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Vacancy Uptick Seen as Apt. Deliveries Continue

“This year, and next year, are going to be banner years for supply growth,” says Victor Calanog, chief economist with Reis.

By Paul Bubny | Updated on November 21, 2017

The coming year will be “a time of reckoning” for apartment markets such as New York, Calanog writes.

NEW YORK CITY—Even as multifamily remains the strongest commercial property sector by a variety of metrics, including investment sales volume, analysts are expecting deceleration in rent growth and, with that, in revenue growth as well. At Reis Inc., for example, chief economist Victor Calanog sums up a 10-basis point third-quarter uptick in nationwide vacancies and “paltry” asking and effective rent growth of 1% and 0.9%, respectively, by reiterating what he’d said in August: “expect a moderation in rent growth” as the market absorbs new supply.

Similarly, although Fitch Ratings notes that the apartment market remains strong and that “demographics continue to favor the multifamily sector,” the ratings agency sees a peak approaching. Accordingly, Fitch says it expects to cap revenues for this year at 2016 levels.

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