New York Market Takes Top Spot
According to CBRE's latest report, the U.S. multifamily sector saw strong momentum at the start of 2022, with robust demographic trends underpinning record leasing activity, rent growth and investment during the first quarter.
The New York market posted the highest net absorption at 17,200 units, which accounted for 15% of the total absorption recorded in the top 15 metro areas - the strongest absorption experienced in those markets in more than two decades.
"New York's multifamily sector remains one of the hottest in the country with extremely strong demand fueled by job and wage growth," said Ryan Silber of CBRE's New York Capital Markets team.
On the investment sales front New York's multifamily sector was one of the top markets in the country. Investment sales climbed to nearly $18 billion, more than double the amount from a year ago. As a whole, the country's multifamily segment accounted for 37% of total commercial real estate investment volume in Q1 2022, followed by office at 21% and industrial at 20%.
"New York remains one of the most desirable areas to live in given its metropolitan allure, access to top and highest paying jobs, and some of the most prestigious educational institutions in the country," added Matthew Klauer of CBRE's New York Tri-State Debt and Structured Finance team.
Due to high demand, vacancy rates for all residential classes throughout New York continued to drop precipitously over the past four quarters. As a result, rent growth accelerated rapidly during the same period, climbing by 14.4%.
"Strong multifamily fundamentals persist, with favorable migration trends, high household formation, and strong wage and job growth contributing to continued demand. An abundance of equity and debt capital remains available, albeit at significantly higher rates than enjoyed in the past few years," said Brian McAuliffe, President of Multifamily Capital Markets for CBRE.
"Looking ahead, while investors continue to have strong convictions on market fundamentals, bidder pools have reduced due to the increase in the number of offerings in the market and we are experiencing upward movement in cap rates as debt volatility impacts pricing," added Mr. McAuliffe.