How Will Commercial Real Estate Vacancy Rates Change in 2024 by Property Type??
Cutting Through Uncertainty: 2024 Economic & CRE Outlook (Part2)
Multifamily Housing:
Multifamily housing, including apartment complexes and condominiums, remains a resilient segment in commercial real estate. Vacancy rates may vary based on geographic location and economic factors. Urban areas with strong job markets tend to maintain lower vacancy rates, while suburban and rural areas may see fluctuations based on population trends and lifestyle preferences. In 2024, there is a noticeable increase in the overall vacancy rate, hovering at approximately 5% to 6%. This aligns with the perspectives of Freddie Mac and RealPage and Fannie Mae.
"We expect the vacancy rate to remain relatively stable in 2024 despite what we believe will be the peak year for deliveries this cycle. For 2024, we forecast the vacancy rate to be 5.7%, 40 bps higher than the 2000-through-2022 RealPage average of 5.3%." - Freddie Mac
As of January 2024, Fannie Mae predicts that the vacancy rate for multifamily housing in 2024 will be up to 6.25%. This is due to the expected 1 million new units coming online in 2024.
- RealPage: A 5.7% vacancy rate in 2024, which is 40 basis points higher than the average of 5.3% from 2000 to 2022
- RealPage: A 3.5% increase in the total stock of U.S. apartment units in 2024, which would be the highest annual uptick since 1974
Conclusion: Commercial real estate is a dynamic ecosystem where vacancy rates serve as a barometer of market health. Investors and stakeholders must closely monitor these rates across various property types to make informed decisions. As we navigate the ever-changing landscape, understanding the nuances of vacancy rates equips us with the insights needed for success in the diverse and evolving world of commercial real estate.
*This is not professional financial advice.