Beyond the Health Crisis: Multifamily Class A Overview Special Report
Health Crisis Weighs on Class A Rentals as New Properties Continue to Open; High-Cost Tech and Travel-Oriented Markets Facing the Most Hurdles
Coronavirus disruptions stall Class A rent growth. The health crisis is altering apartment demand and interfering with leasing as some renters relocate to other areas out of financial need or desire. Class A rentals prevalent in dense, high-cost urban zones are more exposed to these trends. The average effective rent for Class A units fell 1.5 percent nationally between the first and second quarter of this year, 60 basis points more than for the overall average. Tenants seeking lower-cost or more spacious residences helped push Class A vacancy up 80 basis points in that span, while eviction moratoriums helped keep Class B and C rates more stable. Construction also contributed to greater Class A availability. About 23,000 more apartments opened in the first half of 2020 than in the same period last year, with net absorption down 75 percent. New deliveries are taking longer to lease amid a variety of health risks, dampening short-term performance.