Midyear Multifamily Outlook

Luxury apartments proving resilient thus far in 2023. The renter demand slowdown that coincided with economic uncertainty and increasing interest rates has impacted all apartment segments, but the luxury tier has held up relatively well in recent periods. From the end of 2022 through the mid-point of this year, Class A vacancy rose by 30 basis points, compared to elevations of 40 and 80 basis points in the Class B and C segments, respectively. Luxury tier resilience is particularly notable, given the supply-side competition that Class A rentals are facing amid record construction. Nearly 200,000 new units were delivered nationwide during the first half of 2023, surpassing the prior record-tally for the opening six months of a year by almost 25,000 rentals. Economically curbed demand amid historic development will nevertheless keep Class A vacancy drifting up and normalize rent growth through year-end.