Plenty of Renters Left to Soak Up Demand

CHICAGO—The strength of the nation’s multifamily market has been well-noted, but some observers have also begun pointing to what could be warning signs of a developing bubble, such as unrealistic pricing in gateway regions. However, according to recent research by Chicago-based JLL, homeownership rates are still down as more Americans choose to rent and this will continue to drive demand for apartments in many regions.

“That should mean plenty of renters to soak up the considerable volume of multifamily units coming to market,” the researchers conclude. And even though about two-fifths of residential units under construction in 2014 were multifamily, a 12.3% increase over last year and close to 2005′s peak, rents have also continued to increase, especially on the West Coast and in cities like Miami and Boston. Rents in San Francisco, for example, jumped 6.9% in the third quarter of last year. Construction cranes may crowd the Miami skyline, but rents there went up 5.6%, and Denver landlords saw a 6.5% increase.