Multifamily Absorption Crushes the Record Demand Seen Last Quarter

Article originally posted on Globe St. on November 24, 2021

RealPage data show the trailing four-quarter sum exceeded 500,000 units for the first time.

The third-quarter multifamily absorption level broke the record set last quarter and is the highest on record since tracking began in 2000, according to RealPage as reported by National Multifamily Housing Council.

This also marks the first time the trailing four-quarter sum has exceeded 500,000 units.

Net absorptions of investment-grade, market-rate apartments tracked by climbed to 268,331 in the third quarter—up from the already strong 218,763 units in 2Q 2021.

The trailing four-quarter sum increased 22.6% in 3Q 2021 to reach 610,715 units, up 208.4 percent from the prior year.

US demand for apartments overall continued to soar in Q3 2021. Preliminary calculations from RealPage showed that the nation’s occupied apartment count jumped by 255,094 units during the July to September time frame. That’s the biggest quarterly product absorption figure seen in records that go back to the early 1990s.

The annual demand volume as of 3rd quarter registered at 597,354 units in the preliminary stats. That figure soared beyond the past economic cycle’s peak of some 380,000 units absorbed in the year-ending 3rd quarter 2018. Annual product demand averaged about 250,000 units in 2010 to 2020.

Sun Belt Product Absorption Continues

In the Sun Belt and other non-gateway metros, occupied apartment counts climbed by just over 19,000 units during the 3rd quarter in Dallas/Fort Worth (14,700 of them in metro Dallas) and by roughly 15,300 units in Houston.

Quarterly product absorption totaled just over 7,000 units in Austin and just under that figure in Miami. Demand for about 5,500 to 6,000 apartments registered in Denver, Atlanta, Minneapolis, and Orlando.

Metros posting demand for roughly 4,500 to 4,800 apartments during the third quarter included Phoenix, Philadelphia, San Antonio, Tampa and Charlotte.

“It’s worth noting that extremely high apartment occupancy held back apartment demand in some locations during the third quarter,” according to the RealPage blog. “There was essentially no more product available to be absorbed in metros like Riverside-San Bernardino, Virginia Beach, Sacramento, Greensboro/Winston-Salem and Memphis.”

New Unit Deliveries Up in Tarrant County

According to the Apartment Association of Tarrant County, “A little more than 1,800 new units were delivered in the third quarter, up from roughly 1,200 new units from April through June. Only half of Greater Fort Worth submarkets saw any new supply in the period. Approximately 650 new units in the South Arlington region were the most for any submarket, followed by about 350 new units in North Arlington and just under 300 units in West Fort Worth.

Net absorption totaled around 4,500 units in the period. This was slightly less than the 4,900 net units from the second quarter, but significantly outpaced Q3 demand from recent years. It is important to remember that the apartment demand recovery began in the summer of 2020, so net absorption in the third quarter of 2020 was already unusually high. Even so, this year’s total outpaced last year by around 700 units. As a result, average occupancy rose by 1.6% to close September at 93%.

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