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MarketSnapshot
At Northmarq, we are committed to offering our clients the latest trends and expert analysis to power their decision making. Our MarketSnapshot suite of reports contains critical market data covering a variety of commercial real estate property sectors. In each report, you will find: Investment sales volume data Average cap rate information Buyer distribution analysis... and more! Single-Tenant Overall Market Single-Tenant Office Single-Tenant Industrial Single- Tenant Retail Multi-Tenant Retail
Latest Publications
Raleigh 4Q23 Multifamily Market Insights Report: Class A properties likely to continue to change hands in 2024
Highlights:Following a fairly strong first half of the year, operating conditions in Raleigh-Durham softened during the fourth quarter. The vacancy rate rose while asking rents dipped lower. Supply-side pressures pushed vacancies higher despite healthy renter demand.Vacancy rose 50 basis points in the last three months of the year to 7.5% and the rate pushed up 170 basis points for the full year. The market’s long-term average vacancy rate is between 5.5% and 6%.Asking rents trended lower in the second half of 2023 after posing healthy rent gains in the opening six months of 2023. Apartment rents inched higher by 0.1% in 2023, closing the year at $1,573 per month.Although annual sales in 2023 lagged levels recorded in 2022 by 50%, sales activity began to build some momentum in the second half of the year. With several new construction properties changing hands, the median price was $251,900 per unit in 2023.Read the report, or engage with our Raleigh office to learn more.
February 15, 2024
Charlotte 4Q23 Multifamily Market Insights Report: Green shoots alongside inventory growth into 2024
Highlights:Operating conditions in the Charlotte multifamily market softened somewhat during the fourth quarter, as the vacancy rate rose, and rents inched lower. Completions were elevated and the construction pipeline has several projects that are slated to deliver in 2024.Area vacancy rose 30 basis points during the fourth quarter to 7.3%. Year over year, vacancy increased by 130 basis points, even with net absorption totals up more than 50% from 2022 levels.Asking rents inched lower in the last six months, offsetting solid rent growth in the first half of the year. Area rents dipped 0.9% in the fourth quarter to $1,578 per month. Rents ended 2023 0.5% higher than one year earlier.Transaction volume bounced off of earlier lows during the second half of 2023, but total sales for the full year still lagged levels recorded in 2022 by 54%. The median price in 2023 was $229,300 per unit, while cap rates ranged between 5% and 5.5% during the fourth quarter.Read the report, or engage with our Charlotte office to learn more.
February 14, 2024
Economic Commentary: Early Year Job Growth Reports Deal the Market a Surprise
2023 ended on a stronger economic note than expected according to data reported during the past month. Despite the Fed’s tightest monetary policy in 40 years, a strong labor market and easing inflationary pressures have enabled real (inflation-adjusted) disposable personal income to grow at the fastest yearly pace since 2020 and provide ongoing support for the economy. Interest rates have likely peaked, but there is little urgency for the Fed to start cutting rates until they see a more substantial slowdown in the economy and sustained easing of inflationary pressures.CPI, Consumer Spending & LendingThe Consumer Price Index (CPI) for December came in a little hotter than consensus, indicating that the path to the Fed’s target of 2.0% may take a bit longer than expected. Headline CPI increased 3.4% year-over-year from 3.1% in November, while year-over-year core CPI eased to 3.9% from 4.0%. More importantly, the Fed’s preferred measure for inflation, the Personal Consumption Expenditure Index (PCE), showed that inflation increased 2.6% year-over-year, and the core PCE eased to a 2.9% year-over-year rate from 3.2%. On a three-month and six-month annualized basis, the core PCE is growing at less than the 2.0% Fed target.As mentioned above, consumer spending was supported by incomes growing faster than inflation. Additionally, consumers have been using savings, credit cards, and buy-now/pay-later borrowing so that personal spending was greater than personal income during the second half of 2023 by about 20%. Consequently, the savings rate is now down to 3.7% - the lowest level for the year 2023. Credit card balances increased at the fastest year-over-year rate on record according to the New York Fed. Unpaid balances on credit cards have surpassed 2019 levels, and consumers are taking longer to pay off their bills than before the pandemic.Bank lending continues to slow, with total loans and leases at all commercial banks only growing 1.9% year-over-year compared with an 11.4% growth rate at the end of 2022. Loan loss provisions from the six biggest banks increased to $9.3 billion in fourth quarter 2023, representing a 30% year-over-year uptick. The top 25 banks are approaching $50 billion in loan loss provisions, which is the most since fourth quarter 2020. Among the most frequently cited reasons banks expect to maintain tight lending standards are less favorable or a more uncertain economic outlook, expected deterioration in collateral values, and the credit quality of loans.Leading Economic Indicators & GDP GrowthAt the risk of sounding like a broken record, leading economic indicators declined for the twenty-first consecutive month in December. The biggest drags came from consumer expectations and manufacturing new orders.The advance report of fourth quarter 2023’s real GDP provided surprising evidence of economic strength with an increase of 3.3% (annualized rate) bringing real GDP growth in 2023 to 2.5%. There was stronger than expected growth across all the major subcomponents of the report including personal consumption, investment, and government. Despite the strong end to 2023, real GDP is forecast to only grow about 1.0% annualized in the first half of 2024.The Labor MarketThe employment report for January provided the biggest surprise of all the reports. Job growth in January was 353,000 – nearly twice the consensus forecast – and December’s employment numbers were revised sharply upward indicating an acceleration in job gains. Gains in employment were more broadly based than seen in recent monthly reports. The unemployment rate was unchanged at 3.7%.Two areas of concern in the otherwise strong employment report were average hourly earnings (+0.6%) and the reduction in the average workweek from 34.3 hours to 34.1 hours. The unfavorable readings in these metrics can likely be tied to the inclement weather in January which particularly impacted employees at the lower end of the wage scale. Those workers were often unable to work due to the weather and the impact of their lower wages were left out of the calculation of the average hourly earnings. Additionally, an increase in the minimum wage became effective in 22 states.Mitigating the uptick in the growth of hourly earnings was an earlier report that showed strong labor productivity in fourth quarter 2023 at +3.2% (+2.7% year-over-year) and a small increase in unit labor costs of +0.5% (+2.3% year-over-year). Both are supportive of easing inflation pressures.The Employment Cost Index (ECI) for fourth quarter 2023 – the Fed’s preferred measure of labor cost pressures – was up 0.9% (+4.2% year-over-year), which was the best quarterly reading since second quarter 2021. The Fed is looking for the year-over-year ECI to move to 3.5% which, together with a long-term increase in productivity of 1.5%, would be consistent with their 2.0% inflation target.Inflation & Interest RatesThe Fed kept the target Fed Funds rate unchanged (5.25% - 5.50%) for a fourth straight meeting while pushing back against an interest rate cut in March, noting that it “does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.” Concern was expressed about continued easing in financial conditions, with stocks up and credit spreads tight, that could boost demand, and tight labor markets that could keep prices for services moving higher.The real (inflation adjusted) Fed Funds rate is now at the highest and most restrictive level since 2009. Even if the Fed does not increase rates any further, declining inflation pressures will effectively cause the real Fed Funds rate to increase – a form of passive tightening.Markets are pricing in four to five cuts in interest rates beginning in May or June while the recent forecast from the Fed only calls for three cuts by year-end. The pace of lowering interest rates by the Fed will likely be dictated by the strength of the labor market. Due to their dual mandate of price stability and full employment, if weakness in the labor market develops, the Fed would likely need to respond more aggressively with faster interest rate reductions. hbspt.cta.load(7279330, '82eb72ca-5654-4eba-adf6-319e6a9bdad0', {"useNewLoader":"true","region":"na1"});
February 12, 2024
Manufactured Housing 4Q23 Market Overview: Rents maintain a steep upward trajectory
Highlights:The manufactured housing sector continued to post strong operational performance in recent months, as occupancy and rents trended higher during the fourth quarter. Shipments of new units were consistent throughout 2023, totaling 83,000 units for the full year.Occupancy inched higher by 10 basis points during the fourth quarter to 94.7%. The national occupancy rate increased by 30 basis points in 2023.Rent growth continued in recent months after elevated gains in the preceding two quarters. Rents advanced 1.5% in the final three months of the year, closing 2023 at $679 per month. During the past year, rents increased by 7.3%.While sales activity picked up during the second half of the year, annual transaction volume in 2023 lagged levels recorded in 2022 by 40%. The median price in 2023 was $41,000 per space, down 29% from one year ago.Read the report, or visit our Manufactured Housing page to learn more.
February 12, 2024
Phoenix 4Q23 Multifamily Market Insights Report: Deliveries picking up, likely to accelerate in 2024
Highlights: An active pace of new apartment construction dragged on property performance in 2023, despite healthy renter demand for units. With the development pipeline totaling more than 42,700 units under construction, supplyside pressures will persist through 2024.Vacancy pushed higher throughout much of 2023; during the fourth quarter, the rate rose 40 basis points to 7.4%. For the full year, vacancy rose 100 basis points.After mostly holding steady in the first half, rents retreated in the final six months of 2023. Rents ended the year at $1,575 per month, down 2.5% from one year earlier.The investment market picked up slightly during the fourth quarter, but transaction volumes were down 68% from 2022 to 2023. Prices ticked lower to $270,300 per unit, while cap rates averaged 5.25%.Read the report, or engage with our Phoenix office to learn more.
February 7, 2024
Tucson 4Q23 Multifamily Market Insights Report: Investment activity limited to Class C properties
Highlights:Multifamily property performance in the Tucson market softened during the fourth quarter, as vacancy rose and rents decreased. Developers delivered a cyclical high of completions in 2023, with 2,000 units coming online.The vacancy rate rose 30 basis points in the final three months of 2023 to 8.2%. Year over year, vacancy is up 80 basis points.Average rents posted gains in the first nine months of the year before inching lower in the fourth quarter. Despite the recent decline, rents in Tucson advanced 2.6% in 2023, finishing the year at $1,187 per month.Transaction activity remained limited in the fourth quarter, tracking trends that prevailed throughout much of the year. The total sales transactions were down 77% from the previous year. The median price was $125,400 per unit in 2023.Read the report, or engage with our Phoenix office to learn more.
February 7, 2024
Denver 4Q23 Multifamily Market Insights Report: Class A assets leading the way in the investment market
Highlights:After holding steady for much of the year, operating conditions in the Denver multifamily market softened during the fourth quarter. The vacancy rate rose, and rents declined in the final three months of the year. New projects continued to come online; annual completions totaled roughly 13,500 units.The vacancy rate trended higher in recent months after remaining relatively stable during the first nine months of the year. Vacancy rose 40 basis points during the fourth quarter to 5.8%. The local vacancy rate rose just 20 basis points for the full year.Rents dipped in the closing months of 2023 after posting healthy growth in the first three quarters of the year. Apartment rents declined by 1.8% during the fourth quarter to $1,894 per month. Even after a drop at the end of the year, area rents increased by 1.6% in 2023.Transaction volume picked up during the second half of the year, but annual sales in 2023 still lagged levels recorded in 2022 by 47%. The median price in 2023 was $318,600 per unit, up 6% from the previous year.Read the report, or engage with our Denver office to learn more.
January 29, 2024
Single-Family Build-to-Rent Special Report: Strategies evolve with rates elevated and supply growth accelerating
While current conditions present greater challenges compared to earlier periods — particularly on the supply side — we see investors and developers continuing to act as strategies evolve with rates elevated and supply growth accelerating.Deliveries of new units increased in 2023, and new construction outpaced absorption, resulting in higher vacancy rates and rents that were essentially flat. These pressures should begin to ease by the end of 2024, with construction starts slowing. The debt and equity environment has evolved, and investment markets have cooled, but transactions are still getting done — albeit at lower volumes than in recent years.Report highlights:After years of rapid growth, the single-family build-to-rent (SF BTR) market is facing its first period of uncertainty. New development surged in 2023, but demand was also elevated; absorption spiked 35% from 2022 levels but has not kept pace with deliveries.The pace of economic growth as measured by GDP has topped expectations throughout the year, including a sharp spike higher in the third quarter. Inflation was a drag on the economy throughout much of 2022 and early 2023, but the rate has come down to manageable levels in the second half, reducing a threat to the overall economy. Labor markets remain strong, with an unemployment rate under 4% and 2.7 million net new jobs created in 2023.Despite dropping by about 100 basis points since an October peak, residential mortgage rates are elevated and restricting home buying activity. The average rent on a SF BTR unit is $828/month lower than the average monthly mortgage payment on a median-priced single-family home.Construction trends are mixed, with deliveries up approximately 20% from 2022 levels, while starts are 11% lower than the pace established one year earlier. Construction is concentrated in the fast-growing South region, with Texas, Florida and the Carolinas top spots for new development.Vacancy rates have trended higher in 2023, as new supply growth has outpaced absorption by approximately 25%. Phoenix, Dallas-Fort Worth and Atlanta have led the way for absorption, while Charlotte and San Antonio are among the top markets for rent growth.Agencies remain the primary sources for acquisition financing, with underwriting similar to new Class A apartments. Equity investors are exercising greater caution in the current environment and aware of the competitive impact of new supply. Terms for construction financing became increasingly conservative in 2023, and lenders have become more selective on the loans they quote.Read the full report, or explore our Build-to-Rent page to learn more.
January 9, 2024