to a Pew Research Center Survey, roughly one in five U.S. adults say they have either changed their residence due to the pandemic or know someone who did. The proof of sustained demand for storage is in the street rates, particularly for the non-climate-controlled category. Month-over-month rates reported for August showed that national...

For years, 24-hour and 18-hour cities, and the live-work-play concept, have been mantras in commercial real estate. Suddenly, however, cities are facing a pandemic-driven exodus. Is this a temporary blip or the start of a long-term trend? COVID-19’s impact has been particularly deep in major metropolitan areas such as New York City, Los Angeles, Chicago and San Francisco office space, which have also seen sharp drops in apartment occupancy rates and rents as the city centers are largely shut down and residents shelter elsewhere. In Manhattan, for example, office buildings that were closed for months remain mostly empty upon re-opening, as employers avoid putting workers at risk and people avoid public spaces. Midtown streets that are typically teeming with tourists are nearly empty as Broadway and other entertainment venues remain shut. New York City’s story is being played out in city centers across the country. Not only do urban areas temporarily lack the jobs and cultural institutions that drew people there, but the crowds and closeness are suddenly an element to be feared rather than fascinate. Few if any saw this coming, as growth has coalesced in cities in recent years. The United Nations has forecast that 75 percent of the global population would live in cities by 2050, doubling their size, and the U.S. seemed to be headed in that direction. A recent study of the largest 30 U.S. metros by the George Washington University School of Business and Smart Growth America in conjunction with Yardi Matrix found that walkable neighborhoods encompassing office, housing, retail and entertainment grew faster and produced higher absorption and rent growth over the last decade than counterparts without that combination. During that time, 70 percent of the jobs created were in the top 50 U.S. metros. Corporations have been...

Last year, New York state implemented new protections for residents of rent-stabilized and market-rate housing, including the conditions under which rent hikes and evictions are allowed. Affordable housing advocates saw the landmark Housing Stability and Tenant Protection Act of 2019 as vital to helping low-income people avoid homelessness in expensive markets such as New York City. Skeptics predicted it would backfire and reduce incentives to develop, invest in and manage rental housing. The law has been under siege in the courts from landlord interests who claim it violates the Constitution’s taking and due process provisions. One year into the new era, has either side been proven right? Obviously, a lot has changed in the New York rental market since the law was signed in June 2019. But in December of that year, before the COVID-19 pandemic took hold, the New York Times reported that evictions in the state dropped by 20% in the preceding six months. State and federal provisions put in place during COVID have further strengthened eviction protections for more than 1.5 million state residents not able to pay rent due to the pandemic. In April and May, rents in New York City actually went up year over year. The Times reported in June that “those looking to sign or renew leases in the last few months say that while some landlords are grudgingly offering short-term concessions, like a free month of rent, most are unwilling to budge on pre-pandemic pricing and, in some cases, are even increasing rents.” And how about rent payments? Yardi Matrix data collected in July revealed rent declines ranging from 0.8% to 1.6% in Brooklyn, Manhattan and Queens that month, while occupancy levels in the metro have been flat for several months. “With the vacancy rate where...

As colleges and universities announce varied plans to cope with coronavirus this fall, what will be the impact on student housing owners and operators? Some definitive answers were delivered in a July 15 webinar from Yardi Matrix, which also marked the launch of the Yardi Matrix Student data service. Market coverage includes over 2,000 universities and colleges nationwide, including the top 200 investment grade universities across all major collegiate conferences. Reports will also include data into shadow markets, defined as campus-proximate housing that often is rented by college students, though it may not be labeled as dedicated student housing. “The college experience is going to change, and has to change until there is a vaccine in place. This is a fall semester issue and probably into the middle of the spring semester,” Jeff Adler, vice president of Yardi Matrix, told the over 400 attendees at the outset of the online presentation. But that’s not all bad news for student housing, especially for providers with shadow market properties. Of the 200 universities Matrix researchers surveyed for the first study, many have announced plans to reduce dorm capacity levels to accommodate social distancing protocols. This means that more than 60 percent of students attending schools in the Yardi 200 will be living in such shadow market housing – and the total national percentage is higher. “Reduced dorm capacity requirements are a tailwind for off-campus housing,” Adler said. “Is student housing pandemic proof? I would say that it’s pandemic resistant. There is some choppiness expected, but I think overall the sector is going to hang in there.” Long term, the U.S. is expected to see an overall decline in its population of college-age adults, but with more Americans than ever earning four year degrees, attendee figures should...

Already well known in the industry for its dependable, up-to-date and prescient market data, Yardi Matrix will take those skills to school as it begins reporting on the student housing sector. The new research area from Yardi Matrix comes at a particularly opportune time, as student housing owners and investors are navigating an uncertain environment caused by the COVID-19 pandemic. With many colleges and universities still making final decisions about what campus life and enrollment will look like in fall 2020, housing providers are anxious to see how this unprecedented situation will impact revenue streams and investment health. Quarterly Matrix reports focused on the student housing market will be available beginning this summer. Market coverage will include over 2,000 universities and colleges nationwide, including the top 200 investment grade universities across all major collegiate conferences. Reports will also include shadow markets, meaning campus-proximate housing that often is rented by college students, though it may not be categorized as traditional student housing. “We’re looking forward to offering the same comprehensive and future-thinking reporting that we do for the rest of the real estate industry to the student housing sector,” said Jeff Adler, vice president of Yardi Matrix. “We’ve done a deep dive into student housing fundamentals and look forward to sharing our insight with all who are interested.” To that end, the Yardi Matrix team will host a July 15 webinar focused entirely on the student housing market. Attendees can expect to gain insight on the short and long-term impact of COVID-19, best and worst-case scenarios, key indicators for operators and potential areas of opportunity. You can secure your spot in the online session by signing up here. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property...

With the U.S. economy in a recession, unemployment numbers sky high and COVID-19 cases surging in the south and west, multifamily owners and operators face challenging times ahead. And things may get worse before they get better, according to a new special report from Yardi Matrix. The report is based on a study of 107 major metros, with data reflecting April and May 2020 asset performance. Over that period, multifamily asking rents dropped .4% nationally, and twice as many markets saw rents decline as opposed to increase. Renters are looking for less expensive units, with the biggest impacts in the sector felt by Class A+ properties. Rents for “luxury lifestyle” properties dropped by -1.2% over the last two months, compared to a decline of .5% for “renter by necessity” properties. “Multifamily’s nearly decade long run of healthy performance increases came to an abrupt and unexpected end this year,” said Jeff Adler, vice president of Yardi Matrix. “Job losses have been particularly high among apartment renters, and simply collecting rents and maintaining occupancy is a new area of focus for owners and managers.” Multifamily had a long run of strong performance – asking rents grew by 26% nationally between January 2015 and 1Q20. But going forward, the future looks cloudy at best. “The shape of the recovery remains unclear. More importantly, the pandemic is spurring changes in working conditions and social trends that will impact housing demand for years to come,” states the report. What’s ahead will be determined by a complicated combination of economic factors, public health metrics and renters’ feelings about the future. If renters decide to eschew urban apartments for a more distanced standard of life in the suburbs or smaller cities, multifamily could be in for a prolonged pain period. Gain...

Each week’s news seems to bring a new wave of devastation for the U.S. employment market, as unemployment claims continue to climb due to the COVID-19 pandemic. The national unemployment toll was 36.5 million jobs lost when this was written – by the time you read it, that figure will likely be higher. Yardi Matrix® dove into the unemployment data to find out which sectors and geographic regions are hardest hit, which will hold up and where the unemployed may want to look for their next opportunity. Unlike past recessions, job losses have not been spread across the economy. Layoffs and furloughs have been concentrated in segments most affected by shelter-in-place orders: retail, leisure, travel and entertainment, and jobs in which social distancing is difficult. Between February and April, leisure and hospitality jobs contracted by a jaw-dropping 48.1%, or 8.1 million workers. Other hard-hit segments include other services (-21.9%), a category that includes personal services and repairs, retail trade (-13.7%) and construction (-12.7%). The number of lost jobs has been higher among hourly, service-based workers than for career workers who more easily can work from home. On a proportional basis, job categories that shed the fewest jobs over the last three months are financial activities (-2.8%), government (-4.3%) and wholesale trade (-6.2%). Another segment that lost relatively few jobs was professional and technical services (-5.3%), which includes computer systems design services (-3.8%). “This report provides in-depth insight to the most durable employment sectors, both professionally and geographically,” said Jeff Adler, vice president of Yardi Matrix.  Find the full Durable Employment Sectors report from Yardi...

Self storage is still considered among the most stable real estate sectors during rocky economic times, but it is not immune from the COVID-19 crisis, attendees of the May 19 SSA Webinar presented by Yardi Matrix experts learned. “Under the best of circumstances, and short of a medical solution, recovery is going to be partial and slow,” said Jeff Adler, vice president of Yardi Matrix, at the start of the presentation. Adler and Chris Nebenzahl, institutional research manager for Matrix, presented the current outlook for self storage as it navigates changing tides. If you missed it, find the presentation materials and a recording of the session. While the industry looked strong in March, things shifted in April. National street rates for 10×10 non climate controlled (CC) units fell 2.6 percent, and rates for 10×10 CC units fell 6 percent. That was the largest decline in more than three years.   The impact was nearly universal, as street rates for non-CC units fell in 97 percent of the major markets tracked by Yardi Matrix, and CC units saw declines in every market tracked. Only Raleigh-Durham and Portland, Ore. saw non-CC street rates drop less than in previous months, and Phoenix stayed completely flat (see slide at left). Nationwide, Yardi Matrix tracks a total of 2,209 self storage properties in various stages of development, comprising 593 under construction, 1,172 planned and 444 prospective properties. Matrix also maintains operational profiles for 25,914 operating self storage businesses, bringing the total data set to 28,123. The COVID-19 crisis has yet to slow self storage development, however, as properties under construction or in the planning stages account for 9 percent of the market in April, a 20-basis-point increase over March. That’s expected to change in the coming months. “We expect...

Yardi Matrix continued its series of comprehensive market impact webinars on May 6 with an in-depth look at the state of the multifamily industry, presented by Jeff Adler, vice president of Matrix. “We are just beginning to see some of the ripple effects (on multifamily), and now the discussion has shifted to how we recover and move forward,” stated Adler at the outset of the session. Nearly 1100 real estate professionals tuned in for the 90-minute session. A similar presentation with a focus on the commercial real estate sector is set for Wednesday, May 13. You can register here. Attendees report that the Matrix webinars are invaluable for keeping a finger on the pulse of the rapid changes that continue to impact the industry. Here are some of the key takeaways from the multifamily impact webinar. Listen to the full presentation to see data points and comprehensive slides. So far, the multifamily industry is holding up well. April rent collections were excellent, only off a few single digit points from prior months, said Adler. It’s expected that trend will continue at least until August. Leasing season has resumed and many properties with availability are seeing more interest than expected, according to anecdotal reports from industry contacts. Data from Yardi’s RentCafe online leasing service shows a marked uptick in views of online apartment listings over the last month. The economic recovery is expected to be partial and slower in some states than others. This will impact all industries, and multifamily will likely continue to see household consolidation as renters move in with friends or family members to try to keep costs down. For new leases, concessions offered by owners and managers will be an important indicator of market performance trends going forward. Population trends will...