Multifamily market to rebound in 2021
CBRE, a commercial real estate services firm, predicts a return to pre-COVID multifamily vacancy levels and a 6% increase in net effective rents in 2021. CBRE is forecasting a full market recovery occurring in early 2022.
An economic recovery will likely lead to new demand for multifamily housing. CBRE analysts say this demand will come in part from “unbundling” as younger renters move out of their parents’ homes and co-renting friends split into their own apartments.
The following factors will impact market demand:
- Income. Job loss and reduced confidence will slow recovery
- Remote work. New work-from-home capabilities mean renters will place less emphasis on being close to the office
- Urban amenities. Demand for nightlife, cultural options and public transit will return as COVID-related fears subside
- Living spaces. Demand for larger living spaces (to accommodate remote work/schooling) will diminish only slightly as we reach a new normal
- Outdoor spaces. Demand for outdoor living spaces will diminish only slightly as we reach a new normal.
CBRE analysts predict investment in multifamily properties will rise 33% in 2021. Investment activity is expected to increase as investors gain greater confidence in the market. Offshore buyers are also expected to be more active, particularly as travel restrictions ease.