Multifamily Housing Sector Experiences Record-Breaking Growth in 2021

According to a new report from CBRE Group Inc., an American commercial real estate service and investment firm, 2021 was a record-breaking year for the multifamily housing industry. In Q4 2021, total investment volume was $148.9 billion, a 73% quarter-over-quarter increase. This growth brings 2021’s total investment to $335.3 billion, which is nearly double the previous record of $193.1 billion set in 2019.

The market also set an annual absorption record of 617,500 units — up by 238% from 2020 and 97% from 2019, as well as 58% higher than the previous record of 390,000 units in 2000. Absorption measures the net amount of square footage either leased or vacated, with a positive reading meaning that more space was newly leased than vacated.

The CBRE findings show that last year’s performance signals a rebound for the industry, which was challenged by the pandemic in 2020 following a strong 2019. “The 2021 multifamily market was extraordinary, by any measure,” said Brian McAuliffe, president of multifamily capital markets for CBRE. “We expect the ongoing economic recovery, job creation, wage growth, and household formation to support continued strong multifamily demand in 2022.”

According to CBRE, average rents exceed their pre-pandemic levels in all but three markets that the firm tracks. The average net effective rent rose by 13.4%. All 69 markets that CBRE tracks experienced positive rent growth last year, reaching double digits in 49 markets.

In addition, new multifamily construction deliveries ended the year at 274,500 units. However, with a pipeline of more than 400,000 units under construction, CBRE forecasts deliveries this year to eclipse 2021.