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CBRE: New apartment supply weighs on pricing power

by Andrea Waitrovich

Multifamily acquisitions activity in the United States cooled during the first quarter 2017, totaling $26 billion, a 35.4 percent decline from the prior year, according to CBRE. While that comparison may overstate the slowdown given the near-record volume of first quarter 2016, the most recent quarter’s total is also below the 2012–2017 average of $30.7 billion. Despite the drop in activity, investment interest in apartment properties remains very high by all types of capital sources.

Net absorption of multifamily units totaled 30,500 for the quarter and 208,700 for the year ending first quarter 2017, reflecting sustained favorable multifamily demand.

The leading U.S. metros for first quarter net absorption were New York (6,400 units, including Long Island and Newark), San Francisco Bay Area (3,600), Washington, D.C. (3,400), Phoenix (3,300) and Seattle (2,600).

Multifamily completions totaled 44,600 units during the first quarter 2017. For the year ending the first quarter 2017, new supply totaled 252,100 units — the highest four-quarter total since the early 2000s’ peak of 251,400 units set in second quarter 2000.

More than half of the first quarter 2017 deliveries were in nine U.S. metros led by New York (4,800 units), Washington, D.C. (3,400), Dallas/Fort Worth (2,600) and the San Francisco Bay Area (2,600).

The overall multifamily vacancy rate was unchanged during the first quarter 2017 at 4.9 percent.

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