Tightening Trend
The MFE Index shows revenues on the rise. Multifamily revenues continued their steady uptick in the third quarter of 2005, according to Atlanta-based brokerage firm Marcus & Millichap. That’s thanks, in part, to completion levels that have remained low and increased activity in the condominium market.
Many apartment projects under construction are shifting to for-sale units before they are even finished, and existing inventory continues to be converted. The result: lower vacancy rates and fewer concessions. Add to that increases in occupancy and effective rents, and you get revenues with nowhere to go but up.
Marcus & Millichap expects the market tightening trend to accelerate in 2006. The MFE Revenue Index for third quarter 2005 hit 94.7, considerably higher than the 89.9 for the same period a year ago. It was the highest showing since fourth quarter 2001, when the index read 96.
Completion levels, which have been on a downward trend for the past year, hovered at 43 in the third quarter, just barely higher than their all-time low reading in the previous three months.
The MFE Index, published quarterly in partnership with Marcus & Millichap, reviews the national apartment market performances and analyzes its fundamentals.
–Nichola Zaklan