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2022 Multifamily Investment Forecast Report | Greater New Haven, CT Metro

February 4, 2022 by Marcus & Millichap Research Services

Rapid Development Along Commuter Infrastructure;
Investors and Renters Move In From Nearby Markets

  • Last year’s demand surge spurs supply growth in coastal urban cores. Many property developers expect more renters in southwestern Connecticut, evidenced by high supply growth in the local multifamily sector. The area’s construction pipeline delivered nearly 2,000 units last year, with another 2,300 apartments expected in 2022.
  • Investors faced with lower yields and new demand drivers. The release of pent-up investor demand compressed yields across all segments of the region’s diverse multifamily market. In Fairfield elevated activity in Stamford’s urban core compressed rates to around 4.5 percent, while suburban multifamily housing dipped to just above 5 percent.

2022 Market Forecast

  • Employment (up 1.6%) – After last year’s surge, the market adds 12,000 new jobs in 2022, the second highest net increase since 1998.
  • Construction (2,300 units) – New unit completions are projected to surpass last year’s steady pace through 2022, with builders delivering roughly 350 more units than completed in 2021.
  • Vacancy (up 50 bps) – Normalizing job growth is outweighed by a large delivery volume, pushing vacancy up to 3.1 percent, the largest increase in the market since 2015.
  • Rent (up 2.2%) – Effective rent increases stabilize after passing $2,000 per month in 2021, slowing to 2.2 percent as year-over-year rent growth returns to market norms.
  • Investment – Capital migration from New York intensifies as investors flow to submarkets with lighter regulations, leading to downward pressure on cap rates across all property types.

*Estimate; ** Forecast
Sources: CoStar Group, Inc.; Real Capital Analytics; RealPage, Inc.

Metro-level employment, vacancy and effective rents are year-end figures and are based on the most up-to-date information available as of December 2021. Effective rent is equal to asking rent less concessions. Average prices and cap rates are a function of the age, class and geographic area of the properties trading and therefore may not be representative of the market as a whole. Sales data includes transactions valued at $1,000,000 and greater unless otherwise noted. Forecasts for employment and apartment data are made during the fourth quarter and represent estimates of future performance. No representation, warranty or guarantee, express or implied may be made as to the accuracy or reliability of the information contained herein. This is not intended 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.

Download the Full Report Here

Filed Under: Multifamily, Special Report

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This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2020 Marcus & Millichap and Limon Net Lease Group

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