Commercial Real Estate Update: Demand for Multifamily Heats Up

June 22, 2021

What is CREMI?

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.”

Be sure to explore the tool’s newest feature under the U.S. Map tab. In addition to selecting a
property type to view, users can select a specific variable to explore a national snapshot of variable trends. Also,
on the Bell Curve view, hovering over a particular market will show the market’s momentum index
breakdown, allowing users to explore what’s driving the property type index alongside other markets.

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…