(Rental) Home Run

Most metropolitan areas are growing again according to Moody’s Economy.com. In May, 292 of the 384 local areas tracked were either recovering or expanding, up from 257 in April. Moody’s bases its analysis on an “adversity index” that includes statistics on employment, housing starts, home prices and industrial production.

As a result, the multifamily market is on the rebound. Reis reports that the vacancy rate fell to 7.8 percent in the second quarter following three consecutive quarters at 8.0 percent. Net absorption exceeded 46,000 units, the largest quarterly gain in 10 years. Asking and effective rents grew 0.4 and 0.7 percent, respectively. Apartments are benefiting from the falling homeownership rate and from the modest 593,000 private sector payroll jobs added in the first half of this year.

Other property types are turning the corner, too, notably industrial. According to final Grubb & Ellis statistics, the industrial vacancy rate dropped by a hefty 30 basis points to end the second quarter at 10.6 percent. Increasing freight shipments and a surge in manufacturing activity that began late last year fueled second quarter net absorption of 19.2 million square feet. This ends a string of 10 consecutive quarters of softening conditions.

Moody's Economy Rental Growth Map

Robert Bach
Senior Vice President, Chief Economist
Grubb & Ellis