NATIONAL TRENDS

MULTIFAMILY REPORT SECOND QUARTER 2018

MARKET AT A GLANCE

OCCUPANCY
RATE 94.6%
Down 40 bps since 2Q17

EFFECTIVE $
RENT 1,304
Up 2.3% since 2Q17

TOTAL
INVENTORY 25.5m

OCCUPANCY AND RENT TRENDS

U.S. APARTMENT RENT GROWS 2.3% AS EMPLOYMENT EXPANDS 1.6%

Even with decelerating apartment inventory growth, a slowdown in annual leasing activity led to a drop in the national average
occupancy rate. The U.S. apartment inventory expanded 1.3% with 315,342 new units since mid-2017, down from 363,578
additions during the preceding year. While annual deliveries were down, leasing activity also decelerated with 204,221 units
absorbed over the last 12 months. Due to the supply-demand imbalance, apartment occupancy was down 40 basis points year
over year to settle at 94.6% in the second quarter of 2018. On the market level, occupancy was highest in the Minneapolis-St. Paul
metropolitan area at 96.7% in the second quarter of 2018, even with a 50-basis-point annual decrease. In New York and several
California markets, primarily in the Los Angeles area, occupancy was at or higher than 96.0% in the second quarter of 2018.
While U.S. occupancy lowered over the last 12 months, effective rent reached $1,304 in June 2018. Effective rent advanced 2.3%
annually, matching the rent growth during the preceding year. The 5.1% annual effective rent growth through the second quarter
of 2018 in Tucson led the nation, with the 5.0% year-over-year increase in the Houston metropolitan area nearly keeping pace.

96% $1,400
OCCUPANCY AND RENT TRENDS

95% $1,300

94% $1,200

93% $1,100

92% $1,000
3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18

Occupancy Rate Effective Rent

a Berkshire Hathaway and Jefferies Financial Group company

NATIONAL TRENDS
MULTIFAMILY REPORT

DELIVERIES AND DEMAND

450,000 DELIVERIES AND DEMAND

DELIVERIES 152,582
Units YTD
300,000

150,000

NET
ABSORPTION 128,376 0
Units YTD
2013 2014 2015 2016 2017 2018*
Deliveries Demand
*Year to date

ECONOMIC TRENDS

Total nonfarm employment expanded 1.6%, or by 2.4

2017 UNEMPLOYMENT* 2018
million jobs, annually through May 2018. Growth was
4.3% -50 BPS
CHANGE
3.8% down 10 basis points from the preceding year, due in
part to a 0.7% contraction of the information sector.
Bucking the overall trend, hiring accelerated in the
2017 EMPLOYMENT* 2018 professional and business services industry. After
146.3m 1.6%
CHANGE
148.7m growing 2.2% since May 2016, the sector expanded
2.4% in the following year. Professional and business
services employers added 483,000 net positions,
2017 EXISTING SFH SALES* 2018 to lead all sectors since May 2017. Job creation was

4.96m -3.0 %
CHANGE
4.81m also robust in the education and health services
segment. The sector expanded 1.9% with 441,000 net
positions. At a market level, Orlando led large metros
with 3.5% annual growth that equated to 44,000 net
2017 MEDIAN SFH PRICE* 2018
jobs. Employment expansion exceeded 3.0% in a few
$ 254.3k 5.2%
CHANGE
$267.5k other metros that included Dallas-Fort Worth, Seattle-
Tacoma, Austin, Jacksonville, and San Jose. New York
and Dallas-Fort Worth were the only metros with
2017 10-YEAR TREASURY** 2018 gains over 100,000 positions, at 122,500 jobs and
2.19% 70 BPS
CHANGE
2.91% 119,400 jobs, respectively.

*May; **June U.S. SHARE OF WALLET

U.S.
ANNUAL RENT

26.5 %
share of wallet

SECOND QUARTER 2018 BERKADIA

NATIONAL TRENDS
MULTIFAMILY REPORT

TOP 15 RENT GROWTH MARKETS

OCCUPANCY AVG RENT AVG RENT NET DELIVERED

INCREASE ABSORPTION UNITS
MARKET 2Q17 2Q18 2Q17 2Q18 2Q17 2Q18 2Q18 ANNUAL 2Q18 ANNUAL
Tucson 93.9% 94.2% 5.1% 5.1% $719 $756 130 365 60 120
Houston 88.9% 89.9% -0.1% 5.0% $982 $1,031 3,907 11,930 2,313 6,147
Orlando 95.9% 95.9% 4.9% 4.8% $1,203 $1,261 2,091 7,706 1,931 7,707
Las Vegas 94.8% 94.4% 4.5% 4.8% $932 $976 964 2,442 1,089 3,479
Knoxville 95.3% 95.7% 1.5% 4.3% $871 $909 -44 655 36 402
Phoenix 94.6% 94.6% 4.5% 4.3% $993 $1,036 1,889 7,628 2,479 7,715
Colorado Springs 96.0% 95.4% 8.1% 3.9% $1,046 $1,087 415 526 289 890
Jacksonville 95.0% 94.5% 3.6% 3.9% $992 $1,030 535 1,899 788 2,500
Inland Empire 96.4% 96.3% 5.9% 3.8% $1,427 $1,482 692 558 203 783
Dallas-Fort Worth 92.0% 92.0% 4.6% 3.4% $1,069 $1,105 8,474 18,308 3,202 20,148
Tampa-St. Petersburg 95.0% 95.4% 2.5% 3.3% $1,135 $1,172 1,966 4,812 1,447 4,166
Columbus 96.1% 95.3% 3.2% 3.2% $905 $935 689 1,837 971 3,128

San Diego 96.2% 95.6% 4.9% 3.2% $1,961 $2,024 450 1,372 981 3,381
Salt Lake City 95.9% 95.5% 5.3% 3.2% $1,095 $1,130 1,046 1,765 881 2,278
Minneapolis-St. Paul 97.2% 96.7% 3.9% 3.1% $1,284 $1,324 1,028 2,900 1,325 4,442
NATIONAL AVERAGE 95.0% 94.6% 2.3% 2.3% $1,274 $1,304 99,662 204,221 81,545 315,342

TOP 15 OCCUPANCY MARKETS

OCCUPANCY AVG RENT AVG RENT NET DELIVERED

INCREASE ABSORPTION UNITS
MARKET 2Q17 2Q18 2Q17 2Q18 2Q17 2Q18 2Q18 ANNUAL 2Q18 ANNUAL
Minneapolis-St. Paul 97.2% 96.7% 3.9% 3.1% $1,284 $1,324 1,028 2,900 1,325 4,442
Los Angeles South 96.2% 96.3% 4.5% 2.9% $1,890 $1,945 -187 792 56 343
New York-Jersey City-White Plains 96.6% 96.2% -0.8% 0.8% $2,811 $2,833 -884 4,248 4,038 16,511
Inland Empire 96.4% 96.3% 5.9% 3.8% $1,427 $1,482 692 558 203 783

Los Angeles North 96.4% 96.0% 4.1% 2.9% $2,056 $2,116 738 -65 345 1,080
San Francisco–Oakland  95.8% 96.0% 0.7% 1.2% $2,965 $3,002 2,314 5,838 1,265 4,685
Orlando 95.9% 95.9% 4.9% 4.8% $1,203 $1,261 2,091 7,706 1,931 7,707
Sacramento 96.5% 95.9% 8.8% 3.1% $1,284 $1,324 1,028 2,900 248 748
Detroit 96.5% 95.9% 3.9% 2.5% $944 $968 910 -242 149 825
Ventura County 95.6% 95.8% 5.1% 3.1% $1,068 $1,101 662 2,597 434 2,332
Boston 96.0% 95.9% 1.9% 1.4% $2,331 $2,364 3,999 6,701 1,977 7,311
Los Angeles West 95.3% 95.8% 3.4% 2.8% $2,695 $2,770 1,080 6,479 1,553 3,963
Knoxville 95.3% 95.7% 1.5% 4.3% $871 $909 -44 655 36 402
San Diego 96.2% 95.6% 4.9% 3.2% $1,961 $2,024 450 1,372 981 3,381
Orange County, CA 96.3% 95.6% 4.1% 2.5% $2,010 $2,061 1,078 1,950 1,160 4,159
NATIONAL AVERAGE 95.0% 94.6% 2.3% 2.3% $1,274 $1,304 99,662 204,221 81,545 315,342

© 2018 Berkadia Real Estate Advisors LLC

Berkadia® is a registered trademark of Berkadia Proprietary Holding LLC
Document sources: Axiometrics; Berkadia Research; Federal Reserve Bank of St. Louis; Moody’s

BERKADIA SECOND QUARTER 2018

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a Berkshire Hathaway and Jefferies Financial Group company

© 2018 Berkadia Proprietary Holding LLC

Berkadia® is a trademark of Berkadia Proprietary Holding LLC.
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