Three Stories About Rents Coming Down For Apartments

Last year I felt like the commercial multifamily market peaked around July 2016. Rents were still going up, but the pace of the increases started dropping. A year later and now we see a decrease in rents and higher vacancies. This morning I read three stories about apartment rents and supply that do not bode well for these areas. This is what happens when you build too much.

In NY City, landlords are seeing a decline in their rents.

https://www.bloombergquint.com/global-economics/2017/08/10/manhattan-s-peak-leasing-season-whimpers-with-july-rent-decline

On the other coast, the Bay Area, they are saying the markets have peaked for multifamily.

https://www.bisnow.com/san-francisco/news/multifamily/bay-area-multifamily-markets-may-have-peaked-time-to-sell-say-ten-x-77469

And Denver is expecting a glut of luxury apartments

http://www.denverpost.com/2017/06/25/denver-luxury-apartments-market/

What I found odd about the Denver story is that the area is looking at new programs for Section 8 Housing to take advantage of the vacancies that are rising in the area.

http://www.denverpost.com/2017/08/11/city-on-right-track-with-housing-options/

If you read the story, you may also note that 5% of the rent would be put into an escrow, which at the end of two years the voucher recipient would have enough money for a down payment on a home. Basically you have the government subsidizing the down payment of a home. Does anyone really think that is a good idea?