Skip navigation
apartment buildings exterior
apartment building chart Waldemarus/iStock/Getty Images

The Big Picture

The titanic effects of the coronavirus pandemic have shifted views across the board on multifamily fundamentals.

Exclusive research results from NREI’s seventh annual multifamily survey show that industry participants have dialed back expectations on performance and access to capital. Yet they continue to view multifamily favorably relative to other property types.

“People generally view multifamily as being more resilient, and that is playing out in the data as well,” says Mike Sebastian, industry principal, investment management at commercial real estate software firm AppFolio Inc.

Multifamily fundamentals have been holding up better than those in other property sectors that have been more greatly impacted by the negative effects of the coronavirus and subsequent economic downturn. According to Moody’s Analytics REIS, apartment vacancies remained unchanged in the second quarter at a relatively tight 4.8 percent, while effective rents declined by only 0.4 percent.

The near-term outlook for the multifamily sector is also muddy. Respondents’ views are mixed on what will happen with occupancies and rents in the coming year. Nearly half of respondents (47 percent) think occupancies will improve over the next 12 months and an equal amount expect a decline, while 6 percent believe there could be no change. That is a notable shift compared to surveys over the past six years in which a majority of respondents consistently predicted that occupancies would either maintain current levels or continue to improve.

Opinions are similar on the outlook for rents. In all, 45 percent of respondents anticipate that rents will climb, while 40 percent think they will fall, and 15 percent expect no change. That also reflects a significant drop compared to previous surveys where the vast majority of respondents—upwards of 66 percent—expected rates to increase in the coming year. The increased pessimism translates to a projected overall average decline in rents by 2.1 percent, which is the first forecast of negative rent growth in the survey’s history.

Survey methodology: The NREI research report on the multifamily sector was conducted via an online survey distributed to NREI readers in August. The 2020 survey results are based on responses from 237 participants. The majority of respondents hold top positions at their firms, with 56 percent who said they were either an owner or C-suite executive. Respondents also represent a cross-section of different roles in the multifamily sector, including private investors (37 percent), developers (16 percent) and financial intermediaries (12 percent).