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A reversal from the second half of last year, positive net absorption for the multifamily sector has been seen over the first six months of 2023. According to Berkadia’s midyear National Multifamily Report, renters moved into more than 98,800 units than moved out during the first half of the year.

Sun Belt markets continue to be favored by renters. Berkadia’s data shows that net absorption was highest in Phoenix, Houston, and Dallas-Fort Worth in the first half of the year.

The influx of new apartment supply also is facilitating leasing activity. More than 198,800 units came online in the first half of the year, with elevated activity slated to continue. More than 1.2 million multifamily units were under construction as of 2023’s midpoint.

Dallas-Fort Worth tops the list of Berkadia’s top 10 market pipelines, followed by Phoenix; New York; Austin, Texas; and Northern New Jersey.

The market has been competitive for operators as more than 376,400 units have come online in the past year. This has resulted in 13.1% of market-rate properties offering concessions in the second quarter, which is up from a year-over-year average of 7.6%. However, the average concession amount dropped to 4.5% of asking rent in the second quarter compared with 5.7% in mid-2022.

“This move contributed to a positive swing in leasing activity across the country, especially in Houston. Approximately one out of every five properties in the market offered concessions as net apartment absorption nearly reached 5,000 units in the second quarter of 2023,” stated the report.

According to Berkadia, the monthly effective rent averaged $1,809 in the second quarter, a 4% year-over-year increase; however, it is significantly lower than the 16.9% increase seen in 2021. The national occupancy rate dropped to 94.7% from 96.8% the prior year.

Year to date, Berkadia reported $14.6 billion in multifamily sales, with an average price per unit of $316,565 and an average cap rate of 5.2%.