Unfinished business: The paradox of apartments under construction and rent growth across U.S. markets

While office is a product type that is very much under the microscope, multifamily is often overlooked despite glaring supply and demand imbalances in certain markets, such as Austin, Texas.
Many U.S. markets are showing signs of being overbuilt, primarily due to developers trying to cash in on high migration levels, as well as growing demand drivers, such as large corporate relocations. Most of these projects were financed with cheap construction debt, and with the rise in interest rates over the past 18 months, levered developers will face challenges refinancing their assets with permanent debt.
Despite this, the U.S. is still observing population growth, and with climbing interest rates shrinking the pool of prospective home buyers, occupancy should still rise across major U.S. markets, albeit, not at the rent figures that were underwritten.

February 1, 2024