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3% created
$650 59,00 jobs, led by the education and healthcare
sector, where 39,000 positions were added. The leisure
2% and
$500hospitality sector contributed nearly 10,000 jobs.
1% • Roughly
$350
4,800 office-using positions were added, where
professional and business services growth was offset by
0% government
$200 declines.
14 15 16 17 18* 14 15 16 17 18*
CONSTRUCTION:
Completions and Absorption
Completions Absorption 4,490 units completed Y-O-Y
VACANCY:
Vacancy Rate Trends
Borough United States 30 basis point decrease in vacancy Y-O-Y
8%
• A slower pace of construction and net absorption of more
6% than 6,270 units led vacancy in the borough to fall 30
Vacancy Rate
RENTS:
Rent Trends
Monthly Rent Y-O-Y Rent Change
3.2% increase in effective rents Y-O-Y
* Forecast
**Data presented is for New York City
Multifamily Research | Market Report
DEMOGRAPHIC HIGHLIGHTS
3Q18 MEDIAN HOUSEHOLD INCOME 3Q18 AFFORDABILITY GAP MULTIFAMILY (5+ Units) PERMITS***
*Mortgage payments based on quarterly median home price with a 30-year fixed-rate conventional mortgage, 90% LTV, taxes, insurance and PMI. **2017-2022 Annualized Rate
***NEW YORK-NEWARK-JERSEY CITY,NY-NJ-PA METROPOLITAN STATISTICAL AREA
3% $650
1% $350
Completions Absorption
12
s)
Brooklyn
CURRENT TRENDS 3Q18 – 12-MONTH PERIOD
EMPLOYMENT:
Employment Trends Pricing Trends
Metro** United States 1.3% increase in total employment Y-O-Y
$400
3%
created
$350
59,00 jobs, led by the education and healthcare
sector, where 39,000 positions were added. The leisure
2% and
$300hospitality sector contributed nearly 10,000 jobs.
• Roughly 4,800 office-using positions were added, where
1% $250
professional and business services growth was offset by
0%
government.
$200
14 15 16 17 18* 14 15 16 17 18*
CONSTRUCTION:
Completions and Absorption
Completions Absorption 4,930 units completed Y-O-Y
VACANCY:
Vacancy Rate Trends
Borough United States 80 basis point decrease in vacancy Y-O-Y
8%
• The sharp drop in supply and continued robust net absorption
6% pushed vacancy down 80 basis points to 1.8 percent. The
Vacancy Rate
RENTS:
Rent Trends
Monthly Rent Y-O-Y Rent Change 2.9% increase in effective rents Y-O-Y
$2,100 4%
• Strong absorption in Downtown Brooklyn led to 7.1
percent rent growth; the borough’s rents averaged
$1,950 2% $3,704 per month. The Bed-Stuy/Ft. Greene/Bushwick
submarket also outperformed, adding 3.5 percent.
$1,800 0%
14 15 16 17 18*
* Forecast
**Data presented is for New York City
Multifamily Research | Market Report
DEMOGRAPHIC HIGHLIGHTS
3Q18 MEDIAN HOUSEHOLD INCOME 3Q18 AFFORDABILITY GAP MULTIFAMILY (5+ Units) PERMITS***
*Mortgage payments based on quarterly median home price with a 30-year fixed-rate conventional mortgage, 90% LTV, taxes, insurance and PMI. **2017-2022 Annualized Rate
***NEW YORK-NEWARK-JERSEY CITY,NY-NJ-PA METROPOLITAN STATISTICAL AREA
Lefferts Gardens
Outlook: Buyers have extended beyond the core
Southwest Brooklyn 1.3% -30 $1,676 1.8% locations along the East River toward neighborhoods
farther into the borough in order to achieve higher
Ditmas Park/Flatbush 1.5% -40 $2,018 1.6% return targets.
4%
Williamsburg/Greenpoint/
2.8% -210 $3,329 2.2%
Year-over-Year Change
Navy Yard
3% $350
Downtown Brooklyn 2.9% -490 $3,704 7.1%
2% $300
Bed-Stuy/Fort Greene/
1% 3.2% 20 $2,862 3.5% $250
Bushwick
0% $200
Brooklyn 1.8% -80 $2,270 2.9%
14 15 16 17 18* 14 15 16 17 18*
Completions Absorption
12
s)
QUEENS
3Q18 – 12-MONTH PERIOD
Supply and Demand
VACANCY AND RENT:
Supply and Demand
Completions Absorption Vacancy
10 basis point increase in vacancy Y-O-Y
Completions Absorption Vacancy
6.0 4% • A significant rise in construction led to a 10-basis-point
4 4%
increase in vacancy to 2.1 percent. Net absorption
Units (thousands)
Units (thousands)
4.5 3% 3 totaled 5,730 units.
Vacancy Rate
3%
Vacancy Rate
3.0 2% 2
2.7% increase in effective rents Y-O-Y
2%
1.5
• The average effective rent advanced 2.7 percent over the
1% 1 1%
past year to $2,163 per month as relatively higher price
0 0% points in new buildings lifted overall pricing in the borough.
0 0%
14 15 16 17 18* 14 15 16 17 18*
CONSTRUCTION:
Supply and Demand INVESTMENT HIGHLIGHTS:
Supply and Demand
6,120 Completions
units completed
Absorption
Supply and Demand
Y-O-Y
Vacancy Completions Absorption
Supply and Demand Vacancy
1.00 8% 4 DealCompletions
• DevelopersCompletions
finished 6,120Absorption
units duringVacancy
the past 12 • flow contractedAbsorption
moderately, while5%
the average price
Vacancy
(thousands)
(thousands)
months,
6.0
0.75
up nearly 50 percent from the previous
4% year per unit rose to just above $260,000 per door. Trades
6% 34 4%
Vacancy
4%
Vacancy
when 4,270 apartments were completed. were focused on locations in Long Island City, Flushing
(thousands)
(thousands)
4.5 3% and Astoria.
Vacancy
0.50 23
• Construction will fall by nearly half in 2019, led by4%projects 3%
Vacancy
3%
Units Units
Rate Rate
Units Units
Rate Rate
in Long
3.0 Island City. The largest project is located
2%in Flush- • Cap rates remain in the mid-4 percent band while
0.25 2% 12extending into the mid-5 percent range2%
2%
ing. Known as One Flushing, the project contains 232 for assets farther
affordable
1.50 apartments with 22,000 square feet 1% of
0%retail. 1 away from the East River. 1%
0 1%
14 15 16 17 18* 14 15 16 17 18*
0 0% 0 0%
14 15 16 17 18* 14 15 16 17 18*
STATEN ISLAND
Supply and Demand
VACANCY AND RENT:
Supply and Demand
Completions Absorption Vacancy 70Completions
basis point increase in vacancy
Absorption Y-O-Y
Vacancy
1.00 8% • Moderate tenant outflows lifted vacancy 70 basis points
4 5%
to 3.2 percent despite a lack of completions during the
Units (thousands)
Units (thousands)
4%
Vacancy Rate
0.50 4% 2 2.2% increase in effective rents Y-O-Y
3%
* Forecast
BRONX
3Q18 – 12-MONTH PERIOD
VACANCY AND RENT:
Supply and Demand
Completions Absorption Vacancy 20 basis point decrease in vacancy Y-O-Y
• Demand outstripped supply growth over the past year
4 4%
by nearly 700 units, trimming vacancy by 20 basis points
Units (thousands)
to 1.0 percent.
Vacancy Rate
3 3%
Vacancy Rate
2 2% 2.1% increase in effective rents Y-O-Y
CONSTRUCTION:
Supply and Demand
INVESTMENT HIGHLIGHTS:
2,050 Completions
units Supply andAbsorption
completed Demand Vacancy
Y-O-Y
%
• Development slipped slightly
4 Completions from 2,70
Absorption units
5% in the
Vacancy • Transactions increased considerably over the past year
previous year to 2,050 in the most recent 12-month as buyers pursued assets in the West and South Bronx.
Units (thousands)
% 43 4%
Vacancy Rate Rate
4%
Vacancy Rate Rate
period. The pace of construction remains elevated relative The average price per unit was in the low-$190,000s.
Units (thousands)
to historical trends.
Vacancy
2 3%
• Roughly 3,000 units are expected to be brought to market for higher-yielding opportunities throughout the borough.
% 21 2%
2%
in 2019, which would represent the highest completions Cap rates are lowest in Fordham and Norwood.
%
total 1of the current business cycle. 1%
0 1%
14 15 16 17 18*
0 0%
14 15 16 17 18*
WESTCHESTER COUNTY
VACANCY AND RENT:
Supply and Demand
Completions Absorption Vacancy 70 basis point decrease in vacancy Y-O-Y
4 5% • Vacancy fell 70 basis points over the past year to 3.1
percent as net absorption picked up considerably,
Units (thousands)
Vacancy Rate
2 3%
2.9% increase in effective rents Y-O-Y
1 2% • The average effective rent rose 2.9 percent to $1,996 per
month, boosted by an influx of Class A units at relatively
0 1% higher price points than the county average.
14 15 16 17 18*
* Forecast
Sources: CoStar Group, Inc.; Real Capital Analytics
Multifamily Research | Market Report
CAPITAL MARKETS
Apartment Mortgage Originations Fed meeting. After the Federal Reserve lifted overnight rates and
By Lender maintained a positive economic outlook, long-term interest rates have
100% pushed higher. The 10-Year Treasury yield has quickly traded toward
the 3.25 percent range, which is prompting lenders to pass on the
Percent of Dollar Volume
75% Gov't Agency increased cost to borrowers. However, fierce competition for loans is
Financial/Insurance also leading to some cost absorption among lenders. While greater
Reg'l/Local Bank
50%
Nat'l Bank/Int'l Bank
borrowing costs may prompt buyers to seek higher cap rates, strong
CMBS economic performance should enable rent growth above inflation. As
25% Pvt/Other a result, sellers remain committed to higher asking prices, which is
widening an expectation gap as property performance and demand
0% trends remain positive.
14 15 16 17 18*
• The capital markets environment continues to be highly
* Through 2Q competitive. Government agencies remain the largest source of
Include sales $2.5 million and greater funds, commanding slightly over 50 percent market share. National
Sources: CoStar Group, Inc.; Real Capital Analytics
and regional banks control approximately a quarter of the market.
Pricing resides in the high-4 percent realm with maximum leverage of
75 percent. Portfolio lenders will typically require loan-to-value ratios
closer to 70 percent with interest rates in the low-5 percent range.
National Multi Housing Group
The passage of tax reform and rising fiscal stimulus will keep the U.S.
Visit www.NationalMultiHousingGroup.com economy growing, underpinning strong rental demand and supporting
a national apartment vacancy rate of 4.6 percent at the end of 2018.
John Sebree
First Vice President, National Director | National Multi Housing Group
Tel: (312) 327-5417
john.sebree@marcusmillichap.com J.D. Parker
Senior Vice President/Division Manager
j.d.parker@marcusmillichap.com
Prepared and edited by
Aaron Martens Manhattan Office: Brooklyn Office:
Research Analyst | Research Services
The information contained in this report was obtained from sources deemed to be reliable. Every effort was made to obtain accurate and complete information; however, no
representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. Note: Metro-level employment
growth is calculated based on the last month of the quarter/year. Sales data includes transactions valued at $1,000,000 and greater unless otherwise noted. This is not intend-
ed to be a forecast of future events and this is not a guaranty regarding a future event. This is not intended to provide specific investment advice and should not be considered
as investment advice.
Sources: Marcus & Millichap Research Services; Bureau of Labor Statistics; CoStar Group, Inc.; Experian; National Association of Realtors; Moody’s Analytics; Real Capital
Analytics; RealPage, Inc.; TWR/Dodge Pipeline; U.S. Census Bureau