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Positive Absorption Restores Some Stability,
But is Unlikely to Match the Pace of New Supply
Demand begins to recover ahead of historic development. Despite the market’s recent challenges, including the tech sector losing 11,500 jobs through the 12 months ended in June, rental demand is gaining momentum. Nearly 2,400 apartments were absorbed on net over the first half of this year, offsetting net relinquishments during the final six months of 2022. Improving rental demand has been a welcome sign for the multifamily sector, especially after weaker absorption gave rise to a 190-basis-point vacancy climb last year. On the supply-side, however, development is slated to pick up over the second half of 2023 and accelerate in 2024, outstripping demand expectations. Next year, over 20,000 units are slated for completion, a volume that almost doubles the market’s prior high and increases the likelihood for additional vacancy elevation over the mid-term.