Oversupply not a multifamily market issue

Oversupply is not an immediate issue for the multifamily market.

The multifamily market shouldn't be affected by overbuilding due to the heightened demand in the industry, according to Victor Calanog, head of research and economics for Reis.

This information may be positive for property management companies, as the level of demand could jump further if the level of economic expansion picks up. Since the recession ended, the vacancy rate for multifamily properties dropped by nearly half and rents increased significantly in the past few years, Calanog wrote in a column for National Real Estate Investor.

Construction levels are low at present, and while this year's figure will be slightly higher than last year, it is not nearly as much as the levels recorded from 2000 to 2009. Because of this, Calanog noted that vacancies should remain around the current level for the next few years, if not slightly lower.

He added that the current economic situation doesn't allow many commercial property managers to raise rents much higher, but this could change if economic growth starts to pick up in the coming months. Currently, the average household income level is not increasing with rent jumps.

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