Rental Demand Goes Up, Up, Up with Tech Buoyancy

Alma and Engel are two communities within the San Francisco Shipyard.

SAN FRANCISCO—While class-A multifamily is experiencing cyclically high levels of construction, supply for classes B and C remains fairly muted, according to Kroll Bond Rating Agency. This bodes well for the approximately $132.3 billion of multifamily loans that have been securitized since 2010 in 346 Freddie Mac K-Series transactions ($107.9 billion) and CMBS conduit transactions ($24.4 billion), as KBRA’s analysis indicates that nearly 80% of the underlying collateral ($103.9 billion) is class B or class C.

According to the National Multifamily Housing Council, as new apartments have been completed, particularly in the class-A segment, the net positive demand-and-supply balance that had existed for some time has turned negative. Based on the July 2017 report, this is the seventh consecutive quarter of softening conditions for the market tightness index. The index this year has been at levels not seen since the Great Recession.