The hotel sector is coming back! Another quarter has gone by, and the sector is showing a strong Q3 (third-quarter) compared to a year ago. The multifamily market is staying strong! We are seeing several trends for this market moving into the new year. Multifamily is experiencing record-breaking rent growth and occupancy rates.
How Did Hotels and Multifamily Projects Do in 2021’s Q3?
Demand increased by 37.3%, occupancy gained 35.1%, revenue per available room (RevPAR) jumped to 89.7% and the average daily rate (ADR) grew by 40.4%. The top 10 performing markets in Q3 were all in the South, and the weakest 10 markets were all Northern urban destinations.
The overall vacancy rate fell by 1.2 percentage points quarter-over-quarter and 1.5 points year-over-year to a record-low 2.9%, while average net effective rent increased by 6.2%. Average rents now exceed their pre-crisis levels in all but four of the 69 markets. Multifamily investment volume increased by 31% quarter-over-quarter in Q3 to $78.7 billion. The market is on track to well exceed 2019’s record total of $193 billion.
2022 Market Projections
CBRE expects for 2022 that leisure demand will continue to boost the performance of properties in resort and remote locations, supplemented by growth in “bleisure” travel, which combines business and leisure pursuits.
CBRE forecasts the U.S. national occupancy level to approach the long-run average of 62.0% in 2023.
CBRE anticipates that urban-core hotels in high-cost markets will continue to see hampered demand due to the delayed return to the office and “the great migration south” that took place over the pandemic.
Likewise, apartment demand will likely remain robust and rent growth remain elevated in 2022, given the current rates of absorption, 2022’s rising mortgage rates, and the lower level of construction activity relative to current demand.
BASE4 | Your Design Partners
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