The past year or so has been a challenge for many multifamily markets and Memphis is no different.
The latest report from CBRE that analyzed the city's asset class found that rents dipped by 2.1 percent in 2024 to $1,198. Annual rents fell the furthest on Class C assets in East Memphis, which suffered a 12.9 percent plunge to $914. Meanwhile, North Memphis' Class B group saw the largest gains (6.6 percent to $1,131).
The fourth quarter saw a 164 basis point drop in rents from the previous three months. Class A properties led the way in the declines for the period, taking a 263 basis point dive.
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Total multifamily Memphis sales dropped to $149.5 million. CBRE attributed the decline in the category to sellers remaining "firm on pricing causing buyers to be priced out due to higher debt costs."
While occupancy slipped to 91.9 percent, there is some good news. The category started to level off in the last six months, from a slight drop in the first half, which CBRE said may indicate "that the bottom of the market happened earlier" in 2024. Also, the CRE firm believes this could lead to a chain reaction across the board.
"This further supports the positive mid to long-term multifamily outlook due to supply peaking, rents bottoming, and demand stabilizing," it wrote.
West Memphis controlled the strongest occupancy levels in 2024, at 95.6 percent. The weakest occurred in South Memphis at 88.5 percent.
While occupancy saw some improvement, Memphis' multifamily sector still faces short-term uncertainties, according to CBRE. However, this is mainly due to where interest rates are and what will happen with them, as the Federal Reserve seems hesitant at this time to cut them further due to inflation picking up again, rather than the pure fundamentals in the market.
"While sales activity in the market seemed to be increasing in the latter half of 2024, the rebound in treasuries have stalled most transactions," CBRE said.
"Sellers have remained firm on price, favoring holding rather than selling at the discounted price that buyers need for the higher debt costs."
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