The multifamily commercial real estate market is coming to the end of a very strong cycle. Each year that ticks by gets closer to a peak in the prime rental cohort (20-29 year olds), and with strong rent growth, a new supply deliveries and pipelines unlike anything seen in the last 30 years, and stagnate wages (especially for people just our of college), the writing has been on the wall for some time.
That’s not to say owners and investors should exit, it’s rather that short term yield expectations should be discounted, and capitalization rates will likely start floating upward – especially in markets like Washington, DC where the supply pipeline is significantly outpacing demand.
I was featured in an article, by Laura Kusisto, in the Wall Street Journal on October 1, 2015 titles “Apartment Market Boom Levels Out, Data Indicate” exploring just these sorts of market fundamentals. Other articles are beginning to appear that refocus on the fundamentals and data, opposed to the irrational exuberance we’ve until recently. Globe Street had another similar article today.