The unprecedented socioeconomic events of the last two years and subsequent impact on multifamily rents is examined by a new bulletin from Yardi® Matrix now available for download. The publication breaks down the traditional drivers of multifamily rent growth—economic measures such as employment and population growth, and property fundamentals such as supply and changes in occupancy—and details how each impacted the highs and lows rents exhibited from March 2020 to April 2022. The analysis is broken into two periods: the four quarters following the start of the pandemic (2Q20 to 1Q21) and the four quarters of the recovery and rent surge (2Q21 to 1Q22). “Drivers of rent growth have changed not only once, but twice, in the two years post-pandemic. Each time was distinctly different,” states report author Paul Fiorilla, director of research for Yardi Matrix. “The period from April 2020 through March 2021 was marked by massive job loss, sheltering from home and migration from gateway markets to the Sun Belt. The April 2021 to March 2022 period was characterized by a booming pent-up demand and massive recovery across the entire country.” If you’ve been following the apartment industry closely, the general narrative of the pandemic is clear: motivated by remote work options and changes in life circumstances, many renters abandoned high-cost urban gateway markets in favor of more affordable cities with more room to breathe. Major cities like San Francisco, Chicago and New York saw rents drop dramatically and vacancy rates increase. After vaccine availability brought stabilization of the public health situation and widespread economic recovery ensued in 2021, return to gateway markets began and rents across nearly all markets were driven up by new household formation, low vacancy rates and easily obtainable employment. “Pent-up demand, strong consumer balance sheets, migration to...

Multifamily performance continues to outpace every year other than 2021, according to the latest Yardi® Matrix Multifamily Report. Average U.S. asking rent rose $19 in May to an all-time high of $1,680. Year-over-year growth decelerated by 40 basis points to 13.9 percent. That’s 130 basis points off the peak in summer 2021, but still exceptional performance, according to Matrix analysts. “Decelerating economic growth and concerns about gas prices and inflation have not eroded multifamily demand much nor slowed down the upward climb of rents,” say Matrix analysts. Rent growth in recent months is consistently a bit less than it was in 2021, but considerably above any previous year and spread across the country. Rent growth rose at least 10 percent year-over-year in 26 of Yardi’s top 30 metros. The biggest gains were recorded in rapidly growing Sun Belt metros. Miami, Orlando and Tampa are all above 20 percent growth year-over-year. The Twin Cities, at 5.2 percent year-over-year, was the only metro in the Matrix top 30 with rent growth below 8.7 percent. Meanwhile, the average single-family home asking rent also increased by $19 in May to $2,038, as year-over-year growth dropped by 70 basis points to 12.7 percent. The single-family rental sector is expected to continue to ride strong demand, especially as home sales slow due to higher interest rates. Learn more in the latest 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 continues to perform well nationwide according to the latest National Self Storage Report from Yardi® Matrix. National average storage rates rose $1 to $146 in April, matching the all-time high set last fall. Street rate growth, however, is decelerating because rates increased more dramatically in 2021. Street rates for 10×10 non climate-controlled units nationally increased 4.8 percent year-over-year in April, while rates for 10×10 climate-controlled units saw slightly less growth at 4.3 percent. According to industry executives at the NYSSA investment forum this month, demand comes not only from normal factors like migration and student movement, but also from individuals who need storage to accommodate offices and businesses that have been squeezed out of the tight commercial market. Storage customers are renewing at high rates and extending the length of stays. It all results in growth in rents and net operating income, which has increased upwards of 20 percent for some REITs over the past year. However, market headwinds do exist. Consumer demand that has driven the recent boom could cool as higher interest rates slow migration and dampen home sales, which are major drivers for self storage. And although storage has a limited amount of capital expenditures, increasing expenses for items such as labor and materials may erode benefits of strong rent growth. “Storage executives, however, are confident the segment is uniquely well positioned in an inflationary environment because leases can keep pace with rising prices and they foresee an ongoing increase in demand,” states the report. Yardi Matrix tracks a total of 4,051 self storage properties nationwide in various stages of development — including 1,467 planned, 747 under construction and 526 prospective properties. Matrix also maintains operational profiles for 28,289 completed self storage facilities across the United States, bringing the...

As the stock market rocks and rolls, inflation becomes a fact of life and many Americans continue to relocate, what’s in store for the multifamily industry? Answering that big question was the goal of a recent Yardi Matrix webinar presented by Jeff Adler, vice president of Matrix, who presented fundamentals, economic indicators, geographic trends and much more. If you missed the presentation, you can view the recording and slide materials. Additional multifamily insights are available in the latest Yardi® Matrix Multifamily Report, which reported this week that the average U.S. asking rents rose $15 in April to an all-time record $1,659. Multifamily asking rent growth measured a record 14 percent increase in 2021. However, that performance is expected to moderate during the remainder of 2022, due to multiple factors. “I do expect the economy to continue to grow – at a slower rate. I do expect multifamily to continue to grow – at a slower rate. Bottom line, it is going to be bumpy,” Adler said. On the plus side, multifamily fundamentals are strong, and the sector should remain resilient during the next year and beyond. Beyond external factors like inflation, rising interest rates and economic volatility, there are many trends impacting housing that investors and multifamily professionals should make note of. They include: Ongoing population migration: “The hybridization of the work force and the ability to work from anywhere has enabled a spreading of the population,” said Adler. That has been beneficial for secondary and tertiary markets over gateway markets. Find out which ones in the presentation materialsLease renewals: While multifamily asking rents have jumped 20-25 percent over the last year in most markets, lease renewals are more likely to ask for about 10 percent more per month, Adler stated. That means many...

Despite a widely reported drop in college enrollment over the last two years, the student housing industry continues to perform well and is back on track with healthy rent growth and preleasing for Fall 2022. Those were a few of the topline conclusions of a webinar focused on student housing, presented April 13 by Yardi Matrix vice president Jeff Adler. Miss the session? You can view the recording and presentation materials. Overall, up to one million students who were expected to attend college in the U.S. are now missing from enrollment rolls. That’s a significant reduction that will have myriad impacts, from college finances to housing to career prospects. “If you look at the straight from high school to college enrollment, we thought we would see a gap year (in 2020-2021), but it turns out the gap year was an off-ramp,” said Adler. That off-ramp has been detrimental to lower-tier four-year colleges and community colleges. But within the Yardi 200, comprised of the top 200 investment grade universities across all major collegiate conferences, enrollment is up and is expected to continue to be up at a modest rate over the next several years. That’s due to consolidation of enrollment, Adler explained. “If there are fewer (students) available, and you want to get into a school that has a higher reputation, then the name brand schools are the ones that are the winners,” he said. That largely includes the 42 private and 158 public schools that comprise the Yardi 200. As of March, preleasing for next fall was recorded at 63.7 percent across Yardi 200 schools. That’s 13.5 percent higher than the same time last year and 9.9 percent higher than March 2019, before the pandemic. The average rent per bedroom is $777 for Fall...

Prolonged inflation and the war in Ukraine are beginning to impact U.S. economic growth and rent performance as well, according to the latest Yardi® Matrix Multifamily National Report. Average U.S. asking rents rose $14 in March to an all-time high of $1,642. However, year-over-year growth dropped 50 basis points to 14.8 percent – an indication that rents are beginning to slow after 2021’s record-shattering performance. “Rent growth is unlikely to keep pace with 2021, as last year’s explosive movement started in the second quarter,” state Matrix analysts. Rents for single-family rentals continue to rise month-over-month, but growth is also decelerating in that subsector. The average U.S. single-family rent rose $14 to $1,999 in March, while year-over-year growth dropped 90 basis points to 14.1 percent. Rent growth continues to be led by population shifts to the Southeast and Southwest. Miami, Orlando, Tampa, Las Vegas and Phoenix all recorded asking rent increases of 23 percent or more in March. “The big picture that emerges from March multifamily data is that the market remains healthy, though signs point to the inevitable deceleration in some markets,” states the report.  “Meanwhile, economic conditions and global events contain headwinds that justify the expectations of moderation and caution.” Gain additional insights from the Yardi Matrix Multifamily National Report. Join Matrix on Thursday, May 12 for a deeper dive into the current state of the multifamily market. Get more details and sign up...

Yardi Matrix recently added a new sector to its property management database: storage facilities for the fast-growing recreational vehicle and boats market. Matrix enters the market as RVs and boats reach new heights of popularity. Sales of exclusive facilities for these assets exceeded $157 million last year, almost triple the previous annual record, as Americans sought travel and recreation opportunities away from crowds. And there’s no sign of a letup – some 9.6 million households say they intend to buy an RV within the next five years. Meanwhile, new powerboat retail unit sales this year are expected to surpass the 300,000 sold in 2021 by up to 3%. A driver of RV/boat sales is “the healthy balance sheets of households as people stopped spending while sheltering in place and collected stimulus checks from the government,” according to a Matrix bulletin issued in March. In addition, “the pandemic helped stoke a growing appreciation for recreation and travel to rural settings.” The Matrix RV/boat storage facility database encompasses 786 completed storage facilities exclusively dedicated to RVs and boats, with more than 6,800 acres of space and 35 facilities in the development pipeline. Matrix identifies Denver, Houston, San Francisco, California’s Inland Empire, Los Angeles, Dallas and Phoenix as top markets for RV and boat storage properties. Looking ahead, Matrix regards RV and boats as a “durable part of the American experience” that’s likely headed for even more growth. Demand is met with a somewhat limited offering of supply, with only 88 properties in the Matrix database having been delivered since 2010, compared with about 225 between 2002 and 2009. Even so, the market is sturdy. “The growing demand from RV and boat sales combined with the limited amount of supply means the segment’s fundamentals should remain healthy,...

Multifamily asking rents picked up another $10 in February to reach a national average $1,628, and year-over-year growth recorded a 15.4 percent bump, according to the new Yardi Matrix Multifamily National Report. Single-family rentals also continue to surpass past performance, SFR rents increased by 14.9 percent year-over-year through February. While most anticipated that the steep upward trajectory for the rental sector would have moderated in the first quarter of 2022, the market continues to surprise. Of the top 30 metros tracked by Yardi Matrix, 90 percent saw double-digit rent growth year-over-year. “Rent growth is likely to start decelerating soon relative to the big increases that began in March 2021, but demand shows little sign of slowing,” say analysts. Nationally, occupancy rates are up 120 basis points year-over-year. Occupancy upticks are particularly strong in Texas and Florida metros, but also in gateway markets that lost residents during the pandemic. New York, San Jose and Chicago are among the cities seeing renters return. Underlying the headlines are the effects of a long-term national housing shortage, notes the report. In January 2021, occupancy rates were 95 percent or higher in just 13 of the top 30 markets, but a year later only two of the top 30 are below that level. In another telling indicator, single-family home sale prices were up an average of 18.8 percent last year. Learn more in the latest Yardi Matrix Multifamily National 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...

The self storage sector continues to weather economic conditions that are likely to become more challenging in the near term, attendees of a webinar presented this week by Yardi Matrix learned. “There are several headwinds that might be getting a bit stronger,” said Jeff Adler, vice president of Yardi Matrix, during the Wednesday presentation. Supply chain disruptions, a tight labor market and inflationary pressure, in addition to the geopolitical tensions between Russia and Ukraine, will all slow economic growth in the U.S., Adler said. A recording of the webinar and presentation materials are now available for download. However, despite the potential of a looming recession that Adler expects will arise by late 2024, the overall outlook for the self storage sector is healthy at present. “The outlook for self storage remains optimistic given persistent demand and a slow supply response. We anticipate growth will continue, but moderate,” Adler said. “Investor interest is incredible in the sector, given its performance and defensive nature, which has proven itself out.” Matrix analysts expect that self storage street rates will continue to grow in 2021, just at a more modest rate. Additional high level takeaways from the webinar include: Street rate growth will continue to be highest in favored migration areas, such as the Sunbelt and mountainous areas of the WestDriving forces of demand will continue, including: people are still relocating, just at a slower rate; Americans have accumulated “stuff” during the pandemic that needs to be stored; and self storage remains the cheapest way to store accumulated possessions Self storage street rates changed little sequentially in January, reflective of positive trends in the industry, and rents remain well above trend on a year-over-year basis, according to the latest Yardi® Matrix National Self Storage Monthly report. Year-over-year rent...

Despite a slight seasonal dip in occupancy, the self storage sector is beginning the year with a continuation of the strong fundamentals that fueled its success in 2021. Self storage street rates changed little sequentially in January, reflective of positive trends in the industry, and rents remain well above trend on a year-over-year basis, according to the latest Yardi® Matrix National Self Storage Monthly report. Street rates for 10×10 non-climate-controlled (NON CC) units were unchanged at $128 in January. National street rates for 10×10 climate-controlled (CC) units decreased by $1 in January to $145. Year-over-year, street rates for 10×10 NON CC units grew 7.6 percent in January, while rates for 10×10 CC units grew 7.4 percent. “Operators report that occupancy rates have dipped slightly as move-outs have increased in recent months, but that is not worrisome because properties were unusually full going into the traditional winter lull,” say Matrix analysts. Year-over-year rent growth remains positive in all major metros, with 11 of the top 32 metros at 10 percent or more growth and 25 of the top 32 at 5 percent or more growth for NON CC units. Rent increases continue to be highest in the Sun Belt and the Southwest, with demand fueling notable jumps in Texas, Florida and the Carolinas. “Rates are holding firmer than historically is the case” in the winter, said John Good, CEO of NexPoint Storage Partners, during an industry webinar. Yardi Matrix tracks a total of 3,831 self storage properties nationwide in various stages of development — including 731 under construction, 1,287 planned and 520 prospective properties. Matrix also maintains operational profiles for 27,298 completed self storage facilities across the United States, bringing the total data set to 31,129. Learn more about the state of the self storage...

Multifamily asking rent gains continued in January, rising $8 to a U.S. average of $1,604, according to the latest Yardi Matrix Multifamily National Report. The latest gain defied normal seasonal expectations and continued a trend established last year, a historic period for multifamily asking rent growth. Year-over-year, rents increased 13.9 percent. While rents are unlikely to remain in that growth range throughout 2022, January’s performance is a sign that demand remains healthy. Some 460,000 multifamily units were absorbed in 2021, according to Yardi® Matrix data, more than double the previous year and more than 50 percent above the previous annual high. Absorption in 2021 was led by Dallas and Houston. Five of the next six highest performers were gateway metros Miami, New York, Chicago, Washington and Los Angeles, all of which absorbed some 20,000 units or more. Freddie Mac’s 2022 multifamily outlook sums up the market: “The strong economic conditions along with unprecedented levels of demand for multifamily housing have combined to create robust apartment market conditions in 2021,” the report said. “While there are still uncertainties, such as increasing inflation or more transmissible variants of the COVID-19 virus … the multifamily market is expected to be on solid ground in the short term.” Learn more in the latest Yardi Matrix Multifamily National...

The multifamily market appears poised for another solid year in 2022, according to the U.S. Multifamily Outlook for Winter 2022, released today by Yardi® Matrix. While the record-setting rent gains recorded in 2021 are not expected to repeat this year, analysts anticipate demand for apartments will remain robust, highlighted by strong economic growth and household formation. Investor activity is also expected to continue apace, as capital conditions look favorable and multifamily traditionally offers stable income and low mortgage rates. Powering the positive outlook is the continued strength of the economy and consumer demand. “The economy is benefiting from lingering monetary stimulus, job growth, higher wages and consumer wealth, while supply-chain issues have continued into 2022. Inflation and the labor shortage are the biggest headwinds, but most of the negative ramifications from those matters won’t be felt until 2023 or later,” states the new report. Asking rents rose 13.5 percent nationally in 2021. Anticipated rent growth for 2022 is less than 5 percent, according to Matrix. Economic growth is also expected to step back from the roughly 6 percent increase it recorded last year. Concerns about oversupply have also so far proven to be unfounded and builders are ramping up for new projects nationwide. As of the beginning of 2022, more than 750,000 market-rate apartment units were under construction, with about half expected for delivery this year. Learn more about what’s expected for multifamily in 2022. 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...

Street rates for self storage properties are coming off record-high gains in 2021, and experts are optimistic the sector will continue to perform well in 2022, according to the latest National Self Storage Monthly Report from Yardi® Matrix. Year-over-year, national rates for 10×10 non-climate-controlled (NON CC) units increased 6.7 percent in December. Rates for 10×10 climate-controlled (CC) units increased 7.4 percent. However, month-over-month, street rates for 10×10 NON CC units declined nationally by $1 to $127 in December. National street rates for 10×10 CC units declined by $1 for the third straight month to $145. While performance is dropping back from major gains made during the summer, the growth rates are well ahead of where they were in December 2020, when national year-over-year increases were between 2-4 percent for all unit types. The reasons for optimism include the traditional “4Ds” of self storage demand: death, divorce, dislocation and disaster. Owners/managers see demand not only from those traditional drivers, but from two new Ds: decluttering and distribution/business demand. Executives who participated in a panel at the recent KeyBanc Capital Markets 2022 Self Storage Investor Forum all were optimistic about demand, rent growth and capital trends in the year ahead. One commented: “As we look back on 2021 I consider it the greatest year to date in the storage industry. 2022 will be a good year for our business.” Most operators will start spring leasing season with exceptionally high occupancy rates, giving them pricing power to increase street rates and bring existing leases up to the new market rates. Although a repeat of 2021’s 8.5 percent rate growth for 10×10 non-climate-controlled units is unlikely, Matrix analysts expect strong overall growth in 2022. Yardi Matrix tracks a total of 3,022 self storage properties nationwide in various stages...

Wouldn’t it be terrific to predict the future of real estate performance? We’re not quite fortune tellers (yet), but analysts have optimized predictive analytics. Data gives us insights into major shifts, empowering real estate pros to navigate decision-making accordingly. Today, we’re taking a look forward into the hottest markets for real estate in 2022. No, growth isn’t dominated by the same old major metros For years, large cities like Los Angeles and New York reigned supreme on the hottest markets lists. High rents, low vacancies and a steadily growing interest in convenient urban living made major metros desirable destinations. While major metros still have their appeal, remote work has enabled significant portions of the population to work from anywhere in the nation. Their sights shifted to secondary and even tertiary markets as people sought a lower cost of living. In such markets, dollars go further and gain more square footage in both multifamily and single-family options. The 43rd Emerging Trends in Real Estate report issued by PricewaterhouseCoopers (PwC) ranks the following cities as the hottest markets in 2022: 1. Nashville2. Raleigh/Durham3. Phoenix4. Austin5. Tampa/St. Petersburg6. Charlotte7. Dallas/Fort Worth8. Atlanta9. Seattle10. Boston Who thought we would see the day when cities like Raleigh would usurp San Diego, or Charlotte to outpace New York? These are strange and exciting times. Is there anything standing in the way of ongoing growth for smaller markets? Sometimes, trends are just trends. They are blips on the radar that you can navigate with or around and emerge on the other side of history nonplussed. But are the hottest markets for 2022 a trend, or are they the beginning of an entirely new dynamic in real estate? The PwC report indicates that, “flexibility and convenience drive the next decade” in real...

Yardi Matrix has been honored as a leading real estate analytics provider by Proptech Outlook, an industry publication that annually recognizes companies that are at the forefront of providing real estate analytics solutions and transforming business. In a forthcoming article in the Proptech Outlook magazine, Matrix vice president Jeff Adler dissects the paradigm shifts that have occurred for the real estate industry due to the pandemic and how they may influence ongoing investment. Investors need comprehensive, verified, and reliable data to make decisions that go beyond guesswork, which is why Matrix has so much value for investment professionals. “Essentially, Yardi Matrix’s function is to bring more transparency in formerly opaque markets. We exist to save time and effort for investment professionals while also ensuring that they are making the right bets at the right time,” Adler told Proptech Outlook. Using Matrix, investors can directly get the relevant insights regarding the commercial real estate market and its subsectors, and easily benchmark, predict, and compare the potential value from various investment opportunities in lesser time and with more precision. “Beyond acquisition and underwriting, the insights provided by Yardi Matrix can also be leveraged for brokerage, loan origination, portfolio management and reassessment, and even property development,” observes Proptech Outlook. Matrix clients have been able to achieve significant returns on their investments, aided by analysis based on factors like location, migration patterns, employment and more. Matrix also offers biannual live webinars that help keep industry professionals informed on the latest trends. “As the impediments of the pandemic alleviate further and investment professionals revamp their efforts, we will be ready to equip them with the latest insights regarding the property market to make more accurate investment decisions,” Adler said. Read the interview with Jeff Adler in its entirety on...

Single-family rentals (SFR) are currently thriving. Last year alone brought $8 billion in new investments, and activity through this year exceeds that pace. Activity is especially rapid around the metros of the southeast and interior U.S. The regions’ low taxes and high land availability attract developers while renters enjoy the low cost of living and a higher quality of life. But can the SFR market growth last as Americans return to the cities from which they fled? What caused the boom in single family rental popularity? The popularity of SFR is threefold. The industry has been steadily gaining momentum since the onset of the Great Recession. Empty nesters composed a significant demographic of early adapters. They aimed to downsize and decrease maintenance without losing the private space they’d grown to love. Millennial families with freelance jobs or with telecommuting options made up the second largest faction of renters in single-family homes. Fast forward about a decade and single-family rentals received another boost in demand. The pandemic served as a catalyst for the recent spike in interest as many Americans opted to leave congested cities for roomier suburbs. Small scale investors made up the bulk of property owners in 2018. By 2020, the landscape began to change. In addition to mom-and-pop operations, builders quickly gained interest in rental assets. Analysts estimated that the pandemic accelerated built-to-rent space by 5 to 7 years. About 10% of SFR are now built-to-rent properties and 12% of current single-family construction is designated for rentals. Trepp reports that 2020 was the most active year for SFR securitizations in U.S. history. New issuance topped $8.3 billion, about a 99% increase from 2019 and a 9% increase from 2018’s previous record-high. Into mid-2021, Trepp recorded $3.1 billion worth of newly securitized SFR...

Lately, most news seems to be centered around when workers will be returning to the office. But, according to the September CommercialEdge National Office Report, the U.S. office real estate market is also warming up again after cooling off of 2020. While August vacancy rates nationwide are still 210 basis points (bps) below their August 2020 levels, they’re also ticking steadily downward, sinking another 10 bps to 15.4% compared to July. Meanwhile, the national average full-service equivalent listing rate for all office space was $38.72 per square foot in August — an increase of 1.2% year-over-year. Even so, seven of the top 25 markets analyzed experienced a contraction in listing rates: Listings in Manhattan and Chicago fell 2.9% and 1.7%, respectively, while Seattle office space vacancy rates notched 6.8% higher — one of the largest year-over-year increases of the markets analyzed. Essentially, the life sciences sector is the only consistent bright point throughout the pandemic. In fact, it’s grown faster in the last 18 months than before the pandemic started. However, more than half of the office space in this sector is concentrated in just four markets: Boston, San Diego, San Francisco and the Bay Area. These markets are prime arenas for the life sciences industry due to the presence of top universities like Stanford, MIT and Harvard that provide not only research opportunities, but also a large talent pool, as well. Furthermore, Boston alone has 7.2 million square feet of lab space under construction, with another 11.6 million square feet currently in the planning and prospective stages — and that doesn’t even include planned conversions. Granted, office construction is slowing across the nation and, although deliveries are holding steady, new starts are slowing down in almost every market. But, Austin, Texas, is a...

Investors have set their sights on suburban and tertiary markets. Lenders are responding favorably to the trend. While banks will continue to keep one foot planted in major metros, many are following their trusted relationships to less familiar terrain outside of city limits. Sleepy secondary markets are waking up The shift began as a trend prompted by the pandemic but has continued at a steady clip through the highs and lows of COVID-19. This is particularly true in cities where major employers have transitioned to remote and hybrid models. Many white collar industries such as technology, consulting and legal have adapted more flexible work conditions. With zero or fewer days required for office attendance, employees have been exploring their housing options. Blake Hering, principal with Gantry Inc explains, “As these remote operating models adopted by many office users have taken root and grown following last year’s social distancing mandates, a generational shift valuing the lower cost of living, higher quality of life, and larger footprint domiciles available in secondary markets has clearly fueled the beginning of a new, robust cycle for regional markets outside the MSA domain.” Employees are venturing further from their workplace hubs to secondary and tertiary markets where their money likely goes farther: lesser-known markets may offer more square footage for their money and more outdoor space, housing trends that were revitalized during the pandemic. Lending follows the leader The migration is particularly evident in MSA markets such as Seattle, Wash., and Portland, Ore.  in the Pacific Northwest. Investors are following demand to smaller markets such as Bend, Salem and Tacoma. “This shift is now rewarding experienced sponsors in what have become prioritized markets by offering access to a host of new lending sources that once only reserved their allocations for operators...

Federal tax reform enacted in December 2017 reduced or eliminated capital gains taxes for investments directed toward multifamily, commercial and self storage real estate located in more than 8,700 low-income “opportunity zones.” This source of capital was expected to seed startups, accelerate business expansions, create jobs, improve housing options and revitalize built environments in areas where about 35 million Americans live. A Yardi Matrix white paper published in 2019 noted that the zones initially appealed to “a new base of largely untapped investors” and offered value-add opportunities in “new markets that were thought to be too small or risky as investment strategies.” Many policymakers touted opportunity zones as a way to create jobs and lift up underserved communities and minority-owned businesses. Critics assert that the program lacks transparency and mostly helps well-heeled investors and developers. A year-and-half since investors joined the program in earnest (many waited until final Treasury Dept. regulations were released in December 2019), has the opportunity zone initiative fulfilled its promise? Expert opinion is split. The White House Council of Economic Advisors, for example, reported in October 2020 that the program had attracted $75 billion in new investments to distressed American communities, $52 billion of which wouldn’t otherwise have entered the zones, and increased private property values within the designated areas by 1.1%. This infusion of capital represented “a powerful vehicle for bringing economic growth and job creation to the American communities that need them most,” holding the potential to “lift at least one million Americans out of poverty [and decrease] the poverty rate in opportunity zones by 11%,” U.S. Department of Housing and Urban Development official Denise Cleveland-Leggett said at the time. Michael Novogradac, managing partner of Novogradac, a San Francisco-based professional services organization, says the program “has seen notable...

Multifamily asking rents jumped an average of 6.3% year-over-year in June, the largest leap ever recorded by Yardi Matrix, a leading industry data tracker. The national average apartment rent increased $23 last month to $1,482, another record, and single-family home rents were up 11% year-over-year. “These are the largest year-over-year and monthly increases in the history of our data set,” said Jeff Adler, vice president of Yardi Matrix. Analysts point to increased household savings and government stimulus funding as factors that have kept the multifamily industry stable during the pandemic period, and now able to rebound as the economy improves. The newly released data is an economic indicator of post-pandemic recovery across the U.S. The largest increases were documented in the lifestyle apartment sector. Renters are also now returning to many gateway markets that saw outbound migration for most of the last year. A supercharged housing market is also pricing out some potential buyers, leading residents to remain in apartments. “Rent growth will not be able to continue at these levels indefinitely, but conditions for above-average growth are likely to persist for months,” Adler said. The increases reflect growth in what landlords are asking for unleased apartments. Renters renewing leases may also be seeing increased rents, but likely at lower levels. Migration is pushing up rents in Southwest and Southeast metros like Phoenix (17.0%), Tampa and California’s Inland Empire (both 15.1%), Las Vegas (14.6%) and Atlanta (13.3%). These metros were lower cost compared to larger gateway metros. Get more insight on the historic 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...