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1、NationalInvestmentForecast2024MULTIFAMILYThe economy has proven to be much more resilient than many expected,and the broadly-anticipated recession never came.Instead,employers added jobs at a steady clip,keeping unemployment historically low under 4 percent,supporting strong consumer spending even i
2、n the face of lingering high inflation.Now,entering the new year,the momentum appears to support sturdy,albeit modest,economic gains in 2024.Against the complex economic background,the nations multifamily sector is contending with its own challenges:The chief among them being record new supply.By th
3、e end of 2024,nearly 900,000 apartments will have opened since the start of 2023.While many of these completions are slated for faster-growing secondary and tertiary markets,which captured household relocations from the pandemic,operations will still be pressured in the near-term.At the same time,th
4、e affordability landscape between markets is also shifting,which has implications for performance this year and further into the horizon.Ultimately,every market is following its own trajectory.To help commercial real estate investors capitalize on the complexities of the investment climate,Marcus&Mi
5、llichap presents the 2024 National Multifamily Investment Forecast.Thank you and heres to your continued success,JOHN SEBREESenior Vice PresidentDirectorMulti Housing DivisionJOHN CHANGSenior Vice PresidentDirectorResearch ServicesTO OUR VALUED CLIENTSPETER STANDLEYVice PresidentDirectorMulti Housin
6、g DivisionTABLE OFCONTENTSDeveloped by Marcus&Millichap Research Services.Additional contributions were made by Marcus&Millichap investment brokerage professionals nationwide.NATIONAL PERSPECTIVE Executive Summary.3 Housing Market Considerations.42024 National Multifamily Index.5Economic Outlook.6Mu
7、ltifamily Overview.7Capital Markets.8Multifamily Investment Outlook.9Development Landscape.10Debt Outlook.11MARKET OVERVIEWS Atlanta.12Austin.13Baltimore.14Boston.15Charlotte.16Chicago.17Cincinnati.18Cleveland.19Columbus.20Dallas-Fort Worth.21Denver.22Detroit.23Fort Lauderdale.24Houston.25Indianapol
8、is.26Jacksonville.27Kansas City.28Las Vegas.29Los Angeles.30Louisville.31Miami-Dade.32Milwaukee.33Minneapolis-St.Paul.34Nashville.35New Haven-Fairfield County.36New York City.37Norfolk-Virginia Beach.38Northern New Jersey.39Oakland.40Orange County.41Orlando.42Philadelphia.43Phoenix.44Pittsburgh.45Po
9、rtland.46Raleigh.47Reno.48Riverside-San Bernardino.49Sacramento.50Salt Lake City.51San Antonio.52San Diego.53San Francisco.54San Jose.55Seattle-Tacoma.56St.Louis.57Tampa-St.Petersburg.58Tucson.59Washington,D.C.60West Palm Beach.61CLIENT SERVICES Office Locations.62-63Contacts,Sources and Definitions
10、.64Statistical Summary.Back CoverNATIONAL MULTIFAMILY INDEX(NMI)The wider adoption of remote work over the past three years boosted population growth among many already fast-growing Sun Belt markets,prompting a subsequent acceleration to ground-breakings that is now coming to bear.This scenario appl
11、ies to sev-eral metros across the top half of the National Multifamily Index.In a year where many expanding markets are contending with prodigious new supply,some traditionally steadier markets are standing out.While these metros lack as robust net in-migration,comparatively modest construction aids
12、 fundamentals this year.Lower supply pressure and a high barrier to homeownership also underpin the outlook in several gateway markets.NATIONAL ECONOMY Despite initial concerns,last year proved to be a robust period for the economy.This positive momentum will carry forward in 2024 as household net w
13、ealth has increased by a faster-than-average 33 percent since the pre-pandemic peak,well-eclipsing inflation.The cost of debt has risen dramatically over the past two years,how-ever,constraining activity in both the residential and commercial real estate markets,and prompting businesses to trim expe
14、nses.Higher borrowing costs,together with rising operating expenses,could prompt employers to do more with less.Job growth is set to be around two-thirds the 2023 pace this year,or possibly lower if economic conditions temper more than expected.While a soft landing to the Federal Reserves tightening
15、 policies is still more likely than not,a miss-step would not be hard to take.NATIONAL MULTIFAMILY OVERVIEW Positive momentum is gathering across the national multifamily landscape,yet vacancy and rent growth rates are not respond-ing in kind.Developers,not to be outdone by last years record 420,000
16、 units,are on track to open approximately 480,000 doors in 2024.Although this is likely the peak of the current cycle,it will take time for these units to be absorbed into the rental market.While supply pressure is high,so are todays barriers to homeown-ership,due to both elevated mortgage rates and
17、 stubbornly-high sale prices.These factors will delay first-time home purchases for many current renters,expanding the rental pool.EXECUTIVE SUMMARYCAPITAL MARKETS The Federal Reserve ended its aggressive 18-month hiking spree last July,holding the overnight benchmark rate flat at a 5.25 percent low
18、er bound through the end of 2023.Going forward,the Federal Open Market Committee has not ruled out the possibility of additional policy firming,but it is widely anticipated by market participants that the Federal Reserve will ultimately cut rates at some point this year,if only modestly.This could f
19、oster a modest transaction activity revival in 2024.While capital is available for multifamily investment sales,un-derwriting criteria has tightened,and borrowing costs are high.Banks have prioritized debt held by existing customers,and many have chosen not to consider new loans as they restrain bal
20、ance sheet outflows.As a result,investors have once again become highly dependent on lending from government-sponsored agencies.Borrowers familiar with the interest rate environment before 2008 may be more active this year.INVESTMENT OUTLOOK The multifamily investment sales climate has realigned wit
21、h his-torical norms following two years of record trading,as the sharp rise of interest rates widened the price expectation gap between buyers and sellers.Yet,slower rent growth,elevated vacancy rates and higher operating costs have also weighed on seller motivation.In addition,the much-anticipated
22、deluge of properties driven to market by maturing debt,higher refinance rates and tighter debt service restrictions has not materialized.As investors calibrate to the more stable,but higher interest rate climate in the coming year,sales velocity should steadily gain momentum.The prospect of flat,or
23、even modestly declining,interest rates should bolster investor activity over the course of 2024.Signif-icant capital awaiting deployment at both the institutional and private levels should begin to emerge,facilitating price discovery and helping to narrow the price expectation gap.Value creation has
24、 begun to surface as the hallmark strategy for investors con-templating negative leverage transactions.4HOUSING MARKET CONSIDERATIONSHousing Market DynamicsAfter surge,limited listings constrain sales.The 2019-2021 run-up in home prices,paired with the Federal Reserves substantial interest rate hiki
25、ng cycle,has made entering into a new mortgage a prohibitive expense for most households.Many current homeowners have a much lower in-place rate than what is available today,dissuading them from moving onto their next property.This lock-in effect is pushing first-time homebuyers toward new homes,but
26、 development is still below previous cycles,translating to a falling supply of listings among new builds as well.High ownership costs underscore appeal of rentals.The combination of higher sale prices and elevated mortgage rates have pushed the affordability gap relative to renting up to its highest
27、 margin ever.The difference between the higher cost of a mortgage payment on a median-priced,single-family home and the mean apartment rent has ascended to over$1,200 per month as of late last year.Gaps for already high-barrier markets like the Bay Area or New York City now exceed$10,000,while even
28、small satellite metros like Reno and Tucson have seen their margins climb by 200 percent.For the segment of the renter pool contemplating homeownership,this historic cost premium will keep many utilizing apartments for longer,both enlarging and enriching the overall population of renters.HOMEOWNERS
29、HUNKER DOWN:HOUSEHOLDS RENTING LONGER*Pandemic peak sales activity ranges from October 2020 to January 2021 based on region.*February 2020 to September 2023 v As of 3QAffordability Gap is the difference between a typical mortgage payment and average multifamily effective rent.Typical mortgage paymen
30、t based on quarterly median home price for a 30-year fixed rate mortgage,90%LTV,taxes,insurance,and PMISources:Marcus&Millichap Research Services;CoStar Group,Inc.;National Association of Realtors;Moodys Analytics;RealPage,Inc.;U.S.Census BureauAfordability Gap Reaches All-Time HighU.S.Afordability
31、Gap$0$375$750$1,125$1,5002320907050301AZARCACOIDILIAKSLAMEMNMSMOMTNENVNMNDOKORSDTXUTWAWIWYALCTDEDCFLGAINKYMDMAMINHNJNYNCOHPARISCTNVTVAWVSales SlowdownPeak*to 2023Total Price Appreciation(2020-2023*)Share of U.S.Sales in 2023-39%32%25%Single Family Sales-MidwestSales SlowdownPeak*to 2023To
32、tal Price Appreciation(2020-2023*)Share of U.S.Sales in 2023-49%45%18%Single Family Sales-WestSales SlowdownPeak*to 2023Total Price Appreciation(2020-2023*)Share of U.S.Sales in 2023-44%43%11%Single Family Sales-NortheastSales SlowdownPeak*to 2023Total Price Appreciation(2020-2023*)Share of U.S.Sale
33、s in 2023-36%46%46%Single Family Sales-SouthSeattle-TacomaPortlandSacramentoSan JoseLas VegasRiverside-S.B.Los AngelesSan DiegoPhoenixSalt Lake CityDenverMinneapolis-St.PaulChicagoSt.LouisIndianapolisCincinnatiDetroitClevelandOaklandSan FranciscoColumbusDallas-Fort WorthAustinOrangeCountySan Antonio
34、HoustonRenoAtlantaCharlotteOrlandoTampa-S.P.TucsonWashington,D.C.PhiladelphiaNashvilleNew York CityBostonLouisvillePittsburghNorthern NJJacksonvilleKansas CityBaltimoreNorfolk-Virginia Beach MilwaukeeNew Haven-FCRaleighWest Palm BeachMiami-DadeFort LauderdaleBetween$0 and$750Between$750 and$1,500Bet
35、ween$1,500 and$2,500Between$2,500 and$5,000More than$5,0002023Afordability GapHigher Mortgage Rates Limit Single-Family Listings52024 NATIONAL MULTIFAMILY INDEX1 See National Multifamily Index Note on page 64Large Development Slate Exerts Influence this Year as Some Established Markets Gain Momentum
36、Supply surge impedes near-term progress,even among the most dynamic metros.The wider adoption of remote work over the past three years boosted population growth among many already fast-growing Sun Belt markets,prompting a subsequent acceler-ation to groundbreakings that is now coming to bear.This sc
37、enario applies to several metros across the top half of this years National Multifamily Index.A distinguishing fac-tor among some of the leading markets,including Dallas-Fort Worth(#1),Salt Lake City(#6),Charlotte(#8)and Raleigh(#12),from other metros with high-growth but heavy development,such as D
38、enver(#25),San Antonio(#26)and Phoenix(#34),is compara-tively stronger household formation among younger,renter-predisposed demographics.New supply pressure is particularly strong in Austin(#16)and Nashville(#18),despite favorable demographics.On the other side,Las Vegas holds the national distincti
39、on of welcoming more new households from 2023 to 2024 than new apartments,supporting strong revenue growth and propelling the market to the 10th spot in the 2024 Index.High home costs backstop rental demand in metros with more stable populations.In a year where many expanding markets are contending
40、with prodigious new supply,some traditionally steadier metros are standing out.This cohort includes Washington,D.C.(#11),Columbus(#28)and Milwaukee(#32).While these markets lack as robust net in-migration,comparatively modest construction aids fundamentals this year.Lower supply pressure and a high
41、barrier to homeownership also underpin the outlook in places like San Diego(#2),Orange County(#13),Los Angeles(#19)and New York City(#21).The Bay Areas economic recovery is also gaining momentum after a later start,support-ing San Francisco,Oakland and San Jose ranking near the middle of the Index t
42、his year.Softer job growth,paired with demure demographics,are the primary forces keeping markets like Northern New Jersey(#40),Philadelphia(#41),Cleveland(#45),Detroit(#49)and Pittsburgh(#50)in the lower third of rankings for this year.Index MethodologyThe NMI ranks 50 major markets on a collection
43、 of 12-month,forward-looking economic indicators and supply and demand variables.Markets are ranked based on their cumu-lative weighted average scores for various indicators,including projected job growth,vacancy,construction,housing affordability,rents,historical price appreciation and cap rate tre
44、nds.Weighing the history,forecasts and incremental change over the next year,the Index is designed to show relative supply and demand conditions at the market level.Users of the Index are cautioned to keep several important points in mind.First,the NMI is not designed to predict the performance of i
45、ndividual investments.A carefully chosen property in a bottom-ranked market could easily outperform a poor choice in a higher-ranked market.Second,the NMI is a snapshot of a one-year horizon.A market encountering difficulties in the near term may provide excellent long-term prospects,and vice versa.
46、Third,a markets ranking may fall from one year to the next,even if its fundamentals are improving.The NMI is an ordinal Index,and differences in rankings should be interpreted carefully.A top-ranked market is not necessarily twice as good as the second-ranked market,nor is it 10 times better than th
47、e 10th-ranked market.RANKMARKET1Dallas-Fort Worth2San Diego3Tampa-St.Petersburg4Houston5Fort Lauderdale6Salt Lake City7Miami-Dade8Charlotte9West Palm Beach10Las Vegas11Washington,D.C.12Raleigh13Orange County14Indianapolis15Seattle-Tacoma16Austin17Reno18Nashville19Los Angeles20Tucson21New York City22
48、Portland23San Francisco24Oakland25Denver26San Antonio27San Jose28Columbus29Riverside-San Bernardino30Orlando31Jacksonville32Milwaukee33Boston34Phoenix35Atlanta36Chicago37Cincinnati38Baltimore39Minneapolis-St.Paul40Northern New Jersey41Philadelphia42Norfolk-Virginia Beach43Sacramento44Louisville45Cle
49、veland46Kansas City47St.Louis48New Haven-Fairfield County49Detroit50Pittsburgh6ECONOMIC OUTLOOKU.S.Economy Proves More Durable Than Expected;Feds Quest to Tame Inflation Could Still Pose a Risk New year brings new growth opportunities.Despite initial concerns,last year proved to be a robust period f
50、or the economy.Real GDP growth is estimated to have topped 2.0 percent in 2023,backed by a tight labor market with broadly sub-4 percent unemploy-ment.This positive momentum will carry the economy forward in 2024 as household net wealth has increased by a faster-than-average 33 percent since the pre
51、-pandemic peak,well-eclipsing inflation.The cost of debt has risen dramatically over the past two years,however,as the Federal Reserve has worked to cool inflation.These decisions are now beginning to take a toll.In particular,higher borrowing rates are constraining activity in both the residential
52、and commercial real estate markets.The average 30-year fixed-rate residential mortgage has held above 6 percent for more than a year,while bank lending rates on multifamily assets were in the mid-6 to mid-7 percent zone.Businesses and con-sumers are also less likely to make major outlays at a time w
53、hen the cost of debt is high.Hiring continues at measured pace,costlier debt a factor.An estimated$790 billion in U.S.corporate debt is set to mature in 2024.As many of these loans were taken out before the Fed began hiking interest rates,refinancing may force some deleveraging.Together with rising
54、operating expenses,the resulting hit to the bottom line could prompt firms to do more with less.While approximately 2.7 million jobs were created in 2023,above the 2010-2019 annual average,employment growth is set to be around two-thirds of that pace this year.It is likely some job losses will occur
55、 in certain industries and markets for part of 2024.Less income security is likely to temper household discretionary spending.Yet,the unemployment rate is expected to stay low this year,potentially staying in the low-4 percent bound,even if the job market cools.All of these factors put the national
56、economy on track to grow slowly.A soft landing,where the Federal Reserve briefly stalls economic growth without causing a contraction,is the consensus outlook,but is not without risk.An unexpected black swan event or geopolitical crisis could also derail progress.2024 NATIONAL ECONOMIC OUTLOOK Emplo
57、yers relationship with labor evolving.Last years better-than-average hiring belied numerous underlying labor disputes,with groups spanning a wide swath of industries engaging in strikes.While the outcomes of these agreements generally ben-efited workers financial health,additional business expenses
58、could impact corporate investment this year.New labor disputes in other fields could also arise.Home price appreciation bolsters household wealth.The median sale price on a single-family home nationally has increased over 40 percent since the end of 2019.For homeowners,the additional equity has unlo
59、cked new spending potential.Home-owners with mortgages are also in good standing.The share of mortgage loans under servicing was at a record low of 3.4 percent in mid-2023,about half the year-end 2007 rate going into the 2008-2009 financial crisis.Government spending may not be as supportive in 2024
60、.One pillar behind the economys strong performance in 2023 was the combination of private and public in-frastructure and manufacturing spending prompted by legislation signed in 2021 and 2022.Whether private investment will continue in 2024,amid the higher-cost debt climate,is unclear.The U.S.non-de
61、fense budget is also currently capped for 2024.*Forecast*PCE,Core PCE and Median Home Price Through October,CPI and Mortgage Rate Through November0160Total Employment(Millions)Hiring to Slow in 2024Y-O-Y Percent ChangeEmploymentY-O-Y Percent Change-8%-4%0%4%8%Y-O-Y Percent ChangeGDP Growt
62、h Moderates After Turbulence-6%-3%0%3%6%208060424*22$220$290$360$430$5002023*2022202120202019Median Sale Price(Thousands)Prices and Mortgages Both ElevatedMortgage RateMedian Sales Price-Existing Home30-Year Mortgage2.0%3.5%5.0%6.5%8.0%Y-O-Y Percent ChangeInflation Continues to Taper0%3%6
63、%9%12%2023*2022202120202019CPIPCECore PCE8060424*22207MULTIFAMILY OVERVIEWSizable Delivery Pipeline Disguises Impact of Improving Demand as 2024 May Prove Key Year for HousingRecord supply pace gets briefly ahead of demand.Positive momentum is building across the national multifamily land
64、scape.Decades-high inflation shook the finan-cial confidence of many households in 2022,leading to a freeze in formations.The net absorption of rentals returned to positive territory last year,however,accelerating each quarter,and the positive momentum is set to continue this year as inflation taper
65、s.Yet,even as renter demand improves,vacancy rates and rent growth are softening.The chief culprit behind this mismatch is new supply.Developers,not to be outdone by last years record 420,000 units,are on track to open approximately 480,000 doors in 2024.The impact on rent trends is clear.Exiting 20
66、23,upward rent adjustments on renewals had slowed to half the post-pandemic high,while the use of concessions to draw new leases was rising.The capacity to maintain occupancies and drive rent growth will be limited until this years sizable pipeline is absorbed into the market.Fortunately,2024 will m
67、ark a cyclical peak for development.Groundbreakings began to decline late last year as less capital availability,on top of higher labor and material costs,led to fewer projects pen-ciling.This may begin to translate into falling completions as early as 2025,while overall housing demand is still broa
68、dly climbing.Tight housing market underscores need for rentals.The cost to buy a condo or a sin-gle-family home today has skyrocketed,due to both elevated mortgage rates and stub-bornly-high sale prices.The typical mortgage payment on a median-priced home now exceeds the average Class A apartment re
69、nt by over$800,a record.Only about a quarter of households qualify for a mortgage,half the 2019 level.As such,fewer renters will transition to homeownership this year,which will further grow the renter pool amid new household formation.The nation still faces a long-term shortage of housing,warrantin
70、g the magnitude of the current multifamily pipeline,if not the condensed timeline.Af-fordability concerns will play a role this year as well.The mean Class C effective rent has climbed faster than the Class A rate since pre-pandemic,which,amid other cost increas-es,places a substantial burden among
71、income-constrained households.If a meaningful labor slowdown occurs,Class C operations could be impaired.2024 NATIONAL MULTIFAMILY OUTLOOK Primary CBDs return to familiar performance levels.While apartments in primary markets,and their central districts in particular,were hard-hit by the pandemic ea
72、rly on,they are now performing more in line with where they were before 2020.This count-ers concerns that suburban migration would erode the nations largest urban centers.Regulatory environment continuing to evolve.Backed-up eviction filings are still work-ing their way through some court systems,in
73、flating occupancies but stalling rent growth in certain metros.Rent control debates are also ongoing in several parts of the country.At the same time,efforts are underway to streamline development in high-barrier markets.These and other initiatives have the potential to alter local multifamily outlo
74、oks.Class-based fundamentals could widen.Class B assets may face challenges this year,if the cumulative impact of inflation pushes some renters to a lower-quality tier.At the same time,renters by choice have numerous recent Class A builds to choose from,which could impact existing higher-end propert
75、ies.Vacancy RateAverage Efective RentRent Growth ModeratingPrimary Metros Performing WellCompletions/Absorption(000s)Demand Improves Amid Record New SupplyVacancy RateCompletions-25002505007502.0%3.5%5.0%6.5%8.0%Vacancy RateNet Absorption8060424*22202.0%3.5%5.0%6.5%8.0%20202002
76、1Construction Starts FallingUnits Breaking Ground(Thousands)0023*222080604Y-O-Y Change$800$1,100$1,400$1,700$2,000-8%-4%0%4%8%Y-O-Y ChangeAverage Efective Rent8060424*2220Primary CBDPrimary SuburbsSecondary CBDSecondary Suburbs*Forecast*Through Octoberv Through 3Q8CA
77、PITAL MARKETSInvestor Optimism Boosted by Flattening Interest Rates,But Tight Lending Climate Remains a HeadwindFed widely expected to ease rates in 2024.The Federal Reserve ended its aggressive 18-month hiking spree last July,holding the overnight benchmark rate flat at a 5.25 percent lower bound t
78、hrough the end of 2023.Going forward,the Federal Open Market Committee has not ruled out the possibility of additional policy firming,but it is widely anticipated by market participants that the Federal Reserve will ultimately cut rates at some point in 2024,if only modestly.The belief that the Fed
79、has completed its tightening cycle is one of the factors restraining the 10-year Treasury,which briefly broached the 5 percent mark in November before it settled near 4 percent.However,upward pressure will continue to be applied to the 10-year Treasury by the Feds quantitative tightening efforts con
80、stituting monthly balance sheet reductions of$95 billion and the U.S.Treasury Departments issuance of new notes to manage the nations deficit.Bank lending tight,but expected to ease.Higher borrowing costs continue to compli-cate multifamily property investment.By late last year,lending rates for apa
81、rtment ac-quisitions from banks,life companies and government-sponsored agencies had climbed to the mid-6 to mid-7 percent range,with debt service coverage requirements that gen-erally reduced loan-to-value ratios to the 55 to 60 percent range.Banks have prioritized debt held by existing customers,a
82、nd many have chosen not to consider new loans as they restrain balance sheet outflows.As a result,investors have once again become highly de-pendent on lending from government-sponsored agencies,a standard trend during tight lending cycles.Looking forward,investors remain optimistic that lenders wil
83、l begin to loosen underwriting from the current ultra-tight standards,and that borrowing rates will begin to trend lower at some point in 2024.Key indicators like FedWatch and the SOFR forward curve portend modest rate reductions.As financial markets stabilize and the banking sector emerges from the
84、 shadows of the spring 2023 crises that forced notable bank closures,lender spreads could narrow,offering borrowers a welcome respite from the higher rate climate.This could foster a modest transaction activity revival in 2024.2024 CAPITAL MARKETS OUTLOOK FDIC guidance supports extensions.In June la
85、st year,the Federal Deposit Insurance Corporation provided guidance to banks,empowering them to offer loan accommoda-tions and workouts to mitigate commercial real estate debt stress.Though not every bank utilized this flexibility with all loans,it did alleviate some of the expected distress many an
86、ticipated from a wave of maturing debt.Bank outlook improving.Despite the shutdown of several significant banks last spring,most banks were reporting substantially strengthened balance sheets by late 2023.Commercial real estate distress and charge-offs have remained well below prior cycles,with less
87、 than 2 percent of multifamily trades last year falling in the distressed category.Lenders restrain construction pipeline.Capital providers have become particularly cautious with construction financing,pushing rates above 8 percent as of late 2023.The higher cost of capital has helped rein in multif
88、amily groundbreakings,offering an an-ticipated reprieve from the wave of development that has helped push vacancy rates higher over the last two years.Although apartment additions are expected to reach a new peak in 2024,this should represent the high-tide mark of this cycle.*Through Dec.14*Estimate
89、 v Through 3Qz Sales$2.5 million and greaterDistressed Sales(Billions)Percent of Dollar VolumeMultifamily Lender CompositionCRE Distress Low Entering 2024Fed Holdings(Trillions)Fed Maintaining Tight Monetary PolicyFed Funds RateFed Holdings$0$2.5$5.0$7.5$10.00%1.5%3.0%4.5%6.0%Fed Funds Rate191715131
90、109070523*21Treasury Yield TrendsRate0%2%4%6%8%23*20907050310-Year2-Year3-Month0%25%50%75%100%2023*202220212020Regional/Local BankNational BankInternational BankInsuranceGovernment AgencyPrivate/OtherInvestor-DrivenCMBSPercent of Total Dollar Volume*$0$100$200$300$400Distressed SalesShare
91、 of Total Volume0%5%10%15%20%22208232099MULTIFAMILY INVESTMENT OUTLOOKInvestor Strategies Revive Traditional Perspectives;Stabilizing Interest Rates Aid Market CalibrationInterest rate consistency to bolster transaction activity.The multifamily investment sales climate has real
92、igned with historical norms,following two years of record trading.Transaction flow last year roughly matched 2014 levels,marking a significant decline compared to the cycle peak set in 2021-2022.The slowdown was largely driven by the sharp rise of interest rates and the resulting widened price expec
93、tation gap between buyers and sellers.Slower rent growth,elevated vacancy rates and higher operating costs have also weighed on motivation.While record pricing in 2021-2022 incentivized owners to sell,the current climate has convinced many to extend their hold period.In addition,the much-anticipated
94、 deluge of properties driven to market by maturing debt,higher refi-nance rates and tighter debt service restrictions has not materialized.This has frustrated the wave of capital set aside to acquire distressed properties and weighed on trading activity.In the coming year,as investors calibrate to t
95、he more stable,but higher interest rate climate,sales velocity should steadily gain momentum.Investors rekindle strategies common before financial crisis.The prospect of flat,or even modestly declining,interest rates should bolster investor activity in the coming year.Significant capital awaiting de
96、ployment at both the institutional and private levels should begin to emerge,facilitating price discovery and helping to narrow the expecta-tion gap.Value creation has begun to surface as the hallmark strategy for investors con-templating negative leverage transactions.Although cap rates have risen
97、up to 200 basis points on average over the past year,ranging by market,asset class,and other variables,they often remain below the cost of debt capital.As a result,buyers will focus on ways to quickly boost revenues through improved operations,property upgrades or other means.Multifamily investors a
98、re migrating toward traditional standards prevalent before the global financial crisis(GFC)and the era of generationally low interest rates that followed.2024 INVESTMENT OUTLOOK Investors continue to broaden acquisition range.Roughly 40 percent of trades in 2023 took place in tertiary metros,a share
99、 that is now nearly in line with the 45 percent allocation to primary markets.Smaller cities generally face reduced supply pressure,while benefiting from cost-of-living motivated in-migration.Investors pursuit of yield will likely reinforce this trend in 2024.Rising operating costs a concern.Average
100、 insurance costs have climbed by 120 percent over the past four years,driven by an increase in the frequency and magnitude of nat-ural disasters,together with higher property values and repair costs.When combined with a 40 percent average rise in property taxes since 2018 and higher labor costs,inve
101、s-tor margins have been squeezed.Investor“generation gap”increasingly salient.Investors who came of age since the GFC have framed their strategies within the context of a 2.5 percent mean 10-year Trea-sury rate and rent growth ranging above 5 percent.Comparatively,investors active in the 90s and ear
102、ly 2000s operated with an average 5.5 percent 10-year Treasury and rent gains near 3.5 percent,which align closer to the anticipated investment climate going forward.This could strongly influence which investors will be most active this year.*Estimate*Trailing-three-month averagev Through November$0
103、$60$120$180$240Average Sale Price per Unit(000s)Price vs.Cap RateAverage Cap RateAverage Sale PriceAverage Cap Rate0%2%4%6%8%Total Transactions(000s)Multifamily Transaction Activity06523*21$100$125$150$175$20020232022202120202019Average Monthly Tax Expense*Taxes,Insurance Growi
104、ng ConcernsAverage Monthly Insurance Cost*Taxes Per UnitInsurance Per Unit$20$35$50$65$80Y-O-Y Percent ChangeShare of Trades in Tertiary Metros Elevated$1M-$10M$10M-$20M20M+0%11%22%33%44%07050323*2907050323*2110DEVELOPMENT LANDSCAPETight post-lockdown vacancy prompted supply su
105、rge.After the worst of the COVID-19 pandemic,pent-up housing demand pushed the national multifamily vacancy rate under 3 percent in 2021,a multi-decade low.This led to a wave of groundbreakings the following year,a factor that is now coming to bear.Between 2023 and 2024,an estimated record 900,000 a
106、partments will have opened across the country,representing inventory growth of 5 percent.Not all parts of the country face the same supply pressures.Over the past 15 years,development has shifted away from the West Coast and mid-Atlantic toward the Rocky Mountains and the Southeast,including Florida
107、,while staying prevalent in Texas.This generally aligns with stronger population growth trends,although the magni-tude of 2024 arrivals in many Sun Belt metros will apply pressure to fundamentals.Conversely,land constraints and high costs have kept deliveries manageable in California and the Northea
108、st,while softer demographics have also tempered openings in some of the Midwest.*ForecastSources:Marcus&Millichap Research Services;CoStar Group,Inc;RealPage,Inc.AZARCACOIDILIAKSLAMEMNMSMOMTNENVNMNDOKORSDTXUTWAWIWYALCTDEDCFLGAINKYMDMAMINHNJNYNCOHPARISCTNVTVAWVLess than 1.5%1.5%to 3.5%More than 3.5%S
109、eattle-TacomaPortlandSacramentoSan JoseLas VegasInland EmpireLos AngelesSan DiegoPhoenixSalt Lake CityDenverMinneapolis-St.PaulChicagoSt.LouisIndianapolisCincinnatiDetroitClevelandOaklandColumbusSan FranciscoDallas-Fort WorthOrange CountyAustinSan AntonioRenoHoustonAtlantaCharlotteOrlandoTucsonTampa
110、-S.P.Washington,D.C.PhiladelphiaNashvilleNew York CityBostonLouisvillePittsburghNorthern NJJacksonvilleKansas CityBaltimore Norfolk-Virginia BeachMilwaukeeNew Haven-FCRaleighWest Palm BeachMiami-DadeFort LauderdaleLess than 3,0003,000 to 13,000More than 13,000Units Arrivingin 2024Share ofInventorySU
111、PPLY PRESSURE LARGELY CONCENTRATED IN SUN BELT2024 Forecast Completions by MarketSUN BELT AND ROCKY MOUNTAIN REGIONSPICK UP LARGER SHARE OF CONSTRUCTIONShare of Multifamily Completions by RegionREGION-20192020-2024*West Coast17.2%15.7%13.3%Rocky Mountain7.5%9.1%11.6%Texas20.6%19.8%20.1%
112、Midwest11.6%12.1%11.2%Mid-Atlantic9.4%6.4%5.0%Northeast15.5%16.6%15.0%Southeast10.2%11.4%13.3%Florida7.9%8.8%10.5%11DEBT OUTLOOK*Data as of Dec.31,2022*Data as of Jun.30 2023v Through SeptemberSources:Marcus&Millichap Research Services;Mortgage Bankers Association;Moodys AnalyticsDELINQUENCY DYNAMIC
113、S One indicator of potential distress is CMBS loan delinquency.Past-due payments on outstanding multifamily loans securitized in CMBS were under 1.5 percent as of late 2023.From 2016,following the pay-off of$3 billion in CMBS loans tied to Stuyvesant Town-Peter Cooper Village,the average multifamily
114、 delinquency rate has been about 2 percent.While not a complete picture of the health of loans tied to mul-tifamily properties,the CMBS perspective,paired with a strong renter demand outlook,temper broader distress concerns.OUTSTANDING DEBT OUTLOOK Just over 10 percent of outstanding multifamily deb
115、t as of early 2023 was set to mature this year.As such,most borrowers will not contend with this issue until a time when rates could be lower.The FDIC issued guidance in June of last year advising financial institutions to work with borrowers on loan workouts,including deferred or partial payments,a
116、nd other assistance.While higher interest rates have raised concern of default risk on the financial system,long-term renter demand drivers support multifamily,even amid some short-term price recalibration.COMMERCIAL PROPERTY DEBT MATURING,BUT DELINQUENCY LOW FOR NOWMultifamily Debt Maturities Over
117、Next Decade*Multifamily Debt Maturities(Billions)Delinquency Low Through Late 2023Share of Outstanding Multifamily Debt*Multifamily Not Focal Point of DelinquencyCMBS Delinquency Rate-MultifamilyCMBS Delinquency Rate-Oct.2023$0$68$136$204$272$340Later20322032820272026202520242023Life Insu
118、rance CompaniesBank/ThriftState/Local GovtCMBS/CDO/Other ABS3.2%29.6%Agency/GSE/MBS47.9%5.6%10.8%0%4%8%12%16%20%23*2220090807Post-Financial Crisis Peak$3 Billion Loan Resolved inMajor Manhattan Asset SalePost-COVID-19Lockdown High0%1%2%3%4%5%6%OfceHotelRetailMultifamilyIndustri
119、alOther2.8%12*Estimate;*Forecast Sources:CoStar Group,Inc.;Real Capital Analytics;RealPage,Inc.2024 MARKET FORECASTATLANTAAverage Price per Unit(000s)Total Employment(Millions)Employment TrendsY-O-Y Percent ChangeSales TrendsEmploymentY-O-Y Percent ChangeCompletions/Absorption(000s)Supply and Demand
120、Average Cap RateAverage PriceAverage Cap RateAverage Efective RentRent TrendsY-O-Y Percent ChangeAverage Rent2.42.62.83.03.224*23*22215-6%-3%0%3%6%Vacancy RateNet AbsorptionVacancy Rate-808162424*23*222152%4%6%8%10%CompletionsY-O-Y Percent Change$1,000$1,200$1,400$1,600$1,80024
121、*23*22215-8%0%8%16%24%$0$50$100$150$20023*22215144%5%6%7%8%Bifurcated Performance Among Apartment Classes Reflects Local Impact of InflationNew supply and cost-of-living concerns affect Class A and C performance,respectively.Top-tier apartment vacancy remained below 7 percent l
122、ast year,despite developers bring-ing roughly 20,000 units to market,indicating solid demand for luxury units that should carry through in 2024.While a high volume of stock is expected this year,likely prompting increased concessionary use,a robust local economy should help integrate these units int
123、o the market in the long-run.White-collar employment will increase this year,and the metro will remain among the nations most active by net in-migration.Still,these same factors may generate headwinds for lower-tier apartments.In 2023,Atlanta noted the highest rate of annual inflation of any major m
124、etro outside of California or Florida,prompting many lower-income households to consolidate to save on housing costs.This is evidenced by Class C vacancy increasing by 590 basis points between the end of 2021 and late 2023,de-spite consistent sub-4 percent unemployment during that period.Elevated co
125、sts of goods and services will continue to burden these renters,potentially keeping Class C vacancy above the trailing decade-long average of 6.4 percent for an extended period.Some investors waiting out fluctuating fundamentals.Adding to financing headwinds noted nationwide,cooling apartment perfor
126、mance metrics are also shaping Atlantas in-vestment market.Vacancy has rapidly increased over 2022 and 2023,entering this year at 8.1 percent.This is 510 basis points ahead of the all-time low noted at the end of 2021.Such a rapid adjustment has complicated deal flow,with trades last year slowing to
127、 levels previ-ously seen in the aftermath of the health crisis.On a more positive note,however,transac-tion velocity did show signs of improvement in the latter months of 2023,particularly in the sub-$10 million price tranche,indicating that smaller investors may be coming back to market as the upwa
128、rd path of interest rates stabilizes.+1.2%21,000units+150 bps-3.1%EMPLOYMENT:Atlantas employment base will grow by 36,000 jobs,marking the fourth consecutive year of expansion.Still,a 1.2 percent increase denotes the slowest annual gain since 2010.CONSTRUCTION:The 21,000 doors slated for completion
129、in 2024 will achieve a multi-decade record,growing apartment supply by 3.7 percent this year.VACANCY:Aided by a significant inventory increase,vacancy will rise by more than 100 basis points for the third consecutive year.The year-end rate of 9.6 percent is the highest in over a decade.RENT:Rents ar
130、e expected to contract for a second year,after a 2.4 percent decrease in 2023.The average effective rent of$1,603 per month is nevertheless 25 percent above the year-end 2019 level.INVESTMENT:Rapid inventory growth and a resulting sharp vacancy increase place Atlanta closer to the bottom of this yea
131、rs rankings.Investors may look into the Six West project,an initiative in College Park hoping to spur retail-residential development in a portion of the metro historically impacted by nearby airport traffic.NMI RANK3513*Estimate;*Forecast Sources:CoStar Group,Inc.;Real Capital Analytics;RealPage,Inc
132、.2024 MARKET FORECASTAUSTINAustin Braces for Record-High Completion Slate;Corporate Relocations Promote InvestmentIncreasing renter base will counterbalance the 2024 supply wave long-term.Austin will have the fastest-growing age 20-to 34-year-old cohort among major U.S.markets in 2024 as the group e
133、xpands by 1.8 percent.This demographic traditionally rents while saving for a first-time home purchase,a trend that is prolonged in Austin due to the rising cost of a median-priced single-family house,up over$100,000 since just 2019.While Aus-tins renter pool is consistently augmented by in-migratio
134、n a trend unlikely to end in the near future as companies like Tesla,Apple and Oracle make the metro home multi-family supply additions have begun to outpace demand.This dynamic places significant upward pressure on vacancy,resulting in the metric hitting a 20-year high in 2024.The supply wave is li
135、kely reaching its peak,however,as new starts have fallen amid rising material,labor and borrowing costs,allowing supply and demand to realign long-term.Samsung factory highlights outer suburbs for potential buyers.Despite construction pushing up vacancy across the metro,active investors will likely
136、target areas with com-pany expansions slated for 2024.This year,Samsung will complete a$17 billion semicon-ductor factory in Taylor,bringing over 2,000 high-skilled jobs.The facilitys proximity to Georgetown,Round Rock and Pflugerville highlights the growing renter pool in outer suburbs to potential
137、 buyers.Multi-property purchases witnessed in these areas in 2023 will likely continue into this year as investors look to establish a footprint in suburbs primed for an influx of residents.High-paying tech jobs arriving in Austin will also back-stop Class A apartment demand,while service industries
138、 expand to support the added population,providing prospective renters for Class B and C units.Top-tier properties had the tightest metro vacancy exiting 2023,sitting below 6.5 percent,but both the mid-and lower-tier sectors were within 70 basis points of that mark.Average Price per Unit(000s)Total E
139、mployment(Millions)Employment TrendsY-O-Y Percent ChangeSales TrendsEmploymentY-O-Y Percent ChangeCompletions/Absorption(000s)Supply and DemandAverage Cap RateAverage PriceAverage Cap RateAverage Efective RentRent TrendsY-O-Y Percent ChangeAverage Rent0.800.951.101.251.4024*23*22215-4%0%4
140、%8%12%Vacancy RateNet AbsorptionVacancy Rate41016222824*23*222152.0%3.5%5.0%6.5%8.0%CompletionsY-O-Y Percent Change$1,000$1,200$1,400$1,600$1,80024*23*22215-9%0%9%18%27%$80$120$160$200$24023*22215144%5%6%7%8%+2.6%27,000units+80 bps+0.6%EMPLOYMENT:Nearly matching last
141、 years additions,Austin will welcome 35,000 jobs on net in 2024.This brings total employment to roughly 40 percent above where it was a decade prior.CONSTRUCTION:Metro inventory will grow by an unprecedented 8.9 percent,the largest expansion among major U.S.markets,reach-ing a local record-high comp
142、letion slate for the fifth consecutive year.VACANCY:The sudden and persistent acceleration in Austins stock has placed significant upward pressure on vacancy,despite continued renter demand.By year-end,the metric will reach 7.9 percent.RENT:The average effective rent in Austin fell by 1.7 percent in
143、 2023,a trend that will reverse in 2024.By December,the mean effec-tive rent will inch up to$1,650 per month.INVESTMENT:Teslas Texas Gigafactory expansion,slated for 2024 in East Austin,demonstrates the submarkets long-term growth trajectory to investors,despite the 5,000-plus unit local pipeline ad
144、vancing vacancy near-term.Strong employment and household growth keep Austin in the top half of the Index,despite record completions and rising vacancy.NMI RANK1614*Estimate;*Forecast Sources:CoStar Group,Inc.;Real Capital Analytics;RealPage,Inc.2024 MARKET FORECASTBALTIMOREAverage Price per Unit(00
145、0s)Total Employment(Millions)Employment TrendsY-O-Y Percent ChangeSales TrendsEmploymentY-O-Y Percent ChangeCompletions/Absorption(000s)Supply and DemandAverage Cap RateAverage PriceAverage Cap RateAverage Efective RentRent TrendsY-O-Y Percent ChangeAverage Rent1.301.351.401.451.5024*23*222120191817
146、1615-8%-4%0%4%8%Vacancy RateNet AbsorptionVacancy Rate-6-303624*23*222151.0%2.5%4.0%5.5%7.0%CompletionsY-O-Y Percent Change$1,100$1,275$1,450$1,625$1,80024*23*22215-5%0%5%10%15%$80$110$140$170$20023*22215144%5%6%7%8%Core Rentals Absorb Latent Single-Family Demand,Sus
147、taining CBD Investment Single-family crunch kickstarts multifamily demand.Baltimores for-sale housing inventory fell substantially in 2023,keeping local home prices on the rise.The metros difference between the monthly mortgage payment on a median-priced home and the mean multifamily Class A rent gr
148、ew to$780 as a result last year,more-than doubling in 12 months.Higher homeownership barriers have already helped net absorption return to positive territory last year,after net relinquishment in 2022.Much of this returning demand has been hosted by Downtown Baltimore,where an over-5 percent gain in
149、 local stock during 2023 motivated some operators of Class A apartments to increase conces-sions and ease rents.This trend should hold into the rest of 2024,with the area welcom-ing the delivery of over 1,000 units for the second consecutive year.These builds should nevertheless be well-received in
150、the long-term,as the return of multiple employers to the CBD will greatly increase the local renter base.The Maryland Department of Health and The Maryland Department of Labor will each relocate to the core later this year,while T.Rowe Price sets up a 550,000-square-foot headquarters nearby at Harbo
151、r Point this May.CBD sustains deal flow.Home to the most net absorption last year,Downtown Baltimore observed the largest number of deals for apartments.Class B and C assets,in particular,have sustained investor interest as each segment will evade much of the future supply-side risk.This pattern was
152、 reflected in submarkets across the metro as well.Preliminary data from 2023 indicates top-tier assets comprised the smallest share of total metro deal flow noted in any of the previous five years.Despite recently subdued activity,these complexes are positioned to land back on buyers radars longer-t
153、erm.The metros housing crunch,as well as continued,above-average job growth throughout the rest of 2024,should draw greater rental demand and subsequent investor interest for top-tier assets moving forward.+1.3%2,200units-20 bps+2.4%EMPLOYMENT:While hiring is expected to slow down from last year,job
154、 growth will still nearly double the long-term pace in 2024 amid the addition of 19,000 new roles on net.CONSTRUCTION:Stock expansion in 2024 will be the lowest across mid-Atlantic metros,at 0.9 percent.Most new units slated for deliv-ery are underway in Downtown Baltimore and Baltimore City East.VA
155、CANCY:Marketwide vacancy lowers to 5.7 percent in 2024.Mir-roring last year,local rates are likely to compress further in Annapo-lis and Southwest Baltimore County throughout the coming months.RENT:Baltimores rent growth accelerates,as the average effective rate ends 2024 at$1,720 per month.The Clas
156、s C segment will likely lead the charge,after noting 3.0 percent growth in the last year.INVESTMENT:While property performance is improving,Baltimores unfavor-able demographics give it a lower ranking in the 2024 NMI.Nominal Class A pipelines in Columbia-North Laurel,Ellicott City-Elkridge and the n
157、orthern portions of Anne Arundel County help rekin-dle local institutional interest amid tighter single-family affordability.NMI RANK3815*Estimate;*Forecast Sources:CoStar Group,Inc.;Real Capital Analytics;RealPage,Inc.2024 MARKET FORECASTBOSTONPolemic on Multifamily Zoning Continues as Urban Core i
158、s Well-Poised to Absorb New SupplyCity center attracts projects as suburban development push lags.The ongoing imple-mentation of a zoning initiative in Bostons MBTA-connected municipalities will have a notable impact on the areas multifamily landscape.As of late last year,12 of Bostons immediate sub
159、urbs marked as“rapid transit communities,”meaning they feature at least one trolley or subway stop,noted little agreement across the board as to the implemen-tation of high-density housing districts.As debate continues,developer interest remains strongest in the core.More than 20,000 units were prop
160、osed across the region in late 2023,over half of which were earmarked for Suffolk County.Headwinds in other sectors bode well for builders operating in densely-developed locales.The biotech cooldown should be a boon to urban apartment development,as the multifamily sector had faced steep competition
161、 from life science developers for available parcels,particularly those proximate to public transit.While a supply influx will impact vacancy in the near-term,the market faces a chronic housing shortage and has one of the nations higher home price-to-income ratios,which will help integrate these unit
162、s into the local ecosystem.Buyers pursue units proximate to Boston proper.Transaction velocity improved throughout 2023,owing to the markets solid long-term prospects,in addition to a stabi-lizing interest rate environment nationwide.City of Boston-adjacent communities have seen the largest increase
163、s in activity.By late last year,deal flow in Middlesex County had improved to a level roughly on par with 2022,when the number of trades still exceed-ed the historical norm.Investors here are primarily targeting Class C dwellings east of Interstate 95.Renter demand for such units is supported by an
164、extremely tight local housing market,and this segment is unlikely to be greatly impacted by the large number of Class A and B units slated for completion in the near-term.Average Price per Unit(000s)Total Employment(Millions)Employment TrendsY-O-Y Percent ChangeSales TrendsEmploymentY-O-Y Percent Ch
165、angeCompletions/Absorption(000s)Supply and DemandAverage Cap RateAverage PriceAverage Cap RateAverage Efective RentRent TrendsY-O-Y Percent ChangeAverage Rent2.402.552.702.853.0024*23*22215-9.0%-4.5%0%4.5%9.0%Vacancy RateNet AbsorptionVacancy Rate048121624*23*222152%3%4%5%6%Com
166、pletionsY-O-Y Percent Change$2,000$2,250$2,500$2,750$3,00024*23*22215-15.0%-7.5%0%7.5%15.0%$240$260$280$300$32023*22215144%5%6%7%8%+1.0%9,500units+40 bps+2.0%EMPLOYMENT:Roughly 35,000 fewer jobs will be created in 2024 relative to last year.Continued growth in higher-compensati
167、on tradi-tional office-using sectors should aid Class A performance.CONSTRUCTION:Developers are scheduled to bring the largest number of units to market in multiple decades this year.The majori-ty of doors are slated for Boston proper and adjacent suburbs.VACANCY:While net absorption remains firmly
168、in positive terri-tory,the vacancy rate will notch up to 5.4 percent by year-end,the highest level since the immediate aftermath of the financial crisis.RENT:The average effective rent rises for the fourth consecutive year as the metric reaches$2,974 per month,22 percent ahead of the year-end 2019 e
169、quivalent and the highest on record.INVESTMENT:Prolonged debate over rent stabilization in the city of Boston has had little effect on deal flow within the municipality,indicating that a bulk of buyers anticipate the 1994 statewide rent control ban will hold.Relatively tepid projected household form
170、ation translates to a lower-half placement in this years rankings.NMI RANK3316*Estimate;*Forecast Sources:CoStar Group,Inc.;Real Capital Analytics;RealPage,Inc.2024 MARKET FORECASTCHARLOTTEAverage Price per Unit(000s)Total Employment(Millions)Employment TrendsY-O-Y Percent ChangeSales TrendsEmployme
171、ntY-O-Y Percent ChangeCompletions/Absorption(000s)Supply and DemandAverage Cap RateAverage PriceAverage Cap RateAverage Efective RentRent TrendsY-O-Y Percent ChangeAverage Rent1.121.201.281.361.4424*23*22215-2%0%2%4%6%Vacancy RateNet AbsorptionVacancy Rate0510152024*23*222152.0
172、%3.5%5.0%6.5%8.0%CompletionsY-O-Y Percent Change$900$1,100$1,300$1,500$1,70024*23*22215-7%0%7%14%21%$60$105$150$195$24023*22215144%5%6%7%8%Transit Expansions and Logistics Employers Stir Renter Demand Amid Supply BoomUniversity-adjacent apartments shine regionally.The UNC Charl
173、otte area noted one of the largest surges in renters among any Southeastern submarket last year.Strength in this area predates last year as well.Since March 2018 when the LYNX Blue Line extension to UNC Charlotte was completed the submarket has led the metro in net ab-sorption,showcasing the impact
174、of expanded public transit on local apartment demand.Still,the need for rentals has also stayed consistent in less urbanized locations.Despite its lack of public transit,Southwest Charlotte had 27 consecutive quarters of positive net absorption through 2023,with several logistics expansions aiding r
175、ental demand.This trend should continue as Home Depot,Grainger and Carolina Foods move into 2 million square feet of local distribution facilities by the end of this year.Motivated by job growth prospects,builders were underway on 8,300 units here at the onset of 2024,comprising 25 percent of the me
176、tros pipeline.If completed,the construction of the LYNX Silver Line which would connect Gaston County in the west to Union County in the east through the City Center should support rental demand for these new builds.Deal flow exceeds historical norms.Trading velocity from July 2023 onward greatly im
177、proved from earlier last year.Out-of-market buyers are comprising a growing share of deal flow in Charlotte amid a more cost-prohibitive investment landscape.This rings especially true for investors from New York and California,where high per-unit prices generally limit yield decompression.Gaston Co
178、unty and Charlottes northeastern sub-urbs are prime candidates to sustain this activity,after having some of the metros highest cap rates and lowest entry costs in 2023.However,these prices were due to a preference for Class C rentals,which should be preserved in 2024 as the sector evades much of th
179、e future supply-side risk.+2.3%17,100units+130 bps-1.3%EMPLOYMENT:Employers are projected to add 32,000 new roles on net in Charlotte throughout 2024.Growth will slow from last years record,while still holding above the long-term pace of 2.2 percent.CONSTRUCTION:The metros apartment inventory will e
180、xpand by 7.5 percent this year,setting an all-time local high,and ranking as the third-strongest pace among major U.S.markets in 2024.VACANCY:Following multiple years of record-level construction,marketwide vacancy is expected to close out 2024 at 7.9 percent.Gas-ton Countys mild delivery slate may
181、stoke greater stability here.RENT:Charlottes mean effective rent will tick down to$1,575 per month in 2024,marking the first calendar year decrease since 2009.The metric still ends the year 9 percent higher than in 2021.INVESTMENT:An expanding renter base amid regionally-strong job growth gives Char
182、lotte a high 2024 NMI placement.Vacancy around UNC Charlotte was on a downward path in 2023,de-spite having a record 2,300 units delivered during the year.This strong performance may stoke buyer interest for local apartments in 2024.NMI RANK817*Estimate;*Forecast Sources:CoStar Group,Inc.;Real Capit
183、al Analytics;RealPage,Inc.2024 MARKET FORECASTCHICAGOHome Affordability Hurdles Sustain Rental Absorption;Investors Favor Education CorridorsSuburban apartment demand mirrored by recent employer office commitments.Since late 2023,employers like Travelers Insurance,Hartford Insurance,AIT Worldwide Lo
184、gistics and The Federal Aviation Administration have moved into offices in Chicagos suburbs.These decisions are a reflection in part of the current employees already living nearby.Corporate expansions should aid further apartment demand nearby as workers not already local to the area are directed to
185、 adjacent residential areas in order to cut down on commutes.Oak Park,Oak Brook,Naperville,and parts of the Schaumburg area benefit the most from this trend.Homeownership challenges are also aiding demand for apartments.Largely the result of sustained high interest rates,the spread between Chi-cagos
186、 average effective Class A rent and the mortgage payment on a median-priced home has neared its highest point in more than a decade.Amid these dynamics,Chicagos mul-tifamily sector is well equipped to weather a slower level of economic growth this year.Improving absorption will keep vacancy below it
187、s local long-term average of 5.7 percent,aiding a rent growth rate that will rank third among major markets nationally in 2024.University areas draw a competitive investment market.Despite sustained financing challenges,assets located near Chicagos prominent educational institutions are being priori
188、tized by investors.Lincoln Park and Hyde Park are the main beneficiaries of this trend,with proximity to Loyola Universitys new and expanding Lake Shore Campus,as well as the prestigious University of Chicago.Stable enrollment momentum within these higher education programs aids the long-term renter
189、 demand outlook from students and faculty alike.Investor preferences here are also shifting to larger luxury and mid-tier properties,helping accommodate a wider range of renters.This was exhibited by last years average size of properties sold roughly doubling 2022s mean of 32 units.Average Price per
190、 Unit(000s)Total Employment(Millions)Employment TrendsY-O-Y Percent ChangeSales TrendsEmploymentY-O-Y Percent ChangeCompletions/Absorption(000s)Supply and DemandAverage Cap RateAverage PriceAverage Cap RateAverage Efective RentRent TrendsY-O-Y Percent ChangeAverage Rent4.24.44.64.85.024*23*222120191
191、8171615-10%-5%0%5%10%Vacancy RateNet AbsorptionVacancy Rate-*23*222152%4%6%8%10%CompletionsY-O-Y Percent Change$1,000$1,300$1,600$1,900$2,20024*23*22215-6%0%6%12%18%$100$120$140$160$18023*22215146.0%6.5%7.0%7.5%8.0%+0.8%7,400units+10 bps+3.3%EMPLOYMENT:Fol
192、lowing a notable pullback in hiring last year,the pace of employment growth ticks up slightly in 2024 and will match Chicagos long-term average.CONSTRUCTION:Deliveries remain well below immediate pre-pan-demic norms in 2024,increasing stock by 1 percent.The Loop and River North account for roughly t
193、wo-fifths of these supply additions.VACANCY:Upward vacancy momentum is sustained this year,push-ing the metros rate to 5.3 percent by the end of 2024.Still,this will stand 40 basis points below Chicagos historical average.RENT:Amid another year of rising vacancy,the pace of rent growth continues to
194、slow in 2024.Nevertheless,this years gain lifts Chica-gos average effective rate to$2,025 per month.INVESTMENT:Ongoing discussions to raise Cook Countys transfer tax rate on proper-ties valued at over$1 million are likely to impact the investment market this year as firms and individuals reposition
195、their exit strategies.Marginal household formation compared to other major metros places Chicago within the lower third of this years ranking.NMI RANK3618*Estimate;*Forecast Sources:CoStar Group,Inc.;Real Capital Analytics;RealPage,Inc.2024 MARKET FORECASTCINCINNATIAverage Price per Unit(000s)Total
196、Employment(Millions)Employment TrendsY-O-Y Percent ChangeSales TrendsEmploymentY-O-Y Percent ChangeCompletions/Absorption(000s)Supply and DemandAverage Cap RateAverage PriceAverage Cap RateAverage Efective RentRent TrendsY-O-Y Percent ChangeAverage Rent1.001.051.101.151.2024*23*22215-6%-3
197、%0%3%6%Vacancy RateNet AbsorptionVacancy Rate-2024624*23*222150%1.5%3.0%4.5%6.0%CompletionsY-O-Y Percent Change$800$950$1,100$1,250$1,40024*23*222150%4%8%12%16%$20$45$70$95$12023*22215146%7%8%9%10%Cincinnatis Multifamily Sector Benefits from a Tight Housing Market,At
198、tracting Regional CapitalLimited single-family home options drive apartment demand.Entering the fourth quarter of 2023,the metro marked 23 straight months of active home listings below 3,000 houses.Higher mortgage rates and home prices are contributing factors discouraging current homeowners from tr
199、ading up.This has limited the prospects for first-time home buyers as fewer listings increase competition for options.A tight single-family market will keep apartment vacancy below 5 percent through the end of 2024,backstopped by strong suburban demand despite heightened construction.Steady in-migra
200、tion which is expected to total over 20,000 arrivals on net over the next five years and consistent household formation will support lease-up in the long-run.The influx of new supply will,however,mitigate rent growth this year.Areas like Butler County and Southeast Cincin-nati may be most affected a
201、s construction grows there.Still,the metros average effective rent will have surged nearly 40 percent above the 2019 year-end mean by December.Low entry costs and favorable suburban rental conditions draw investors.Active investors in Cincinnati often sought close-in,suburban properties at the end o
202、f last year.In the back half of 2023,the metro had the second-lowest suburban apartment vacancy rate among major Midwest markets,fueled by its tight housing market.Buyers are likely to stay active in neighborhoods surrounding downtown going forward,targeting areas like Westwood,Norwood,Avondale and
203、Walnut Hills.At the same time,current property owners in the metro may seek to capitalize on price appreciation in 2024.Last year,Cin-cinnati had the fastest increase in the mean price per unit among major Midwest metros,jumping 15 percent,but still maintained one of the lowest regional entry costs,
204、poten-tially drawing the attention of out-of-market,regionally-proximate investors.Elevated borrowing costs may hinder some deal flow as buyer/seller expectations realign,however.+1.7%2,800units+10 bps+1.5%EMPLOYMENT:Total employment in Cincinnati will climb by 20,000 positions in 2024,softening fro
205、m last years pace of growth.Still,this years total will sit 6 percent above the 2019 year-end tally.CONSTRUCTION:For the sixth time since 2000,completions sur-pass 2,000 units,growing stock by 1.7 percent in 2024.Southeast Cin-cinnati and Butler County expect the greatest volume of new units.VACANCY
206、:Low for-sale single-family home inventory will mitigate the impact of new supply on vacancy.While the rate increases to 4.9 percent this year,it will land below the trailing 20-year average.RENT:As vacancy loosens from the record lows achieved in 2022,rent growth will decelerate this year.The avera
207、ge effective rent will still climb modestly to$1,390 per month.INVESTMENT:Locally high construction,paired with modest household forma-tion nationally,keeps Cincinnati in the lower half of the Index.Several firm expansions driving job growth in Northern Kentucky,in-cluding the new Matrix Pack North
208、America facility and DHLs airport distribution center,could turn investor focus across the river in 2024.NMI RANK3719*Estimate;*Forecast Sources:CoStar Group,Inc.;Real Capital Analytics;RealPage,Inc.2024 MARKET FORECASTCLEVELANDCompetition for Leases Still Tight in the Suburbs;Investors Drawn by Cle
209、velands Higher YieldsClose-in suburbs benefit from limited pipelines and lower rents.An elevated pace of rent growth in Cleveland which extended through 2023 has begun to direct renter demand to lower-cost submarkets.While the overall mean effective rent will decrease in 2024,it will not be enough t
210、o offset the growing cost disparity between suburban and downtown rents.Close-in neighborhoods,in particular,have appealed to renters looking to lower their mean monthly payment while staying near downtown.Westlake-North Olmsted-Lorain County is one such example.The area entered this year with a vac
211、an-cy rate approximately 200 basis points below its long-term average.Limited proposed or underway projects here will likely keep this rate as one of the lowest in Cleveland.Conversely,at the end of 2023,vacancy in Central Cleveland was rapidly approaching 10 percent.Despite recent challenges,projec
212、ts like Sherwin-Williams new global headquar-ters,which is slated to open in 2025,could fuel long-term demand for downtown housing.Higher lending rates bring Clevelands yield advantage to the forefront.Return-driv-en investors were increasingly active in Cleveland last year as the metro claimed the
213、second-highest average cap rate among major U.S.markets,paired with the lowest price per unit.With borrowing costs likely to remain persistently elevated for the foreseeable future,this high mean cap rate will likely appeal to additional buyers in 2024.Owners that acquired properties before 2020 may
214、,in turn,be motivated to capitalize on price appreciation in Cleveland.Spanning the past 10 years,the mean price per unit rose by roughly 110 percent.While Clevelands population is slightly declining,renter demand may increase as active home listings in Cleveland stay limited.Fewer renters able to t
215、ransition to homeownership may motivate private investors from higher-cost Midwest markets to engage here,particularly in the suburbs.Average Price per Unit(000s)Total Employment(Millions)Employment TrendsY-O-Y Percent ChangeSales TrendsEmploymentY-O-Y Percent ChangeCompletions/Absorption(000s)Suppl
216、y and DemandAverage Cap RateAverage PriceAverage Cap RateAverage Efective RentRent TrendsY-O-Y Percent ChangeAverage Rent0.900.951.001.051.1024*23*22215-8%-4%0%4%8%Vacancy RateNet AbsorptionVacancy Rate-4-202424*23*222152%3%4%5%6%CompletionsY-O-Y Percent Change$800$950$1,100$1,
217、250$1,40024*23*22215-4%0%4%8%12%$30$45$60$75$9023*22215146%7%8%9%10%+0.9%2,000units+40 bps-0.8%EMPLOYMENT:Cleveland will add a modest 10,000 roles on net in 2024.This gain brings the metro within 4,000 positions of its record-high job count,which was recorded in February 2020.C
218、ONSTRUCTION:Deliveries will reach their highest level since before 2000 as inventory expands by 1.2 percent this year.Still,Cleveland has the smallest delivery slate among major Ohio markets.VACANCY:Clevelands vacancy rate will increase for a third straight year in 2024.New builds surpass the number
219、 of units absorbed on net,pushing the metric up to 6.0 percent.RENT:The metros 14-year streak of annual rent growth will be broken in 2024.The average effective rent shifts down to$1,230 per month;however,this mean is 28 percent higher than five years ago.INVESTMENT:Properties proximate to Case West
220、ern Reserve University in areas like Buckeye-Shaker Heights and Coventry Village may garner increasing investor interest in 2024 as the schools enrollment grows.Elevated vacancy,record-high construction and a falling mean effective rent place Cleveland near the bottom of the 2024 NMI.NMI RANK4520*Es
221、timate;*Forecast Sources:CoStar Group,Inc.;Real Capital Analytics;RealPage,Inc.2024 MARKET FORECASTCOLUMBUSAverage Price per Unit(000s)Total Employment(Millions)Employment TrendsY-O-Y Percent ChangeSales TrendsEmploymentY-O-Y Percent ChangeCompletions/Absorption(000s)Supply and DemandAverage Cap Rat
222、eAverage PriceAverage Cap RateAverage Efective RentRent TrendsY-O-Y Percent ChangeAverage Rent1.001.051.101.151.2024*23*22215-5.0%-2.5%0%2.5%5.0%Vacancy RateNet AbsorptionVacancy Rate-3036924*23*222152%3%4%5%6%CompletionsY-O-Y Percent Change$800$950$1,100$1,250$1,40024*23*22212
223、0%3%6%9%12%$40$65$90$115$14023*22215146.0%6.5%7.0%7.5%8.0%Central Ohio Expects Regionally High In-Migration;Top-Tier Assets to Benefit from White-Collar Job GrowthColumbus attracts tech companies,aiding demand for new luxury rentals.Since early 2022,Central Ohio has received su
224、bstantial corporate investments,spearheaded by the groundbreaking of Intels two chip factories in New Albany,the first of which is expect-ed to be production-ready by 2025.Companies like Amazon,Google and Microsoft are either planning new data centers in the area or expanding existing sites.The grow
225、ing tech presence in Columbus is expected to drive job creation,particularly in high-skill sectors,both this year and beyond.Top-tier apartments are set to benefit from the housing needs of these new,well-compensated residents.Although elevated construction will place up-ward pressure on vacancy nea
226、r-term,the metro is well-positioned for prolonged growth going forward.Columbus will add the most new residents through in-migration of any major Midwest market in 2024.As companies move in,the metro will continue posting elevated job and population gains,benefiting fundamentals across apartment tie
227、rs.Tech firm move-ins and university enrollment open options for investors.The return of local transaction stability observed in the latter half of 2023 is poised to continue throughout 2024,despite elevated borrowing costs.Of late,investor interest has been concentrated in both far-out areas and do
228、wntown-adjacent submarkets.Going forward,these areas are likely to keep attracting attention from buyers particularly Licking County as tech firms begin to move in.Assets in the Bexley-Whitehall area could also garner interest due to the submarkets proximity to both New Albany and downtown.Out-of-ma
229、rket private buyers should be active in both zones,often targeting Class B as-sets of older vintage in the sub-$5 million price tranche,while also combing listings in the CBD.Here,trading activity is likely to be centered in the University District,as the Ohio State University noted an increase in e
230、nrollment for the fall 2023 semester.+1.6%6,000units+20 bps+0.8%EMPLOYMENT:Increasing by 18,000 jobs on net in 2024,total employment in Columbus will expand 50 basis points faster than the average pace set over the past two decades.CONSTRUCTION:Completions will reach a 25-plus-year high in 2024,grow
231、ing total inventory by 3.0 percent.Downtown and Wester-ville-New Albany-Delaware expect the largest volume of deliveries.VACANCY:While vacancy inches up to 5.8 percent this year as sup-ply outpaces absorption,total occupied stock will reach an all-time high in Columbus,surpassing 196,800 units.RENT:
232、The metros average effective rent will increase to$1,340 per month in 2024.However,this is the slowest year-over-year gain recorded in the last 15 years.INVESTMENT:Columbus is the highest-ranked metro in Ohio as corporate ex-pansions promote job growth and long-term demand prospects.Honda and LG Ene
233、rgy Solutions electric vehicle battery plant is expected to come online by late 2024.Investors may target assets in Fayette County as the plant is expected to bring 2,000 jobs to the area.NMI RANK2821*Estimate;*Forecast Sources:CoStar Group,Inc.;Real Capital Analytics;RealPage,Inc.2024 MARKET FORECA
234、STDALLAS-FORT WORTHMotivated by Nation-Leading Workforce Growth,Some Suburbs Have Larger Pipelines than Entire MetrosNeighboring submarkets represent the epicenter of development.Allen-McKinney and Frisco combine for about 18,800 units underway with scheduled completion dates between 2024-2026.This
235、trio of suburbs has more rentals slated to finalize in the next three years than at least 35 major U.S.metros.Other local submarkets Ellis County,Kaufman County,South Fort Worth and West Fort Worth-Parker County are on pace for 25-plus percent inventory growth by the end of 2026.In total,more than 2
236、0 separate areas have over 1,000 rentals underway,creating the nations largest active pipeline.The Metroplex is likely nearing peak construction,however,as elevated debt costs,hiking operating expenses and softer absorption have decelerated permit demand.Looking be-yond the ongoing supply wave that
237、is poised to lift vacancy and challenge rent growth,a drop in development would brighten the long-term outlook amid nation-leading employ-ment gains.By year-end,the Metroplex workforce is expected to approach 4.5 million,inching within 210,000 jobs of Los Angeles currently the nations third-largest
238、employ-ment base.For context,that gap was no closer than 750,000 prior to the pandemic.Metroplex investment still ranks among the nations strongest.Despite a sharp reduc-tion in deal flow relative to what was common during 2020-2022,the local trading count and sales volume ranked in the top five nat
239、ionally last year.While capital markets hurdles alongside operational cost hikes from insurance and property taxes remain headwinds,nation-leading job growth will continue to generate buyer attention.Investors may nev-ertheless increasingly steer clear of supply pressure.Carrollton-Farmers Branch,Gr
240、ape-vine-Southlake,Southeast Dallas and West Plano represent areas with mild development relative to recent demand.Conversely,Rockwall-Rowlett-Wylie and Kaufman County stand out as locations with above-average vacancy and considerable new supply coming.Average Price per Unit(000s)Total Employment(Mi
241、llions)Employment TrendsY-O-Y Percent ChangeSales TrendsEmploymentY-O-Y Percent ChangeCompletions/Absorption(000s)Supply and DemandAverage Cap RateAverage PriceAverage Cap RateAverage Efective RentRent TrendsY-O-Y Percent ChangeAverage Rent3.03.43.84.24.624*23*22215-8%-4%0%4%8%Vacancy Rat
242、eNet AbsorptionVacancy Rate-20020406024*23*222152%4%6%8%10%CompletionsY-O-Y Percent Change$850$1,050$1,250$1,450$1,65024*23*222150%5%10%15%20%$60$90$120$150$18023*22215143.5%4.5%5.5%6.5%7.5%+3.0%44,000units+40 bps+2.9%EMPLOYMENT:From 2020-2023,Dallas-Fort Worth added
243、 306,000 more positions than the next-closest U.S.market.That lead is expected to stretch further to 374,000 jobs by the end of this year.CONSTRUCTION:The Metroplex remains the most active site for apartment development in the nation,with 72,000-plus units under construction.About 60 percent of thos
244、e are slated to deliver in 2024.VACANCY:Apartment completions this year top the previous annu-al record by almost 16,000 units,overpowering an expected three-year high for net absorption and placing vacancy at 7.5 percent.RENT:Stronger demand and a cascade of new high-quality supply help lift the me
245、an effective monthly rent to$1,605.Still,this is slight-ly below the long-term annual average growth rate of 3.6 percent.INVESTMENT:Buyers pursuing assets with upside potential in areas where new supply has recently elevated local rent benchmarks could focus on Ellis Coun-ty,North Oak Cliff-West Dal
246、las and South Arlington-Mansfield.Leading the U.S in job creation,and ranking in the top 10 for household growth,the market reaches the pinnacle of the Index.NMI RANK122*Estimate;*Forecast Sources:CoStar Group,Inc.;Real Capital Analytics;RealPage,Inc.2024 MARKET FORECASTDENVERAverage Price per Unit(
247、000s)Total Employment(Millions)Employment TrendsY-O-Y Percent ChangeSales TrendsEmploymentY-O-Y Percent ChangeCompletions/Absorption(000s)Supply and DemandAverage Cap RateAverage PriceAverage Cap RateAverage Efective RentRent TrendsY-O-Y Percent ChangeAverage Rent1.31.41.51.61.724*23*2221
248、5-8%-4%0%4%8%Vacancy RateNet AbsorptionVacancy Rate0510152024*23*222152%4%6%8%10%CompletionsY-O-Y Percent Change$1,200$1,400$1,600$1,800$2,00024*23*22215-7%0%7%14%21%$100$150$200$250$30023*22215144%5%6%7%8%Southern Submarkets Capture Renters Attention;Stabilized Stoc
249、k Helps Draw Investors to LakewoodEmployment and migration trends aid Denvers apartment outlook.Despite a pull-back in overall job creation last year,new professional and technical services roles con-tinued to be added.Momentum is expected to carry forward here and in other high wage sectors through
250、 2024,supporting household formation.Amid these trends,Denver also boasts improving in-migration after some disruption caused by the pandemic,adding to the metros household count.Newcomers to the market are still faced with homeowner-ship challenges,directing housing demand to apartments.Yet,this in
251、flux is outpaced by a record multifamily delivery slate,resulting in near-term fundamentals softening.Some pockets of the Mile High City,nevertheless,are in a good standing to welcome this elevat-ed apartment supply.The southern areas of Parker-Castle Rock and Highlands Ranch de-fied the metros tren
252、d of substantial vacancy expansion last year,with local rates holding under their respective 2019 baselines.This momentum is partially bolstered by the areas proximity to the Tech Center,accommodating nearby commuting professionals.Financing stability aids some resuming activity.Transaction velocity
253、 improved in the latter half of 2023,as the Federal Reserve took its foot off the gas in tightening monetary policy.This year,more clarity on interest rates and local growth dynamics should prompt further investor interest.A sizable portion of increased trading activity was noted across the western
254、suburbs near Lakewood and Wheat Ridge.Dissimilar to the market as a whole,these areas recorded nominal construction last year and few deliveries are sched-uled for 2024.New renter demand is being directed to existing properties,contributing to a local vacancy rate that has consistently held below th
255、e market average a boon for the area.Deals here are also typically under the metros mean price per unit,while yields often exceed the marketwide figure,creating a key driver amid still-elevated debt costs.+0.3%17,500units+90 bps+3.0%EMPLOYMENT:The addition of 4,000 roles this year more than negates
256、2023s net loss.This gain will extend the total employment count to 3 percent above 2019s high.CONSTRUCTION:Completions will surpass the record set in 2018 by 7,000 units.The historic influx expands local stock by 5.2 percent,among the top-10 largest gains for major markets nationally.VACANCY:Denvers
257、 largest delivery slate by a considerable margin places notable short-term upward pressure on metro vacancy this year.Reaching 7.1 percent,the rate will be its highest since 2009.RENT:Amid rising vacancy,rent growth remains below its 3.9 per-cent long-term mean.Still,the average effective rate will
258、climb to a new high in 2024 of$1,978 per month by year-end.INVESTMENT:A modest employment forecast and notable vacancy lift this year contribute to Denvers middle-of-the-pack NMI ranking.Years of substantial supply-side pressure downtown have cautioned more investors.Buyers seeking long-term holds,h
259、owever,may find opportunities at a competitive price during a period of higher vacancy.NMI RANK2523*Estimate;*Forecast Sources:CoStar Group,Inc.;Real Capital Analytics;RealPage,Inc.2024 MARKET FORECASTDETROITSelect Suburbs Maintain Tight Vacancy,Improvements Downtown Could Revive Renter and Investor
260、 InterestRenter demand for top-tier units limits new supply pressure.From December 2019 through September 2023,the median price of a single-family home in Detroit rose by 40 percent,outpacing apartment rent growth by 10 percentage points.The rising cost of homeownership has led many residents to rem
261、ain in the renter pool,particularly in suburban areas that offer larger floor plans.Livingston County,together with the city of Novi,recorded one of the lowest vacancy rates exiting 2023,reflecting growing renter demand in an area of localized population growth.Households staying in the renter pool
262、longer are also benefiting Class A fundamentals metrowide.The rental tier was the only property class to note vacancy compression in 2023,and as such,heightened construc-tion appears warranted.Looking beyond 2024,however,Detroit has its challenges.De-spite positive signals for luxury space,Detroits
263、declining population will have an adverse effect on overall apartment demand long-term.During the next five years,the metro is expected to lose over 60,000 residents on net,a headwind for vacancy going forward.New developments could aid downtown.Some public and private projects slated for near-term
264、completion have the potential to turn investor focus to urban assets.The Ralph C.Wilson Centennial Park along the riverfront completes this year,enhancing the appeal of other projects like the Michigan Central Ford redevelopment.The Gordie Howe International Bridge is also underway,allowing for pede
265、strian and bike traffic across the Detroit River,and adding another connection between the metro and Canada in 2025.These projects could draw some renters downtown,directing risk-tolerant investors toward urban assets with value-add opportunities.Elsewhere,buyers preferring areas of low construction
266、 and tight vacancy could target South Wayne County and Warren-Rose-ville.Both submarkets have vacancy below the metro rate and sparse pipelines.Average Price per Unit(000s)Total Employment(Millions)Employment TrendsY-O-Y Percent ChangeSales TrendsEmploymentY-O-Y Percent ChangeCompletions/Absorption(
267、000s)Supply and DemandAverage Cap RateAverage PriceAverage Cap RateAverage Efective RentRent TrendsY-O-Y Percent ChangeAverage Rent1.71.81.92.02.124*23*22215-10%-5%0%5%10%Vacancy RateNet AbsorptionVacancy Rate-8-404824*23*222150%2%4%6%8%CompletionsY-O-Y Percent Change$800$950$1
268、,100$1,250$1,40024*23*22215-4%0%4%8%12%$40$60$80$100$12023*22215145%6%7%8%9%+0.2%2,900units+40 bps-0.8%EMPLOYMENT:The limited job creation witnessed in 2023 will carry into this year.By December 2024,total employment in Detroit will have grown by a net 12,000 positions in two y
269、ears.CONSTRUCTION:This years projected delivery volume will be the highest since at least 2000;however,total inventory in Detroit will still expand by just 1.0 percent in 2024.VACANCY:Net absorption will trend positive this year after two years in the red.Consequently,vacancy will rise at a slower p
270、ace than in 2022 or 2023,but will still lift to 6.2 percent.RENT:Detroit will be one of two major Midwest markets that record a slight decrease in its average effective rent following sizable vacan-cy increases.The metros mean will be$1,290 per month by year-end.INVESTMENT:The University of Michigan
271、 Center for Innovation will break ground in 2024.Focusing on graduate education and talent-based development,the project has the potential to attract investors to Foxtown.Limited household formation,rising vacancy and a drop in the mean effective rent keep Detroit low on the 2024 Index.NMI RANK4924*
272、Estimate;*Forecast Sources:CoStar Group,Inc.;Real Capital Analytics;RealPage,Inc.2024 MARKET FORECASTFORT LAUDERDALEAverage Price per Unit(000s)Total Employment(Millions)Employment TrendsY-O-Y Percent ChangeSales TrendsEmploymentY-O-Y Percent ChangeCompletions/Absorption(000s)Supply and DemandAverag
273、e Cap RateAverage PriceAverage Cap RateAverage Efective RentRent TrendsY-O-Y Percent ChangeAverage Rent0.60.70.80.91.024*23*22215-8%-4%0%4%8%Vacancy RateNet AbsorptionVacancy Rate-40481224*23*222151.0%2.5%4.0%5.5%7.0%CompletionsY-O-Y Percent Change$1,200$1,600$2,000$2,400$2,800
274、24*23*222150%8%16%24%32%$100$140$180$220$26023*22215144%5%6%7%8%Favorable Job Growth Dynamics Temper Impact on Apartments from Other ChallengesEmployment momentum bolsters multifamily demand.Amid a temperate climate,business-friendly tax environment and lower average asking off
275、ice rent than adjacent Southeast Florida metros,local hiring is set to accelerate in 2024.This will stand in con-trast to all other major Florida markets,and follows the metros near record-high addi-tion of traditionally office-using jobs recorded last year.As such,the metro will boast the second-fa
276、stest rate of job growth in the state,a boon for apartment demand,which allows Fort Lauderdale to hold the second-lowest multifamily vacancy rate among the same sample size by year-end.The metro,however,faces some long-term headwinds as elevat-ed local living costs adjust renter preferences and migr
277、ation trends.Fort Lauderdales mean marketed rent has jumped nearly 50 percent since 2019,directing more residents to lower-cost units as Class C vacancy held below its historical average.Growth within the 20-to 34-year-old cohort is also decelerating,partially associated with higher living costs.Thi
278、s dynamic goes up against the metros largest delivery slate on record in 2024.Improved capital landscape helps return institutional investment.Transaction velocity picked up in the later months of 2023 amid eased aggressiveness on rate hikes by the Federal Reserve.A clearer financing outlook has hel
279、ped institutional-level capital de-ployment return to pre-pandemic norms.Frequently completing deals in northwestern areas of the metro near Plantation-Sunrise and Coral Springs,firms acquiring assets here benefit from vacancies that stand below the market average despite notable supply-side pressur
280、e.Buyer-seller expectations are also coming back into alignment,which should facilitate trade moving forward.While near-term pricing corrections benefit buyers,owners are still able to capitalize on the more than 30 percent appreciation to Fort Lau-derdales average price per unit noted since the ons
281、et of the pandemic.+2.2%6,500units+30 bps+2.0%EMPLOYMENT:The addition of 20,000 roles this year will allow Fort Lauderdales pace of job growth to trail only Miami among ma-jor Florida metros.CONSTRUCTION:Supply additions in 2024 exceed the previous record high observed last year by more than 1,800 u
282、nits,increasing the metros existing stock by 3.2 percent.VACANCY:Record inventory expansion and tempered population growth relative to recent norms maintain upward vacancy movement in 2024.This allows the rate to reach 6.0 percent by year-end.RENT:Higher availability results in this years rent growt
283、h figure holding below the metros long-term mean of 4.8 percent per annum.Still,Fort Lauderdales average will inch up to$2,515 per month.INVESTMENT:Strong employment and rent growth propel Fort Lauderdale to the top of the high-ranking Southeast Florida cohort of metros.A higher share of activity is
284、 accounted for by out-of-state buyers.Many of these properties have older vintages and above-market average va-cancy rates,indicating investors are seeking value-add projects.NMI RANK525*Estimate;*Forecast Sources:CoStar Group,Inc.;Real Capital Analytics;RealPage,Inc.2024 MARKET FORECASTHOUSTONSusta
285、ined Regional Affordability,Emerging High-Wage Job Prospects Foretell Notable MigrationHouston will remain a magnet for relocating households.Now years in the rearview,the circumstances of the pandemic accelerated migration to Sun Belt metros due to cost-of-living and quality-of-life advantages,fuel
286、ing the addition of 165,100 households in Houston between 2020-2023.Correlating with that influx,rent growth was excep-tional prior to last years moderation,resulting in an aggregate 25 percent surge.Some other Sun Belt metros had even larger hikes,altering the spectrum of relative living costs.Hous
287、tons mean effective rent trailed the average of major Sun Belt markets by about$180 per month in 2020.Entering this year,that relative monthly discount stretched to roughly$370.This positions Houston to sustain migration long-term,especially if an economic slowdown leads to an uptick in budget-consc
288、ious movers.Further enhancing relocating households considerations,hiring in high-wage industries has been notewor-thy,reflected in median household income growth.Houston ranked first in Texas for that metric last year and is projected to do the same in 2024.Relative affordability,alongside attracti
289、ve wage prospects,should continue to stoke migration and housing demand.Surging costs clash with a promising outlook.Even amid a nationwide slowdown in transactions after aggressive interest rate hikes and a pullback in available financing,some operators in Houston may be more inclined to list in 20
290、24.Historically prone to natural disasters,the average cost to insure an apartment unit rose by over 50 percent annually as of the third quarter of 2023,well above other Texas metros and the national increase.This additional burden,alongside rising property taxes,could motivate trading activity.Buye
291、rs willing to take on greater costs,due to the markets favorable long-term outlook,could focus on particular suburbs exhibiting robust demographic growth,in-cluding Clear Lake,Conroe-Montgomery County,Katy and Spring-Tomball.Average Price per Unit(000s)Total Employment(Millions)Employment TrendsY-O-
292、Y Percent ChangeSales TrendsEmploymentY-O-Y Percent ChangeCompletions/Absorption(000s)Supply and DemandAverage Cap RateAverage PriceAverage Cap RateAverage Efective RentRent TrendsY-O-Y Percent ChangeAverage Rent2.72.93.13.33.524*23*22215-8%-4%0%4%8%Vacancy RateNet AbsorptionVacancy Rate-
293、*23*222152%4%6%8%10%CompletionsY-O-Y Percent Change$900$1,050$1,200$1,350$1,50024*23*22215-5%0%5%10%15%$70$90$110$130$15023*22215144%5%6%7%8%+1.8%20,500units+10 bps+2.5%EMPLOYMENT:The net gain of 213,200 positions in Houston since the end of 2019 ranked as
294、 the second-largest rise nationally.Project-ed to add 62,000 jobs in 2024,Houston will retain that same spot.CONSTRUCTION:Marketwide,apartment inventory expands by 2.7 percent this year,matching the 2023 pace.The pipeline is shrink-ing,however,with about half of 2024s volume slated for next year.VAC
295、ANCY:While vacancy is expected to rise for a third straight year to 7.5 percent,the change is moderate.Other major Texas markets all have projected hikes of at least 30 basis points in 2024.RENT:Despite rent growth tapering to its slowest pace since the 2020 shock,Houston maintains a rate of increas
296、e that ranks in the top 15 nationally.The mean effective rent reaches$1,410 per month.INVESTMENT:Largely overlooked in favor of fast-growing suburbs recently,buyers may return to urban core neighborhoods like Downtown-Montrose-Riv-er Oaks and West University-Medical Center amid notable hiring here.H
297、ouston ranks in the top 12 for job and household creation,which,with relatively stable vacancy,earns a bullish position.NMI RANK426*Estimate;*Forecast Sources:CoStar Group,Inc.;Real Capital Analytics;RealPage,Inc.2024 MARKET FORECASTINDIANAPOLISAverage Price per Unit(000s)Total Employment(Millions)E
298、mployment TrendsY-O-Y Percent ChangeSales TrendsEmploymentY-O-Y Percent ChangeCompletions/Absorption(000s)Supply and DemandAverage Cap RateAverage PriceAverage Cap RateAverage Efective RentRent TrendsY-O-Y Percent ChangeAverage Rent0.91.01.11.21.324*23*22215-5.0%-2.5%0%2.5%5.0%Vacancy Rat
299、eNet AbsorptionVacancy Rate-2024624*23*222150%2%4%6%8%CompletionsY-O-Y Percent Change$600$800$1,000$1,200$1,40024*23*222150%4%8%12%16%$40$60$80$100$12023*22215144%5%6%7%8%Class A Apartment Demand Elevated;Core Neighborhoods Remain a Target for InvestorsRecord supply
300、concentrated in Carmel as downtown popularity grows.The local CBD vacancy rate entered 2024 below its pre-pandemic measure,an uncommon occurrence for most major U.S.metros.Renter popularity here is partially the result of improve-ments to office occupancy as tenant needs for such spaces showed posit
301、ive momentum entering the new year.Amid robust renter demand,supply-side pressure was substantial here last year and resulted in vacancy lifting roughly 100 basis points.This should temper in 2024,however,as the local pace of development slows dramatically and directs more renters to existing units.
302、Conversely,the Carmel-Hamilton County area will experience unprecedented inventory growth of more than 10 percent.Nearly half of the metros re-cord delivery slate will complete in the submarket,likely applying upward momentum to local concession use.On a market level,notable luxury apartment demand
303、has stood out.Entering 2024,few major U.S.metros other than Indianapolis recorded segment vacancy in line with,or below,their 2019 measures.This trend was prominent in Carmel,war-ranting its volume of construction,though its pace of additions still presents challenges.First-ring suburbs remain areas
304、 of emphasis for investors.Although velocity likely remains tame amid sustained high debt costs,downtown-adjacent areas are still a focal point for investors.Improving office leasing in the city center is prompting residents to look for shorter commutes.This may support population migration into dow
305、ntown,aid-ing multifamily demand long-term.The East and Southeast portions of Central Marion County are the most active CBD-adjacent areas for trades,more specifically Arlington Woods and Beech Grove.As more institutional-level capital returns to the market follow-ing interest rate stabilization lat
306、e last year,velocity may pick up in the Carmel-Hamilton County area amid a widening selection of Class A stock and robust renter demand here.+2.0%5,000units+30 bps+2.4%EMPLOYMENT:Local employers add 24,000 positions on net in 2024,a slight pullback from 2023s gain.Still,the metros workforce lifts by
307、 5,000 more jobs than the pre-2019 decade-long average.CONSTRUCTION:Indianapolis 2.9 percent stock expansion will be the second-fastest rate among major Midwest markets this year,and the metros largest increase on record.VACANCY:Market vacancy will rise by the same margin as the national rate.Reachi
308、ng 6.8 percent by year-end,the measure will be at its highest point since 2017.RENT:Another year of climbing vacancy halves Indianapolis pace of rent growth from 2023s increase,bringing the metros average effective rate to$1,300 per month.INVESTMENT:Indianapolis holds the highest ranking among Midwe
309、st markets amid improving revenues and growing employment landscape.Southern Marion County is increasing in popularity for investors seek-ing larger assets.Properties here often exceed 200 units and support industrial operations near the International and Greenwood airports.NMI RANK1427*Estimate;*Fo
310、recast Sources:CoStar Group,Inc.;Real Capital Analytics;RealPage,Inc.2024 MARKET FORECASTJACKSONVILLEDemand for New Units Tested as Metro Leads Florida Markets in Stock Expansion for a Third Straight YearCompletions may represent the last in a wave of elevated development.After vacancy reached a his
311、toric low of 2.8 percent in 2021,a group of projects were started to capture renter demand from corporate relocations and population gains.Now in 2024,multi-family fundamentals will be tested by these decisions.Specifically,the three submarkets that comprise Southside Mandarin,Baymeadows and Upper S
312、outhside will ac-count for 40 percent of this years deliveries.Exiting 2023,a collective 3,800 units were underway here,equating to 8.4 percent of existing Southside stock.Elsewhere,projects are centered in St.Augustine and Central Jacksonville,providing some relief for other submarkets like Arlingt
313、on and Westside,where vacancy is above the metrowide mean.While overall supply additions are elevated,a pullback in starts is likely amid rising local insurance costs.If this comes to fruition and population gains remain steady,most units delivered in 2024 should be absorbed over the near term.Regio
314、nally discounted investment opportunities support diverse buyer mix.The metros average Class C rent rose by roughly 6 percent over the course of 2023,while declines were noted in the luxury and mid-tier segments.A still notable gap between the mean lower-tier and Class B rates is poised to influence
315、 active investors to pursue Class C listings,confident that future income gains are plausible.Institutions focused on larger properties and private buyers seeking sub-$5 million commitments should each target Central Jacksonville,where sub-$100,000 per unit pricing is obtainable and listings are mos
316、t frequent.Those eying sizable complexes higher on the class spectrum may find the most opportunities in Southside neighborhoods.Here,Class A and B rentals are available in the$200,000 to$300,000 per unit band.Based on recent and ongoing construction here,chances to acquire newer-built assets could
317、rise during 2024.Average Price per Unit(000s)Total Employment(Millions)Employment TrendsY-O-Y Percent ChangeSales TrendsEmploymentY-O-Y Percent ChangeCompletions/Absorption(000s)Supply and DemandAverage Cap RateAverage PriceAverage Cap RateAverage Efective RentRent TrendsY-O-Y Percent ChangeAverage
318、Rent0.50.60.70.80.924*23*22215-2%0%2%4%6%Vacancy RateNet AbsorptionVacancy Rate02.55.07.510.024*23*222152%4%6%8%10%CompletionsY-O-Y Percent Change$750$950$1,150$1,350$1,55024*23*22215-9%0%9%18%27%$0$40$80$120$16023*22215143.5%4.5%5.5%6.5%7.5%+1.5%7,100unit
319、s+30 bps+1.3%EMPLOYMENT:Jacksonvilles total job count expands by 12,000 positions during 2024.The expected addition of 2,500 white-collar roles bodes well for Class A rental demand.CONSTRUCTION:Developers grow the local apartment inventory by 5.1 percent this year,the eighth-largest increase among m
320、ajor U.S.rental markets.Deliveries are sizable in scope,averaging 240 units.VACANCY:After compressing to 2.8 percent in 2021,vacancy climbs for a third straight year,reaching 8.1 percent.Still,renters absorb a net of roughly 6,100 units in 2024,the largest annual total on record.RENT:A sizable net a
321、bsorption tally supports rent growth in 2024,a contrast to last year.At$1,510 per month,the metros average effec-tive rate is at least$280 below all other major Florida markets.INVESTMENT:The University of Florida has received$75 million in state funding for a 10,000-student satellite campus in Jack
322、sonville.Once a site is selected,competition among investors for nearby rentals may heat up.Strong household growth is offset by deliveries and one of the na-tions higher vacancy rates,placing the metro outside the top 30.NMI RANK3128*Estimate;*Forecast Sources:CoStar Group,Inc.;Real Capital Analyti
323、cs;RealPage,Inc.2024 MARKET FORECASTKANSAS CITYAverage Price per Unit(000s)Total Employment(Millions)Employment TrendsY-O-Y Percent ChangeSales TrendsEmploymentY-O-Y Percent ChangeCompletions/Absorption(000s)Supply and DemandAverage Cap RateAverage PriceAverage Cap RateAverage Efective RentRent Tren
324、dsY-O-Y Percent ChangeAverage Rent1.001.051.101.151.2024*23*22215-5.0%-2.5%0%2.5%5.0%Vacancy RateNet AbsorptionVacancy Rate0246824*23*222152%3%4%5%6%CompletionsY-O-Y Percent Change$800$950$1,100$1,250$1,40024*23*222150%3%6%9%12%$40$65$90$115$14023*22215146
325、.0%6.5%7.0%7.5%8.0%Class A Vacancy Expected to Stay Tight in 2024;Riverfront Developments Offer OpportunitiesNew builds create localized headwinds,but top-tier vacancy is expected to stay low.Kansas City was one of five major U.S.markets that logged a lower Class A vacancy rate entering 2024 than in
326、 2019.Demand for top-tier space over the last four years has been driven by plummeting active single-family listings in the metro.Some residents may be able and willing to purchase a home despite the median price surging 46 percent from 2019 to 2023 but limited for-sale inventory could keep these pe
327、rspective homeowners in the renter pool going forward.Demand from these residents could be directed into Class A units in 2024.The median household income in Kansas City also continues to im-prove,and is projected to climb 3.1 percent this year,adding another tailwind for luxury buildings.Continued
328、supply additions will contribute to a slight uptick in overall vacancy this year,but the impact of these builds will be concentrated in three main areas.More than half of the underway projects slated for delivery in 2024 and beyond are located in Central Kansas City,Shawnee-Lenexa-Mission and Clay C
329、ounty.Investors drawn by new riverfront developments.Construction on the Rock Island Railroad Bridge over the Kansas River began at the end of 2023,with completion expect-ed in spring 2024.Following the redevelopment,a new entertainment district is planned,including event spaces and dining options.T
330、he project aims to draw residents to the West Bottoms neighborhood.Investment activity in Midtown,proximate to West Bottoms,picked up in 2023,and could continue this year as buyers anticipate renewed renter demand in the area.In contrast,investors prioritizing areas with tight vacancy entering 2024
331、may focus on affluent suburban submarkets,such as Overland Park and Shaw-nee-Lenexa-Mission.While these areas expect substantial new builds in the next three years,renter demand for luxury units will likely mitigate supply pressure on vacancy.+0.4%4,100units+10 bps+1.5%EMPLOYMENT:Hiring will slow th
332、is year,constricted by an uncer-tain macroeconomic outlook and a tight labor market entering 2024.Overall,total employment will grow by 5,000 positions on net.CONSTRUCTION:Deliveries will moderate this year,falling below 2023s total.The pace of inventory expansion in 2024 will match the trailing 10-
333、year average of 2.3 percent.VACANCY:A slowing rate of supply additions will prevent a major,marketwide vacancy swing in Kansas City.The rate will inch up to 5.5 percent this year,still below historical norms.RENT:Following three years of strong growth,the average effective rent will increase at a milder pace.By year-end,the mean marketed rate will reach$1,330 per month,35 percent above the 2019 ma