WASHINGTON, DC-Another day, another multifamily deal, this time an acquisition of a property in downtown Silver Spring. The JBG Cos. reported earlier this week it has purchased Falkland Chase apartments from Home Properties of Rochester. By all accounts, it is a solid buy for JBG; the property is a short walk from the Silver Spring Metro and near the future Purple Line.
But the multifamily asset class has been riding a bull cycle for some time and increasingly, the CRE community is wondering at what point will this cycle turn down. New figures on its fundamentals show a mixed outlook.
The Mortgage Bankers Association just reported that the multifamily vacancy rate fell from 4.7% in the third quarter to 4.5% in the fourth, down from a cycle high of 8%. So far, so good, but what to make of Reis’ latest figures for the asset class?
According to Bloomberg, which reported them Wednesday morning, U.S. apartment rents increased in the first quarter but at a very slow pace–effective rents averaged $1,054 a month, up 0.5% from the fourth quarter. Asking rents rose 0.5%. Reis attributes the slowdown in part to all of the new construction entering the pipeline.