U.S. Multifamily Market Enjoys Record Investment in 2021

U.S. Multifamily Market Enjoys Record Investment in 2021

Commercial News » Orlando Edition | By Michael Gerrity | February 2, 2022 8:59 AM ET

According to a new report by CBRE, the U.S. multifamily market set multiple records in 2021 with total investment volume of $335.3 billion, 617,500 units absorbed and the national vacancy rate falling to just 2.5 percent.

Last year's performance signals a significant rebound for the multifamily market, which had one of its strongest years in 2019 before being challenged in 2020. Average net effective rent also rose by 13.4 percent year-over-year.

"The 2021 multifamily market was extraordinary, by any measure," said Brian McAuliffe, President of Multifamily Capital Markets for CBRE. "We expect the ongoing economic recovery, job creation, wage growth and household formation to support continued strong multifamily demand in 2022."

New multifamily construction deliveries of 81,000 units in Q4 2021 brought the 2021 total to 274,500. With a pipeline of more than 400,000 units under construction, 2022 deliveries are expected to eclipse 2021.

Key 2021 Market Highlights:

  • Annual net absorption of 617,500 units in 2021 was up by 238 percent from 2020 and 97 percent from 2019. It was also 58 percent higher than the previous record of 390,000 units in 2000. Absorption measures the net amount of square footage either leased or vacated in a given time period; a positive reading means more space was newly leased than vacated.
  • Record annual investment volume of $335.3 billion in 2021 was nearly double 2019's previous peak of $193.1 billion.
  • On an annual basis, Class A multifamily had the biggest decline in vacancy (-2.8 percentage points), largely driven by residents returning to urban submarkets in the second half of 2021.
  • All 69 markets tracked by CBRE had positive rent growth in 2021, with the increase reaching double digits in 49 markets. Average rents now exceed their pre-pandemic levels in all but three of the markets tracked by CBRE.

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