May 26, 2017 Comments Off on New Apartment Supply Weighs on Pricing Power Views: 502 California News, Top California Stories

New Apartment Supply Weighs on Pricing Power

Multifamily investors took a breather in Q1 2017, with acquisition activity cooling, as reported in CBRE’s Q1 2017 U.S. Multifamily MarketView Snapshot. Activity totaled $26 billion, and reflected a 35.4% decline from the previous year.

While that comparison may overstate the slowdown given the near-record volume of Q1 2016, the most recent quarter’s total is also below the 2012-2017 average of $30.7 billion, say CBRE researchers.

The most active buyers so far this year are private buyers looking for value-add opportunities. Institutional investors and buyers of core product have been less active.

CBRE says, factors contributing to the lower sales volume in Q1 included: pre- and post-election uncertainties, the rise in both long-term and short-term interest rates in Q4 and early Q1, some lack of transparency on pricing directions and less-stellar property market fundamentals than in recent years.

Deliveries are expected to increase over the next few quarters before subsiding in mid-2018. More than half of Q1 deliveries were in nine U.S. metros, led by New York (4,800), Washington, D.C. (3,400), Dallas/Ft. Worth (2,600), and the San Francisco Bay Area (2,600).

Key Highlights

  • Vacancy rate up 4.9% from previous year
  • Net absorption steady at 208,700 units for the year
  • Rentable completions up to 252,100 units
  • Acquisitions volume down to $146 billion

Read more at CBRE Research

Subscribe to Connect Daily California

For comments, questions or concerns, please contact Dennis Kaiser

Share on FacebookTweet about this on TwitterShare on LinkedInEmail this to someone

Tags: , , ,

Comments are closed.