According to Globe St, permits for new construction multifamily properties have dropped nearly 30% Nationwide since the peak of the pandemic. This is due to a higher interest rates and higher supply of apartments that have recently been built.
Several developers began new multifamily construction projects in 2021 and 2022 when they could lock in financing at all time low interest rates. The majority of those projects have been delivered to the market or are getting delivered to the market in Q3 of 2024.
How is supply affecting rates?
The influx of new units has put downward pressure on rents both nationwide and locally in the Spokane area.
Multifamily vacancy rates hit historic lows in 2021 at 3.3% in Spokane and 4.8% in the United States. Currently in Q3 of 2024, multifamily vacancy rates sit at 8.4% in Spokane and 7.8% in the United States.
When can you expect vacancy rates to normalize?
Starting in Q4 of 2024 and heading into 2025, expect to see multifamily vacancy rates normalize over time closer to the 6% range over time. These normalized vacancy rates should put upward pressure on rents moving forward.
How does this help Owners?
Normalized vacancy rates should make it easier for owners to fill their units, lower the amount of concessions offered, and ultimately increase their bottom line.
SVN Cornerstone Multifamily
Jordan Lester is an Associate Advisor with SVN Cornerstone. Jordan served as a brokers assistant for 3 years with SVN Cornerstone before becoming a full time broker. Jordan specializes in the multifamily sector of commercial real estate. To get in touch with Jordan, email jordan.lester@svn.com or call 509.496.6922