What’s Next for Multifamily Concessions?
Multi-Housing News Discusses Apartment Concessions Trends in South Florida with Principal, Matthew Jacocks
'What’s Next for Multifamily Concessions?'
A new report predicts a slowdown during the second half. Other expert opinions vary.
More than one in five professionally managed apartment units across the nation offered concessions in the second quarter of this year. This marks a sharp year-over-year increase, but still below the averages seen during the two previous economic growth cycles, according to Berkadia’s U.S. Apartment Concessions report.
The concessions drive is partly due to increased competition from single and multifamily completions. In areas of higher supply, more owners and operators looked to concessions as a means of attracting new renters, the report noted.
Yet, the trend may be shifting. With a slowdown in home and apartment deliveries and a projected increase in net absorption, the report suggests that the rate of multifamily units offering concessions could drop by some 120 basis points in the second half of 2024.
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Florida’s significant supply growth
Jeff Klotz, CEO and founder of Klotz Group of Cos. in Jacksonville, Fla., operates in the Southeast and Sun Belt. He told MHN that one in five apartment transactions taking place with a concession sounds light and that the rate is increasing in most markets.
“Our area has experienced significant growth over the last few years,” he said. “I expect to see concessions offered in these markets unless something unusual is in a particular submarket, such as barriers to entry, development moratoriums, etc.”
For now, many Sun Belt and Southeast markets have softened. New deliveries are coming online into already high-supply spaces. And in some areas, migration has slowed. “Once the existing inventory is absorbed and the supply versus demand is balanced again, concessions will be less necessary,” Klotz said.
In South Florida, Matthew Jacocks, principal at Lee & Associates, told MHN that concessions are based on product type and depend on new project deliveries within a specific market.
“Depending on new projects in the lease-up phase, what is the saturation level?” he asked. “Concessions will be more of a strategy to stabilize a project quickly but will decline once a target occupancy is reached. This temporarily could trigger other competing projects to offer incentives.”
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About Lee & Associates South Florida
Lee & Associates South Florida is a fully vertical commercial real estate brokerage firm focused on industrial, office, retail, multifamily, investment and land sectors. Our dedicated team of professionals is led by Matthew Rotolante, CCIM, SIOR a 4th generation South Florida native in a family that has owned and operated commercial property here since 1928. Lee & Associates is the largest agent owned brokerage in the nation with Senior Agent’s ability to earn profit share resulting in the highest splits while still receiving full resources, support and leads from our national network. Our collaborative and cheerful culture allows for open communications throughout the company, fostering the sharing of information and best practices to better enable client decision making. The Lee & Associates’ robust national network that sold and leased over $115 Billion in the last 5 years offers clients a cross-market platform of expertise and deal opportunities across all asset specialties and representation roles. For the latest news from Lee & Associates South Florida, visit leesouthflorida.com or follow us on Facebook, LinkedIn, Twitter and Instagram, our company local news.
About Lee & Associates
Lee & Associates is a commercial real estate brokerage sales, leasing and management firm. Established in 1979, Lee & Associates has grown its service platform to include over 75 offices in the United States and Canada. Lee & Associates is the largest agent owned commercial real estate brokerage where agents get the greatest return for their efforts and hence are more committed and better enabled to provide superior results for their customers. For the latest news from Lee & Associates, visit lee-associates.com or follow us on Facebook, LinkedIn, Twitter and Link, our company blog.
