How Will the Apartment Pipeline Absorb?

While absorption is expected to pick up in the near term, much will depend upon the take-up of new supply.

IRVINE, CA—Multifamily vacancies are rising, supply is unevenly distributed throughout the country and the pipeline remains robust, according to a new report from Ten-X Research. September’s Ten-X Commercial Capital Markets Update focuses on key fundamentals for this sector and tackles how well new supply is expected to absorb.

According to Reis data, national apartment vacancies ticked up in the second quarter to 4.4%, representing a rise of 10 bps from the previous quarter and 20 bps from a year ago. While completions declined sharply in the second quarter, absorption was at a nearly five-year low and roughly half the rate of mid-2016, the report says. The sector seems to have settled down in terms of vacancies, but there is still an uneven supply pipeline throughout the country that raises questions about absorption.