Firm multifamily demand was evidenced by the 1,210 units absorbed in 2017 and though that represents a decline of 29.2% from a cyclical peak in 2016, it remains 1.5% above the 10-year average.
The relatively low vacancy rate of 3.9% ticked up for the second quarter in a row but declined by 40 basis points (bps) year over year.
New deliveries cooled from peak levels with 645 units completed in 2017.
In 2017, the average monthly effective rent of $1,440 increased by 0.6% from the prior year but was the weakest growth rate since 2012.
Investment sales fell by 40% from a record 2016, making it the third best year since the recession, but activity was still elevated with sales totaling over $1.4 billion.
Cap rates for stabilized suburban assets held firm as private buyers searched for value-add opportunities. Multifamily cap rates in the Inland Empire are some of the nation’s lowest and local CBRE professionals expect no change for H1 2018. NCREIF returns moderated from 15.7% in 2016 to 12.9% in 2017.