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Property market

22

12-mo change in total vacancy (bps)

1.3%

12-mo net absorption (% of inventory)

1.4%

12-mo completions (% of inventory)

2.3%

12-mo rent growth (per unit)

Investment market

$139.3

Investment sales (2017, billions of $US)

-8.3%

2017 investment sales growth

4.2%

Average cap rate

flat

12-mo change in cap rate (bps)

  • Demand: Elevated multifamily deliveries continue to weigh on rent growth.
  • Transactions: For the third year in a row, the sector saw more transaction activity than any other property sector in the U.S.
  • Markets: Driven by continued price appreciation and the risk posed by new supply, investors gradually shifted their focus away from primary markets in 2017.
  • Sources of capital: Unchanged from previous years, private capital remained the dominant source of investment in 2017, while foreign investment activity saw an uptick.
  • Sources of risk: Risk of oversupply for multifamily persists in short-term, but U.S. housing market as a whole remains undersupplied.

U.S. Multifamily cap rate map

Yields for Class A multifamily properties continued to compress throughout 2017 despite potential headwinds for the sector; cap rates in 2018 largely expected to stabilize.


Methodology: Cap rates pertain to JLL’s expected average ranges for Class A CBD assets being priced as of Q1 2018.

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View the complete H2 2017 U.S. Multifamily Investment Outlook for more on these latest trends.


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