Despite New Deliveries, Multifamily Leasing Still Solid

The Opus Group’s Seven Corners development in St. Paul, MN, which it will complete this year. Investors have begun looking for class A properties like this in secondary cities.

CHICAGO—There is always a bit of suspense after a sector takes off and developers break ground on a host of new projects. That’s when people start to carefully watch the flow of new tenants and gauge whether the level of demand justifies all that new construction. The multifamily market in the US has been one of those rapidly expanding sectors, and so far, the new supply seems well-matched by the desire among consumers for new homes.

As a result, overall rent growth remained strong in 2016, coming in at 3.8%, according to a fourth quarter investment outlook published by JLL. And despite the thousands of new units delivered, the national vacancy rate held steady at 4.4%, roughly the same rate seen for about five years. Furthermore, the national absorption rate of 1.6% was unchanged quarter-over-quarter, and absorption was positive in the nation’s top 40 markets.