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As the year ends, renting is at its highest level in half a century. The increased adoption of “work from home” provided many people the freedom to experience life in a new location.
What were the hottest rental markets in 2022? RentCafe.com analyzed the largest markets in the U.S. where data was available by honing in on (1) the number of days apartments were vacant, (2) what percentage of rentals were occupied, (3) the number of prospective renters competing for an apartment, (4) what percentage of renters renewed their leases and (5) the share of apartments completed this year.
Vacant units, nationwide, were occupied within a month, on average, and a heightened number of renters chose to renew their leases. Rapid inflation and surging interest rates forced many people to put their dreams of homeownership on the backburner, but with 95% of apartments already occupied, finding a new unit in any market was competitive, to say the least.
Renters in search of a lower cost of living flocked to the Midwest. Milwaukee, Wisconsin, and Grand Rapids, Michigan, were among the most competitive metros this year, based on the report, the latter boasting a city occupancy rate to nearly 97%. The shortage of supply there only increased demand, with 18 prospective renters in competition for each apartment. Milwaukee, too, had an average of 18 renters vying for a single unit, taking each off the market in less than a month.
Suburban Chicago ended the year as the country’s 18th most competitive rental market, according to RentCafe. Nearly 70% of renters here decided to stay put and renew their leases, further driving competition—close to 17 renters applied for each available unit, a number well-above the national average. With occupancy rates touching 96%, the metro was far from meeting the aggressive demand for housing, despite the increase in newly delivered units.
Surprisingly, Chicago Urban didn’t make the cut on this list. Good or bad news, depending on who it’s being considered by. The rate of renewal leases here reached 56.5%, and an average of 11 renters competed for each vacant apartment.
Source: Midwest home to most competitive rental markets in U.S. for 2022
https://www.creconsult.net/market-trends/midwest-home-to-most-competitive-rental-markets-in-u-s-for-2022/
Off-Market Multifamily Sellers Are Leaving A Ton Of Money On The Table
Marketing a property can increase the sale price by up to 23%, which runs counter to the idea that off-market deals can achieve higher values because a buyer will be more aggressive to seal a trade.
The perception is when a seller has one buyer vying for an asset, that buyer is more aggressive and willing to pay a premium because they don’t want the seller to get into a bidding war for the property. Our research found the opposite.
This is a sign it is in the best interests of owners to undergo a marketing campaign for their properties. Growing allocations from institutional investors toward real estate are still driving a sizable pool of investors into bidding for multifamily assets, and a full campaign is what drives the premiums.
The job of a broker to create a competitive environment on behalf of the seller. Putting a building on the market determines the strongest buyer.
That may not be necessarily based on price alone. If one buyer has a higher-priced offer but weak financial backing, versus a buyer with a stronger track record, taking a lower offer is the way to go. It’s our job to give the seller those options and we do that by marketing properties and generating the highest number of qualified offers possible.
There are numerous case studies where a seller received an off-market bid, put it on the market, and the off-market buyer still bought the asset but at a higher price.
eXp Commercial Chicago Multifamily Brokerage focuses on listing and selling multifamily properties throughout the Chicago Area and Suburbs.
We don’t just market properties; we make a market for each property we represent. Each offering is thoroughly underwritten, aggressively priced, and accompanied by loan quotes to expedite the sales process. We leverage our broad national marketing platform syndicating to the top CRE Listing Sites for maximum exposure combined with an orchestrated competitive bidding process that yields higher sales prices for your property.
https://www.creconsult.net/market-trends/off-market-multifamily-sellers-are-leaving-a-ton-of-money-on-the-table/
After the strong economic rebound in 2021, growth in the U.S. has slowed in the face of rising inflation, the household income squeeze, and geopolitical events. In commercial real estate, third-quarter 2022 data showed slowdowns in the apartment and office sectors, while industrial and retail retained strength.
Multifamily absorption and rent growth decelerated in 2022, with absorption in the 60,000–70,000-unit range. That’s below pre-pandemic levels. In the meantime, rents rose year over year, but at a slower pace than a year ago. However, multifamily housing demand remains strong. Given rising mortgage rates and home prices, people may be forced to rent for longer due to decreasing affordability.
As the country navigates hybrid work, the office sector continues to struggle. In Q3 2022, about 1.34 million more square feet of office space was vacant and placed on the market than was leased. Although more people returned to their offices, after four quarters with positive net absorption, demand for office space dropped. As a result, the market’s net demand for office spaces decreased relative to supply, and the national vacancy rate rose to 12.4% in Q3 2022 from 12.3% in the previous quarter. The office sector has the highest vacancy rate across all sectors.
Although spending slowed this fall, it remained strong in Q3 2022, driving growth in demand for retail spaces for the seventh straight quarter. Retail sales, excluding gas, auto, and non-store retailers, advanced to $383 billion in August, a 19% increase from August 2019. As a result, net absorption increased to 23.3 million square feet in Q3 2022, a 22% increase from the second quarter. Neighborhood retail that offers in-person services continues to advance even faster. Net absorption for neighborhood centers rose by 35 percentage points compared to the year’s second quarter.
Demand for industrial property remains robust. Net absorption was nearly 425 million square feet in the 12 months ending in Q3 2022. Although demand may have tapered, the volume of industrial space absorbed continues to be double that of pre-pandemic times. As a result, this sector had the lowest vacancy rate in Q3 2022, at 4%.
With such strong demand, rent growth continues at historic highs, rising 12% year over year in Q3 2022. Rents are rising even faster for logistics space, at 13.5% year over year.
Source: Inflation War Take Their Toll
https://www.creconsult.net/market-trends/inflation-war-take-their-toll/
