Based on preliminary data, CBRE EA estimates a Q2 2020 vacancy rate of 4.6% for our national sample of professionally managed multifamily properties, up 70 basis points (bps) year-over-year and 40 bps quarter-over-quarter.
Considering the historic toll COVID-19 has taken on the U.S. economy, a 70 bps rise in vacancy is relatively modest, and indicates remarkable resiliency in the multifamily market. In April alone, the U.S. economy shed 20 million jobs as businesses closed to slow the spread of COVID-19; the unemployment rate surged from a 50-year low (3.5%) in February to rates not seen since the Great Depression (14.7%). But, despite the recent and unprecedented shock to the labor market, Q2 2020’s increase in vacancy pales in comparison to Q2 2009, in the middle of the Great Financial Crisis, when vacancy rose 170 bps year-over-year, from 5.6% to 7.3%.
Looking forward, expect pandemic-related economic stress to continue to nudge the multifamily vacancy rate upward. Factors putting upward pressure on vacancy include the recent uptick in COVID-19 infections in the southern and western U.S., as well as the expiration of enhanced unemployed at the end of July.
Of EA’s tracked markets, 54 posted year-over-year vacancy rate increases this quarter, 10 posted decreases, and two went unchanged. For the fourth consecutive quarter, El Paso (-230 bps) registered the largest drop in year-over-year vacancy. All six gateway markets saw vacancy rates increase: Boston (110 bps), Chicago (40 bps), Los Angeles (120 bps), New York (30 bps), San Francisco (190 bps), and Washington, D.C. (50 bps).