National Apartment Outlook Report, Summer 2015

Apartment Demand Flourishes; Strong Employment Gains Boost Household Formation

Devon Manor Apartments - SOLD by Sean Dreznin of Ian Black Real Estate
Devon Manor Apartments – SOLD by Sean Dreznin of Ian Black Real Estate

Via Marcus & Millichap

Maturing employment cycle supports apartment demand.

Steady hiring since the end of the recession has lifted apartment demand more directly than other commercial property types. As job formation, rising consumer confidence and modest wage growth take hold, apartment demand drivers will maintain momentum. The employment to population ratio for the prime rental cohort, ages 25 to 34, has reached a 15-year high, a particularly encouraging threshold.

Household formation has grown rapidly as economic advancement has supported de-bundling, and young adults have increasingly begun to move out on their own. This broadening growth, together with a tighter unemployment market, will ultimately intensify wage pressure and thereby underpin additional rent gains. The trend has already emerged in the strongest employment markets, but it is migrating to secondary and tertiary metros as the economic momentum spreads.

Industry-leading report highlights:
Favorable demographics and steady employment additions will support household formation, pushing vacancy lower and supporting rent gains.
Developers will add 250,000 units this year, up modestly from last year. New rentals will focus on high-rent areas. Deliveries totaled 232,000 units last year.
Average apartment prices now stand 22 percent higher than the peak set in 2006, while average cap rates have settled near their lowest recorded level.

Contact Sean Dreznin at to discuss selling your property or purchasing the right property!


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