Moody's: Apartment Vacancy Rate Unchanged in Q2; Office Vacancy Rate at New Record High
CALCULATED RISK BY BILL MCBRIDE
JUL 05, 2024
From Moody’s Analytics Economists: Apartment Demand Slowly Catching Up, Office Stress Continued to Manifest, Retail Resilient Despite Bankruptcies, And Industrial Cools Down
National multifamily vacancy stayed flat at 5.7% over the first half of 2024, 50 basis points (bps) above the same time last year and 80 bps higher than the pandemic low. While new supply continued to trickle in and readjust the market balance or even help ease some of the housing shortages, demand has been slowly but steadily catching up. Excessive supply – measured by the total completion minus net absorption on a rolling 12-months basis – trended slightly downwards over the past two quarters after peaking at the year-end of 2023. Rising vacancy tapered off, allowing some room for slight performance gain.
Asking and effective rents recovered some lost ground that occurred in the prior two quarters, both up 0.3% in Q2 to close the first half of the year at $1,838 and $1,746, respectively, but the gain was too marginal to make up all the losses. Asking rent stayed at virtually the same level as 2022. Comparing peak-to-trough, multifamily asking and effective rents are still 0.6% and 1.1% below their peak values recorded from last fall. The average gap between asking and effective rents remained above $90 for the third straight quarter, indicating the highest level of concessions in our tracking history. …
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Moody’s Analytics reported that the office vacancy rate was at 20.1% in Q2 2024, up from 19.8% in Q1 2024. This is a new record high, and above the 19.3% during the S&L crisis.
https://calculatedrisk.substack.com/p/moodys-apartment-vacancy-rate-unchanged-815