Riding strong pre-COVID demand, and supported by generous federal and state stimulus packages, multifamily fundamentals were only modestly impacted by pandemic-related economic shocks in Q2 2020. The long-term outlook for multifamily remains strong, with both rent and vacancy expected to recovery to pre-COVID levels by Q1 2022.

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.

Multifamily fundamentals are projected to follow a similar shape as the U.S. economy over the next two years: a sharp downturn followed by a quick recovery.

Though apartment fundamentals are expected to hit their weakest points one quarter later than employment, they are also projected to return to pre-COVID levels more quickly, hitting Q1 2020 levels one quarter earlier, in Q1 2022.

Based on preliminary data, we estimate a 4.3% vacancy rate for CBRE EA’s national sample of professionally managed apartments in Q1 2020—down 30 bps year-over-year and up 20 bps quarter-over-quarter.

Although GDP and job growth are slowing, unemployment remains near its cyclical low and consumer spending is showing resilience. While the economy remains healthy and broadly supportive of property market fundamentals, absorption of real estate will likely slow through 2020.