By Karina Estrella | Trepp
With homeownership rates sagging over the last 11 years thanks to shifts in demographic trends, apartments have become one of the most in-demand property types. As we wrote in our previous multifamily snapshot, apartment demand rose to its highest level in 25 years in 2017, which is a generational peak. However, some of the sector’s underlying financials are beginning to decelerate – at least when it comes to loans in CMBS. According to Trepp data, the average occupancy for multifamily CMBS loans has been trending downward over the past two years. Average occupancy was measured at a recent low of 93.1% in March, which is 60 basis points lower year over year.
Per Multifamily Biz, construction starts for seven of the 10 largest US multifamily markets dropped in 2017 when compared to 2016. The overall volume of multifamily construction starts was $194.7 billion last year, which is 7% lower year over year. However, it seems that the elevated levels from previous years continue to weigh on occupancy levels.