The Commercial Real Estate Momentum Index (CREMI) provides easy access to various metrics for individual markets by sector and facilitates comparisons of conditions across markets. The index tracks movements in specific metrics (such as occupancy/vacancy rate, rent growth, and the construction pipeline) and provides a targeted view of real estate conditions in the industrial, multifamily, office, and retail sectors. Additional metrics, including employment and population growth, provide information specific to each sector as appropriate. CREMI derives a momentum index value for each sector within a market and gives an overall momentum index value for the entire market. Upward and downward momentum correspond with aggregated trends in the market metrics, not necessarily indicating “good” or “bad.”
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June 2021 Spotlight: The Multifamily Sector
Every month, we explore another aspect of the Commercial Real Estate Momentum Index (CREMI) and how it can inform us about commercial real estate conditions. This month, we’ll focus on indicators of multifamily sector health and how they have changed since inflection points during the pandemic. Variables that contribute to the multifamily momentum index include construction forecast, homeownership rate, mortgage rate, occupancy rate and trend, population growth, and rent growth.
National multifamily sector overview
The overall CRE momentum index for multifamily shows a dramatic increase in upward trending momentum between March 2020 and March of 2021 in many U.S. markets. This can be seen by comparing the U.S. map graphics (see below) for these periods. The areas that continue to show downward momentum tend to be the largest U.S. cities most affected by the longest and most stringent lockdowns to combat the spread of COVID-19, such as New York, Los Angeles, Miami, Dallas/Fort Worth, Washington DC, and Chicago. Southern Texas and Louisiana Gulf Coast areas continue to have the most negative multifamily momentum as that economy in recent years has also suffered multiple shocks to the area’s oil industry-driven economy. Rural, midsized, and smaller cities have seen multifamily demand increase as coronavirus restrictions were lifted earlier in those areas. Additionally, work-from-home options have allowed many employees to…
Read More: Commercial Real Estate Update: COVID Hammers Office Markets
