Steep Multifamily Occupancy Declines An Urban Phenomenon

Steep Multifamily Occupancy Declines An Urban Phenomenon

Multifamily performance has rebounded quickly from the pandemic slowdown, with the exception of occupancy declines in properties in urban gateway metro submarkets, Yardi Matrix says in a recent report.

“According to a study of 78,000 properties in Yardi Matrix’s database, large occupancy declines in the last year have been concentrated in a handful of cities that may take years to recover,” the report says.

However, the multifamily industry overall “is surviving COVID-19 without too much disruption,” the report says. “Nationally, rent and occupancy levels fell only slightly in 2020 before turning positive again in the first quarter of 2021, while acquisition yields barely budged.” However, problems in the struggling urban submarkets show “problems that must be addressed in the wake of the pandemic.”

Some key points in the report:

  • Roughly one out of every 14 multifamily properties in the United States has seen occupancy declines and rates drop by five percent or more over the last 12 months.
  • However, the loss is concentrated in urban assets in gateway metros, which limits the potential for distress.
  • The study shows a large split in market performance and recovery period. Some markets are back to pre-pandemic performance levels already, while it could take five years or more for rents to recover in the most affected urban submarkets.

“While the data demonstrates the troubles some segments of the market face, the industry can take solace in the finding that the poor performance in demand and occupancy is limited.

“The results show that the amount of distress anticipated by some is likely to remain limited, and whatever does occur will almost certainly be concentrated in high-cost gateway centers that will have a much bigger hill to climb to get back to pre-pandemic revenue levels when normality returns,” Yardi Matrix says in the report.


“We forecast that it will take at least five years to return to first-quarter 2020 occupancy levels in gateway cities such as New York, San Francisco (and San Jose), Los Angeles and Chicago, and in secondary metros such as Orlando, Miami and the Twin Cities,” the report says.

“The upshot is that the pandemic has created a list of challenges and changes that the industry will wrestle with for some time. Our review of property-level performance indicates that potential distress might not be as widespread as first imagined, and that it might be an urban phenomenon.”

—Paul Fiorilla, Director of Research, and
Justin Dean, Senior Analyst

About Yardi Matrix:

Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population. Contact the company at (480) 663-1149.

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