Sequence 8

MARKET UPDATES
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The Multifamily Market
Randolph Taylor
Multifamily Investment Sales Broker - Chicago
eXp Commercial | National Multifamily Division
(630) 474-6441 | rtaylor@creconsult.net
https://www.creconsult.net/blog/

US Apartment Market Q1 2024: Supply Outpaces High Demand

Despite apartment demand recovering to stand above normal levels in 1st quarter 2024, even heavier supply continued to weigh down rent and occupancy figures.

In the first three months of 2024, the U.S. absorbed 103,826 apartment units on net, according to data from RealPage Market Analytics. That strong quarterly tally brought annual demand to stand at 317,241 units absorbed in the year-ending 1st quarter 2024. That rate registered about 20% higher than a typical annual absorption rate from the 2010s decade.

Fueling this demand strength is a confluence of factors, including persistent wage growth (which has now outpaced rent growth for 16 straight months), solid job growth, demographic tailwinds and arguably the lowest level of move-outs from apartment units and into single-family homes since the Great Financial Crisis.

Still, even higher-than-average demand failed to keep pace with nearly unprecedented supply that delivered concurrently. In the first three months of 2024, there were 135,652 apartment units completed nationwide. In total, the U.S. delivered 479,367 new multifamily units in the year-ending 1st quarter 2024, representing a 10% increase from the prior quarter.

New apartment supply continues to be the primary influence on national performance. We’re sitting at the highest annual supply figure dating back to 1986 when approximately 550,000 new units were delivered. Though it’s important to note that today’s relative expansion rate of 2.5% remains comfortably below the 1986 expansion rate of 3%.

Also of note, the difference between supply and demand narrowed in 1st quarter to its lowest delta since mid-2022. The mismatch between supply and demand shrank to approximately 160,000 units – still a historically high figure, but much lower than the over 530,000-unit delta seen one year ago.

Slight Rent Growth Still Typical Nationwide

As has been the case for several months, rent growth for professionally managed apartments remained near stagnant nationwide as of March. Asking rents for professionally managed apartments inched up just 0.2% in the year-ending March 2024, with change measured on a same-store basis.

That rate mirrored February’s annual rate, indicating that as the imbalanced relationship between supply and demand narrows, rents rent growth will likely remain muted throughout the remainder of 2024.

This interplay between supply (much higher than usual) and demand (strong, but trailing supply) is the crux of today’s modest rent growth.

Occupancy, meanwhile, remained lower than typical, but not to a severe degree. Apartment occupancy averaged 94.1% nationwide as of March, matching February’s rate and holding approximately in line with the long-term average.

Rent Growth Leaders and Laggards Divided by Supply

Markets with very modest new supply tended to grow rents at the fastest pace in 1st quarter 2024. Of the 12 major markets that posted annual effective rent growth of 2.6% or higher in March, all but two (Columbus and Indianapolis) concurrently posted annual inventory growth below the national norm. The lower the annual inventory, the more likely a market is to be posting nation-leading rent growth.

Conversely, markets that delivered the most new supply tended to experience the most downward pressure on rents. Of the 11 major markets posting annual rent cuts of 2.5% or deeper in March, all concurrently posted annual inventory growth above the national norm. As has been the case for months, markets delivering the most new supply – such as Austin, Atlanta and Dallas – were all among the national laggards for rent cuts in March.

Regionally, the Midwest and Northeast continue to lead with historically normal rent growth. Rent change in the South region, meanwhile, continues to labor under considerable supply pressure. The West region shows mixed results. Soft performance in more inner-West markets, such as Phoenix and Salt Lake City, can be attributed to hefty supply. In more coastal West markets, such as the Bay Area, other factors such as out migration and job losses, appear to be softening apartment demand.

https://www.creconsult.net/market-trends/us-apartment-market-q1-2024-demand-supply/

Multifamily Property Sales in Naperville and Aurora | eXp Commercial

Maximizing Your Success in Multifamily Property Sales in Naperville and Aurora

Introduction

Achieve unparalleled success in multifamily property sales in Naperville and Aurora with the strategic expertise of Randolph Taylor and the eXp Commercial team. Our dedicated approach ensures your property stands out in the competitive market. Discover innovative sales strategies on eXp Commercial's website and see how we can elevate your property's profile.

Why eXp Commercial is Your Ideal Partner

Tailored Expertise for the Naperville and Aurora Markets Randolph Taylor brings unparalleled insights into the multifamily property landscape of Naperville and Aurora. Leveraging his extensive experience, we position your property for maximum exposure and optimal sales outcomes. Dive deeper into our market analysis techniques here.

Comprehensive Marketing Strategies At eXp Commercial, we don't just list your property; we launch it. Our comprehensive marketing strategies ensure your listing reaches a wide, qualified audience. From digital marketing to traditional advertising, we cover all bases. Learn about our unique approach here.

The eXp Commercial Advantage

Our commitment to your success is unmatched. Partnering with us means gaining access to cutting-edge tools, detailed market insights, and a team that's dedicated to achieving the best possible outcome for your multifamily property sale in Naperville and Aurora.

Conclusion

Don't leave your multifamily property sale in Naperville and Aurora to chance. Let Randolph Taylor and the eXp Commercial team guide you to success. Our expertise, tailored strategies, and unwavering dedication are the keys to unlocking your property's potential.

[row v_align="middle" h_align="center"] [col span__sm="12" align="center"] [button text="Schedule Call" color="secondary" size="large" radius="99" link="https://tidycal.com/creconsult/discovery-call" target="_blank"] [/col] [/row] https://www.creconsult.net/market-trends/multifamily-property-sales-in-naperville-and-aurora-exp-commercial/

Sequence 7

CHICAGO MULTIFAMILY BROKERAGE
No Matter Where You Are In The Investment Cycle
with Your Multifamily Property
We Can Help You!
Buy | Sell | Hold | Finance
Randolph Taylor
Multifamily Investment Sales Broker - Chicago
eXp Commercial | National Multifamily Division
(630) 474-6441 | rtaylor@creconsult.net
https://www.creconsult.net/

9301 Golf

Just Listed: Golf Sumac Medical Offices | Des Plaines IL
Price: $3,900,000
SF: 35,245
Stories: 3
Occupancy: 82.3%
Cap Rate: 9.63%
* Stabilized Medical Office Building with Value-Added Potential
* Established Medical Tenants
* 5 Minutes from Advocate Lutheran General Hospital
* 1/2 mile to I-294 and Milwaukee Avenue
* Recent Building Modernization
* Value Add Through Leasing of Vacant Space

Listing Agent: Randolph Taylor
rtaylor@creconsult.net | 630.474.6441
Property Website: https://www.creconsult.net/stabilized-golf-sumac-medical-offices/

Sequence 6

PROPERTY TAX EVALUATION
Expert Property Tax Evaluation to Estimate The
Potential to Appeal Your Property Taxes
REQUEST: https://www.creconsult.net/resources/
Randolph Taylor
Multifamily Investment Sales Broker - Chicago
eXp Commercial | National Multifamily Division
(630) 474-6441 | rtaylor@creconsult.net

High Rates Challenge Commercial Property Strategy

Commercial property owners are grappling with the reality that the anticipated interest rate cuts might not materialize. But it’s not just borrowers who are on the hook; lenders are in a tight spot, too.

A new reality: Persistently high-interest rates are challenging commercial property owners to rethink strategies; as Fed Chair Powell said last week, “Restrictive monetary policy needs more time to do its job.” Hopes for easing refinancing conditions in 2024 are diminishing amid stubborn inflation and strong economic data, shifting expectations in the real estate market.

Escalating costs: Investor expectations for the secured overnight financing rate (SOFR) have shifted significantly, now predicting it to stabilize at 4.825% by early 2025, with only two minor rate cuts anticipated this year, down from six expected in January. This change has sharply increased hedging costs for borrowers with floating-rate debt. The cost to extend an interest-rate cap on a $100M mortgage has surged from $1.3M to $2.1M, posing a new financial challenge for owners.

Zoom in: Lenders are also under pressure as persistent high interest rates lead to commercial real estate loans rolling over. MBA notes that $929 billion in property loans are maturing in 2024, up 41% due to extensions from 2023. Previously effective during the low-rate environment post-2008, the "extend-and-pretend" strategy now risks tying up significant capital with no imminent return to low rates. This affects not only banks, where these loans form over a fifth of portfolios but also investors in CMBS loans, who face disappointing returns as low as 3% on top-tier bonds.

Case in point: In New York, landlords like SL Green and Vornado have paid about $100M to extend a $1.08B loan for an office building, reflecting the lengths some property owners will go to avoid defaults. However, smaller owners might choose to relinquish their properties rather than invest further.

➥ THE TAKEAWAY

Big picture: Sustained high interest rates are freezing property transactions as elevated debt costs challenge buyers to meet lenders’ coverage requirements. Property owners face tough choices: either reduce prices or invest more capital into their properties to secure loan extensions. This new reality forces sellers and borrowers to navigate a constrained market with limited options.

https://www.creconsult.net/market-trends/high-interest-rates-commercial-property-challenges/