Multifamily market shows positive signs in 2011

Commercial multifamily vacancies dropped in 2011.

The continued improvement in the commercial real estate market was led by the multifamily sector in recent years, with rents and vacancy figures both ameliorating in recent years.

Overall vacancies in 2011 for the multifamily sector fell to 7.4 percent, according to the American Community Survey from the U.S. Census Bureau. This was significantly improved from two years earlier, when the figure was 8.4 percent. During that period, rental vacancy declines occurred in quadruple the number of cities where the figure rose.

Close to 25 percent of metropolitan statistical areas experienced jumps in overall renters, the report explained. Approximately 3 percent of the MSAs in the country had drops in these levels. Total renter levels rose to more than 35 percent in 2011, while this figure was slightly more than 34 percent two years earlier.

"While we saw a decrease in rental vacancy rates and pricing in some areas, the burden of rental costs on households increased across many parts of the nation," said Arthur Cresce, assistant division chief for housing characteristics at the Census Bureau. "Factors such as supply and demand for rental housing and local economic conditions play an important role in helping to explain these relationships."

Rental costs increased notably during the year, as the figure was 44.3 percent, according to the report. In 2009, the figure was only 42.5 percent.

Miami had the most renters with high costs of living in an apartment, as this was the case for nearly 56 percent, the report noted. Orlando was in second with close to 53 percent, while Riverside, California and New Orleans were both higher than 51 percent.

The metros that were more affordable in 2011 than two years earlier were Richmond, Virginia, and Buffalo, New York, the report added. Richmond dropped below 40 percent, while Buffalo fell to less than 43 percent.

Investors look at market confidently
While the commercial market saw improvement from the multifamily sector in 2011, this likely continued to ramp up in recent months.

A report from CCIM and the National Association of Realtors showed investment improved for the fourth year in a row in 2012. This was helped by nearly $100 billion in total commercial real estate transactions, which may signal that more property management companies became involved with the market. There was also nearly 20 percent more sales of properties worth $2.5 million or less during the year compared to one year earlier.

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