RENT GROWTH TAPERS ENTERING BUSY SUMMER MONTHS |
EMINENT DOMAIN LAWSUIT COULD DERAIL MASSIVE NY DEVELOPMENT |
NEW PROLOGIS METRIC CITES 16-MONTH LOW IN INDUSTRIAL SUPPLY |
BIG APPLE , LA SEE BOOM IN SELF-STORAGE DEMAND |
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This page , left to right : Evgenii Dmitriev , Sascha Kilmer , Westend61 , homeworks255 |
The multifamily market continues to strengthen , but rents are increasing at a slower rate than 2021 . According to Apartment List ’ s national index , rent increased by 0.9 percent in April . Through the first four months of 2022 , rents increased by a total of 2.5 percent . That growth is significantly less than the previous year , with the second half of 2021 accounting for most of the year-over-year growth of 16.3 percent .
Apartment List also reported its vacancy index remained at 4.6 percent , up from a recent low of 3.8 percent in August 2021 — but still well below pre-COVID-19 numbers . In the largest 100 cities in the U . S ., 93 markets reported rent increases in April , with Sun Belt , Florida , and Arizona cities seeing the largest increases .
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The larger a development ’ s price tag grows , the more potential pitfalls arise to threaten progress . Tritec Real Estate unveiled plans for a $ 750 million mixed-use development on New York ’ s Long Island with residential , retail , office , and public use areas . But after completing the first phase in 2020 , the developers are facing a lawsuit from North Fork Express , a local charter bus company , over 2.2 acres seized by eminent domain .
Tritec is asking the Brookhaven Town Industrial Development Agency to condemn and seize the depot , which it has done to a handful of other properties , though the developers and North Fork could negotiate a sale of the property , according to the New York tri-state area ’ s Real Deal . The two parties remain at a standstill , while the project remains on hold . If completed , the development would include 1,500 apartments , 195,000 sf for retail , and 360,000 sf of office space .
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The healthy industrial market doesn ’ t show signs of slowing down heading into the back half of 2022 . According to Prologis , rent growth in the sector is expected to top 22 percent , with vacancy rates holding steady at a record low of 3.3 percent . Prologis introduced True Months of Supply , a new metric that compares vacancies in existing facilities and unleased space in the pipeline to net absorption . The TMS , based on data from 30 U . S . markets , is a record-low 16 months , with TMS never dipping below 32 months before 2021 .
Researchers cited delays in construction and difficulties in materials as reasons for tapered deliveries and absorption in 1Q2022 . The quarter produced 68 msf of new supply , while absorption was lower than expected at 88 msf . Accordingly , Prologis amended its projected total of industrial completions in 2022 to 375 msf . Net absorption will need to reach 360 msf for demand to keep pace with supply .
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Construction on self-storage is hustling to keep up with surging demand in the New York and Los Angeles metro areas . The two cities top a list of undersupplied markets in the U . S . from Rent Café , with New York ( 2 sf ) and Los Angeles ( 4 sf ) falling well below the national average of 7.1 net rentable sf per person . Almost 12 msf of self-storage is planned or under construction , with Los Angeles accounting for 6.3 msf . Both cities expect 6.2 msf to be completed by the end of this year .
Considering changes in how people use living spaces since the onset of COVID-19 , self-storage has seen increased demand that falls outside of the “ 4Ds ” of dislocation , death , divorce , or disaster . Downsizing in residential and office locations has helped increase income for self-storage operators . Overall , rents have increased steadily in the last year , increasing 6 percent year over year in May 2022 .
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