Apartment Absorption Nears Record High in Q2

Apartment demand in the U.S. has seen a remarkable surge in the second quarter of 2024, showing impressive absorption figures.

Apartment Absorption Nears Record High in Q2

Apartment demand in the U.S. has seen a remarkable surge in the second quarter of 2024, showing impressive absorption figures.

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Good morning. Despite supply dominating headlines, apartment demand in the U.S. has surged impressively in the second quarter of 2024.

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Apartment Market

Multifamily Absorption Reaches Record High in Q2

Apartment demand in the U.S. has seen a remarkable surge in the second quarter of 2024, showing impressive absorption figures.

Record demand: According to RealPage Market Analytics, demand for apartments surged in the year ending Q2 2024, with 390,000 units absorbed—the eighth-largest annual figure since 2000. Only the pandemic boom (mid-2021 to mid-2022), Q3 2018, and Q4 2000 had higher absorption rates.

Zoom in: To date, 257,000 units were absorbed in H1 2024, nearly matching the pandemic-era high of 270,000 in H1 2021. Despite strong demand, supply growth continues to outpace it. Over 500,000 new market-rate units were delivered in the past year, a 45% increase from the previous year and the highest since 1986. With 629,000 more units expected in the next 12 months.

The South dominated apartment demand: In Q2 2024, the South absorbed 226,000 units—nearly 60% of the nation's total, despite holding only 42% of the units. The West also saw improvement, with 89,000 units absorbed, marking its best performance in two years. The Northeast and Midwest had more modest absorptions of 30,500 and 44,100 units, respectively.

Rent growth highest in the Midwest: Lower inventory growth fueled increases in the West. In contrast, areas with high new supply, like Austin, Atlanta, and Dallas, faced significant rent cuts. Markets with lower inventory growth saw rent rises of 2.5% or more, emphasizing the impact of supply on rent trends.


Closing the gap: The void between supply and demand has narrowed, stabilizing occupancy and rent growth rates. Occupancy held steady at 94.2% in June for three consecutive months. Despite strong demand, rent growth remains modest due to a peak in new deliveries. Significant rent hikes are unlikely in 2024, highlighting the market's strong demand amid abundant supply.


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✍️ Editor’s Picks

  • Uncovering schemes: CRE mortgage fraud is on the rise as interest rates climb and defaults go up, leading to more regulatory scrutiny of property financials.

  • Evolving landscape: CRE pros expect office valuations to drop, housing inventory to improve, retail and data center demand to stay strong, and more in 2H24 and beyond.

  • Funding: Lone Star Funds completed its $5.3B LSF XII opportunity fund, which will target distressed assets across various markets.

  • RIP: Brandon Miller, managing partner at Real Estate Equity Corp and known for NYC projects, passed away at the age of 43.

  • Spying saga: Move Inc. has sued CoStar (CSGP), alleging a former Realtor.com employee leaked confidential info to boost Homes.com, prompting the legal battle.

  • Engineering expansion: Private equity is increasingly investing in engineering firms amid a surge in infrastructure spending, with $4.5B spent last year.

  • Distressed valuations: In mid-2024, distressed property valuations have fallen by 43%, with properties under $5M seeing a 51% devaluation.

  • Hospitals into housing: Sphere Investments is expanding its portfolio beyond medical centers into senior living and workforce housing with a $300M fund.


  • Rent control: Rent control policies harm rental housing providers, with 93 cents out of every dollar needed for operating costs.

  • Development drama: Logan Anjaneyulu's Afton Oaks Residences LLC filed for bankruptcy on a 500-unit San Antonio project with assets ranging from $10M to $50M.

  • Real estate rewind: Onni Group secured $300M in debt on three multifamily properties in a $1B deal across LA and Chicago, with a 6.21% fixed interest rate.

  • Grand opening: The 120-unit Douglas at Sunrise Complex in Puyallup, WA, opened with 1K units and a low vacancy rate below 7% amid strong renter demand in the Pacific Northwest.

  • Military maneuvers: Lendlease is selling its 40K-unit US military housing portfolio for 480M AUD to a Guggenheim Partners affiliate, Omaha Beach Investment Holdings LLC.

  • Back on the ballot: California's Proposition 33 seeks to repeal statewide rent control restrictions, igniting debate among tenant rights groups and property owners.

🏭 Industrial

  • Rethinking warehouses: By 2027, Gartner forecasts half of warehouse companies will switch to AI vision systems from scanning-based methods, enhancing efficiency.

  • Deal of the day: Investor confidence rises in Baltimore with EQT Exeter acquiring a 6-building industrial portfolio totaling 900 KSF for $140.5M.

  • Burgeoning empire: The Inland Empire's industrial sector is experiencing remarkable growth, with 17.5 MSF of new space, 45 facilities, and $709M in transaction volume.


  • Winter wins: Demetree Global purchased Hannibal Square in Winter Park, FL, for $55.3M, offering mixed-use space with retail, office, and residential units.

  • Changing hands: The Park at Cross Creek, a 39.35 KSF retail center in Malibu, CA, sold for $80M to a private investor.


  • Doubling down: Boston Properties (BXP) plans to boost its Reston Town Center office space from 645 KSF to 930 KSF.

  • Old vs. new: New office buildings maintained occupancy rates better after the pandemic than older buildings (10 years or older), which lost almost 420 MSF.

  • Office bargain: IMC Equity Group acquired Sawgrass Technology Park in Sunrise, FL, for $49M, a 35% discount from the property’s previous sale.

  • Rebirth of a city: Philadelphia's office investment market is finally showing signs of recovery, with a potential deal involving a large multifamily developer in the pipeline.


  • Tower twist: Hillcrest Real Estate requested financial aid from the City of LA to build a 395-room tower in Studio City.

  • Mid-market momentum: Hotel deal volume is expected to increase with a focus on mid-market and extended-stay properties, while the luxury segment remains tight.


Roofstock Research's deep dive reveals significant downside risk for institutional real estate values from Q2 2022 to Q1 2024, due to high interest rates and tight monetary policy, contrasting previous cycles where accommodative policies helped stabilize values. Read the full report here.

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