Investor demand for multifamily real estate remains relatively strong despite COVID-19

Despite a disruptive pandemic, investor demand for multifamily real estate was strong in 2020, according to a newly released Yardi Matrix Bulletin.

Around 252,000 apartment units were absorbed last year. That’s about 1.7% of total market stock and down 12% from the 286,300 apartments purchased in 2019.

“Considering the economic and social calamity that befell the U.S., in many respects due to COVID-19, the fact that demand held up as well as it did is a relief for the apartment industry,” say Matrix analysts.

Net absorption was strongest in 25 of the 30 largest metros, which accounted for 158,300 units absorbed. Dallas, Atlanta and Denver saw the highest absorption rates.

Negative absorption was centralized in key gateway markets hit hard by COVID-19, which also struggled with renter demand and average rents. The worst performers were the Bay Area and New York City, which combined for -22,100 units absorbed in 2020.

Overall, high-cost gateway metros had net absorption of -0.3% (-7,600 units). Demand was better in secondary (154,100 units, or 2.3% of total stock) and tertiary (96,200 units, or 2.0% of stock) markets.

On a regional level, renters continued to flock to the Southeast (96,700 units absorbed, or 2.4% of total stock), the Southwest (56,800 units, 2.1% of stock) and the West (57,100 units, 1.9% of stock). Meanwhile, demand was slightly positive in the Midwest (27,100 units, 1.1% of stock) and the Northeast (4,900 units, 0.2% of stock).

Here are the top 10 markets based on net multifamily absorption in 2020:
1. Dallas: 19,233 units; 2.4% net absorption of total stock; 93.8% occupancy rate in Dec. 2020
2. Atlanta: 12,864; 2.8%; 94.7%
3. Denver: 11,552; 4.0%; 94.5%
4. Phoenix: 10,082; 3.2%; 95.5%
5. Houston: 8,377; 1.3%; 92.1%
6. Austin, Texas: 7,893; 3.1%; 93.3%
7. Miami: 7,721; 2.5%; 94.4%
8. Tampa, Fla.: 6,196; 2.8%; 95.4%
9. Charlotte, N.C.: 6,073; 3.3%; 95.1%
10. San Antonio: 5,836; 2.8%; 93.0%

Download the full report from Yardi Matrix.

Now 46 years running, Building Design+Construction's 2022 Giants 400 Report rankings the largest architecture, engineering, and construction firms in the U.S. This year a record 519 AEC firms participated in BD+C's Giants 400 report. The final report includes more than 130 rankings across 25 building sectors and specialty categories.

The playground and family area at La Placita Cinco, in Santa Ana, Calif. Photo courtesy TCA Architects

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