Just Released: 2023 Multifamily Investment Forecast
“Long-run demand tailwinds poised to guide multifamily sector through near-term choppy waters.”
Marcus & Millichap has publicly released the Annual Multifamily Investment Outlook Report, providing details on major trends that will dominate this upcoming year.
U.S. Multifamily Index
Overview:
The NMI ranks 50 major markets on a collection of 12-month, forward-looking economic indicators and supply and demand variables. Markets are ranked based on their cumulative weighted average scores for various indicators, including projected job growth, vacancy, construction, housing affordability, rents, historical price appreciation and cap rate trends. Weighing the history, forecasts and incremental change over the next year, the Index is designed to show relative supply and demand conditions at the market level.
Market conditions have allowed for substantial demographic and supply trends to positively impact the performance of the Phoenix market post-pandemic. Phoenix ranks #11 on our National Multifamily Index due to short-term prospects involving increased construction demand.
Driven by the overall fast pace of inventory growth nationally, the Tucson market has been positively impacted allowing for strong rent growth and household formation. Tucson ranks #25 on the National Multifamily Index.
Phoenix 2023 Market Forecast
Employment has demonstrated a 20-bps decrease resulting from the market’s removal of 5,000 jobs after the initial addition of 80,000 positions in 2022.
Rental inventory is forecasted to hit a record high of 4.1% this year totaling 16,000 construction units.
Vacancy is projected to be 110 bps above average at a year-end rate of 7.8%.
Rent has been demonstrating progressive growth averaging $1,750/month, nearly doubling the 2015 average.
Tucson 2023 Market Forecast
Growing vacancy has led us to see a 100-bps increase, totaling 6.7%.
The pace of rent growth has been influenced by increased vacancy and supply pressures, leading to a $1,240/month year-end average rate.
Source: "2023 U.S. Multifamily Investment Forecast" by John Sebree, Peter Standley, Evan Denner, & John Chang