Well, it doesn’t look as though commercial real estate’s multifamily sector has overheated yet. Second-quarter apartment-leasing fundamentals were the strongest in more than a decade, according to research firm Axiometrics, and that’s on top of already outperforming other commercial real estate property types.
Experts don’t expect this success to wane, at least in some regions. In the Miami area, the apartment market is already one of the strongest in the country, a recent Marcus & Millichap report, and the firm expects the trend to continue. On the other side of the country, Sacramento’s multifamily market is so tight that occupancy rates are just above 96 percent, and saw the highest year-over-year second-quarter increase in the nation.
Talk of a multifamily bubble has been speculated for years now. It looks like we’re definitely not there yet.
Investors don’t seem to think so, either. Private-equity firm Carmel Partners just closed a fund that topped just over $1 billion for apartment construction, renovation and debt investment. The fund was oversubscribed, according to Costar’s report.
Markets across the country are seeing apartment construction soar. In the Kansas City Metro area alone, 445 multifamily building permits were issued, according to Home Builders Association of Great Kansas City data, bringing to total for the year to 1,604, a peak not hit since 2001.
So it looks like the bubble, speculated for quite some time now, is certainly not here. Will this robust new apartment construction create it?