National Multifamily Cap Rate Report
The U.S. multifamily average capitalization rate decreased 26 basis points (bps) in Q3 2021 compared to the previous quarter. Since the start of 2021, the average national cap rate has decreased 49 bps. Cap rates declined quarter-over-quarter across the six U.S. regions tracked in Q3 2021, with the Midwest falling the most at 53 bps. Outside of the Pacific West, decreases ranged from 26 to 53 bps as robust multifamily investment activity was reported throughout the country. The average cap rate in the Pacific West decreased by 3 bps in Q3 2021.
The Multifamily sector experienced record investment in Q3 2021 and continues to be a favored asset class among investors, with demand expected to remain strong over the next several quarters . Net absorption reached 251,481 units in Q3 2021—the highest quarterly number since Q1 1994. Multifamily rents reached pre-pandemic levels in Q3, increasing by 6.2% quarter-over-quarter and 8.4% from the year earlier Q3 to $1,873 per unit. Annualized rent growth is expected to reach 4.7% in the next two years. Multifamily vacancy declined 150 bps from the year earlier Q3 to 2.9%.
Source: Valuation VIEW
Data points are confirmed closed transactions adjusted for assumed financing and reflect overall market trends.
U.S. Multifamily Cap Rate Trends
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NCBRE is the largest national provider of real estate appraisal services in the country with more than 800 licensed appraisers in the United States. CBRE's multifamily valuation practice has drawn from this large talent pool with more than 150 licensed appraisers who specialize in apartment valuations. These appraisers form the core of our team and ensure an experienced professional is responsible for each assignment.
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