National Multifamily Rents Plateau, Sun Belt Markets See Targeted Growth In Q1
National multifamily fundamentals are reacting to record levels of new supply set to deliver this year. Rent growth and net absorption declined year-over-year in the first quarter of the year as deliveries peaked in concentrated markets, particularly in Sun Belt states like Texas that are experiencing construction and absorption growth.
That is according to JLL’s Q1 multifamily report, which said national effective rent growth stands at 3.3% and is down 160 basis points year-over-year. Rents in major metros like New York City slowed to 0.1%, 0.5% in San Francisco and 0.8% in Silicon Valley. Rents in Houston, which is economically dependent on the stability of the energy industry, have lagged as well, falling by 1.7%.
Vacancy rates softened 10 basis points over the period in response to an influx of new development, and net absorption fell 40 basis points to 1.1% year-over-year.
Annual construction deliveries reached 1.5% over the last 12 months and totaled 365,000 units, and Sun Belt markets like Nashville and Charlotte led the way, with deliveries totaling 5.2% and 4.9%, respectively. Multifamily developers are specifically targeting Texas markets, and more than 20,000 units came online in both Dallas-Fort Worth and Houston, while Austin and San Antonio also experienced strong multifamily construction deliveries.