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Randolph Taylor
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Apartment demand rebounded in the nation’s gateway markets in the 2nd quarter, after fundamentals in these regions suffered throughout much of the past year.
U.S. apartments saw a burst in renter demand in the 2nd quarter of 2021, logging higher absorption than the nation has seen since RealPage began tracking the market back in the early 1990s.
While the Sun Belt markets – areas that have proven resilient throughout much of the COVID-19 pandemic – accounted for a sizable portion of the nation’s recent demand comeback, gateway markets also logged notable apartment absorption. This recent performance in gateway markets countered the declines these more expensive markets saw throughout much of the past year when deep job losses and population declines resulted in rising vacancy rates and price-cutting measures.
Los Angeles/Orange County
The California market Los Angeles/Orange County absorbed over 12,000 apartments in the 2nd quarter, marking the second strongest showing in the nation, after only Dallas/Fort Worth. This quarterly tally accounted for roughly half of the annual demand volume of over 23,880 units, the nation’s third-best performance after Dallas/Fort Worth and South Florida. This recent performance in Los Angeles/Orange County was quite a turnaround after this region logged annual net move-outs in 2020’s 2nd and 3rd quarters, as the job base dwindled and residents left the area for less pricey locales. At the same time, construction levels remained elevated in this area, especially in the Los Angeles urban core.

Solid 2nd quarter demand made up for previous losses, pushing occupancy in Los Angeles/Orange County to 96.6% as of June, a rate that is back in line with the national average after falling to a low of 95% in June of last year. Apartment operators responded to rebounding occupancy by pushing rents by 3.5% in the year ending June. While still only rising at about half the level of the national norm, rent growth in Los Angeles/Orange County is quite a change from the price cuts that got as deep as 5.1% not long ago in October of 2020.


Chicago absorbed over 10,000 apartment units in the 2nd quarter, making up for some net move-outs seen earlier in the pandemic and taking annual demand to over 7,300 units. Apartment occupancy climbed 110 basis points (bps) in the past year to stand at 95.6% in June. While still behind the national norm, that is the strongest performance Chicago has seen since August of 2019. In the year ending June, effective asking rents grew 2.3%. While this performance was still well behind the national average, it was the first time Chicago saw the return of rent growth since annual price cuts started back in May 2020.

Washington, DC

Washington, DC absorbed over 8,100 apartments in the 2nd quarter, accounting for most of the market’s annual demand volume of over 9,750 units. While apartment demand here never did fall into negative territory, it did fall well behind concurrent completion volumes, which are some of the most aggressive nationwide. Occupancy has rebounded slightly, hitting a few ticks ahead of the five-year average at 95.8% in June. While annual rent growth in Washington, DC seems insignificant at just 0.1%, this was the first time price increases returned after rent cuts were the norm for this market since May 2020.

Bay Area

The three Bay Area markets of San Francisco, San Jose, and Oakland logged sizable quarterly demand for 7,920 units, making up the bulk of annual demand of 8,380 units. The return to solid demand was especially significant for the Bay Area, which was one of the worst-suffering markets during the deepest declines of the COVID-19 pandemic. At its worst, annual net-move-outs in the Bay Area got as deep as 5,530 units in 2020’s 3rd quarter. The return of positive demand pushed occupancy up to 95.1% in the Bay Area in June. While that figure is a bit behind the region’s five-year average, it is well ahead of the low point of 93.6% logged as recently as February 2021. The Bay Area is one of only a handful of regions in the nation where rent change has not made it back to positive territory just yet. Prices were cut 5.9% year-over-year as of June, though that is notably better than the double-digit rent cuts the region was seeing just a few months ago.

New York

New York – another expensive gateway market where apartment fundamentals were hard-hit by the COVID-19 pandemic – saw a significant rebound in demand in the 2nd quarter when over 7,000 apartment units were absorbed. While healthy quarterly demand made up for some of the net move-outs seen earlier in the pandemic, however, annual absorption remained negative, with a loss of over 25,000 units, on the net. While demand boosted occupancy to 95.9% as of June, well ahead of the low point from February, this rate was still 100 bps below the year earlier showing. Thus, New York is the only major market where occupancy is still down year-over-year. Rents are also still being cut on an annual basis as well, but cuts of 8.4% are much better than the annual declines that got as deep as 15% not long ago in March 2021.


In the April-June time frame, Seattle absorbed nearly 5,900 apartment units, accounting for a sizable portion of the 7,260 units of demand seen in the year-ending 2nd quarter. This annual showing was close to hitting the market’s five-year norm and nearly matched concurrent supply volumes for the first time since the 1st quarter of 2020. Seattle apartment occupancy climbed to 96.1% in June, notable progress from the recent low of 93.8% logged at the end of 2020. Seattle didn’t see rent cuts get as deep as what was seen in the Bay Area and New York in the COVID-19 era, but this market has also yet to pull itself out of price decline. As of June, effective asking rents were down a modest 0.3% year-over-year. This is the mildest annual decline this market has seen since operators turned to price cuts in July 2020.

Northern New Jersey

Newark absorbed 5,100 units in the 2nd quarter, just missing out on a top 10 national performance. This recent boost pushed annual demand to nearly 9,570 units, the market’s best showing since the 3rd quarter of 2018. Furthermore, demand is back to pacing close to annual apartment supply, which has been at some of the nation’s strongest in the past year. Occupancy has rebounded in recent months, climbing to 96.7% in June, quite an improvement from the low point of 95.8% seen in March 2021. As a result, annual rent growth returned, albeit at mild amounts at 0.5% in the year ending June. Just a few months ago, when Northern New Jersey was at its worst, rents were being cut by 3.3% on an annual basis.


In Boston, apartment demand hit a solid 4,930 units in the April-June time frame, also just missing out on a top 10 national rate. This recent performance made up about half of Boston’s annual absorption of 9,430 units, the market’s strongest annual demand performance in at least a decade. Recent demand pushed occupancy up to 96.4% in June, pacing well ahead of Boston’s five-year average. Boston was another gateway market that saw the return of annual rent growth in June. Prices were up by 1.3% year-over-year after deep cuts were instituted throughout much of 2020.

Multifamily Investment Sales Broker at Marcus & Millichap
P: 630.570.2246
Randolph Taylor
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Over the past year, many of us at RealPage have referred to the date as Tom Hanks Day, since it’s when America’s Dad shared that he and wife Rita Wilson had contracted the virus. It’s also when the NBA shut down pro-basketball play and when the World Health Organization first classified what was happening as a global pandemic.

apartment market data services

As with so many things, then, the U.S. apartment market entered a fundamentally different period one year ago today.

Starting on March 12 and then proceeding through most of April, many apartment renters froze in place. Searches for new accommodations dropped drastically from year-earlier levels, and new-resident lease signings plunged. At the same time, retention of existing renter households at initial lease expiration soared to record heights. Said bluntly, people stopped moving and hunkered down.

One year later, key stats for the apartment market are in much better shape than what was initially feared back in March 2020.

Demand Is Robust

After apartment leasing activity took a giant hit in Spring 2020, people began to move around once more around mid-year. Apartment demand soared in the 3rd quarter and held well above what’s seasonally normal as 2020 drew to a close. By the end of the year, absorption of market-rate units in the country’s 150 largest metros was up to roughly 296,000 units, only a hair under annual results in 2017 through 2019.

Demand remains above the seasonally typical volume in the first few months of 2021. More than 30,000 units were absorbed in January and February, a time period when cold weather normally limits the net increase in occupied apartments to just a handful of units.

With demand proving stronger than many expected, U.S. apartment occupancy has avoided any damage. The February 2021 average occupancy rate of 95.4% for the U.S. is basically unchanged from the February 2020 figure of 95.5%.

Renters Are Paying (Mostly)

Unprecedented layoffs in March and April 2020 triggered fears that many households would no longer be able to pay their rent. That didn’t happen, at least not in the professionally managed apartment properties sector of the rental housing stock.

According to National Multifamily Housing Council research – to which RealPage contributes data – the share of households meeting their rent obligations ranges between 93% and 95% for each month since the initial U.S. outbreak, in most months off no more than 2 percentage points from year-earlier results.

apartment data service

While a now-improving economy might suggest that the worst is behind us for missed rent payments, there’s still some downside risk. Households suffering financial stress certainly need the rental assistance that is part of the Biden administration’s American Rescue plan. However, RealPage analysts have concerns that forgiveness of back rent owed could lead households to deprioritize meeting their rent payment obligations.

Pricing Power Is Mixed

Effective asking rents for new-resident leases generally dropped as COVID emerged, sliding a little in most locations but much more in select spots, especially expensive gateway cities.

How you feel about today’s pricing power is influenced by where you are, since there’s a huge spread in the results between the country’s top and bottom performers. Annual rent growth is great in metros like Riverside, Sacramento, Phoenix, Tampa, and Atlanta. On the other hand, the hole remains deep in New York and the Bay Area, and there’s also lots of work to do in Seattle, Boston, Washington, DC, and Los Angeles.

In the latest stats, month-over-month rent growth proved very solid during February. Markets that had displayed momentum previously are continuing to do quite well, and green shoots are beginning to show up in the places that had taken the biggest pricing hits earlier.

We’re Still Building

Lots of apartment product remains on the way. Ongoing construction coming into 2021 totaled roughly 583,000 market-rate units, and this year’s scheduled deliveries reach just over 400,000 units, surpassing annual additions delivered throughout the past few years.

The activity has cooled off a little over the course of the past year, with both starts and new multifamily building permit approvals down by 10% to 15%. Still, that’s a minor dip compared to what happened in the 2008 to 2009 recession, with the numbers remaining high by long-term historical standards.

multifamily data services

Developers remain eager to build in the suburbs, especially across fast-growing Sun Belt areas. While there’s less capital available for urban core construction, don’t write off that segment of the stock. Conversations about building more downtown towers are in process, as a project that gets going in the immediate future is likely to be delivering in a much-improved leasing environment.

Property Trade Volumes Are Coming Back

Information from Real Capital Analytics shows a moderate decline in the nation’s apartment sales volume during 2020, mainly reflecting that trades paused during the summer months. There was a brief period when many took a wait-and-see position, holding off until some clarity on valuations could be established. However, sales came roaring back during the final quarter of 2020, and the typical sales price – about $176,000 a door – basically didn’t move from its pre-pandemic level. Cap rates even compressed by another couple of ticks during the course of the year.

The stack of capital available for apartment investment remains huge, probably even bigger than it was pre-pandemic as some money that had been designated for other types of real estate now could go to apartment buys. Anyone on the sidelines waiting for fire-sale prices on distressed assets appears to be out of luck, with maybe the exception of a few small properties with mom-and-pop owners.

Operations Continue to Evolve

Apartment operators had to move fast to adapt to the changes that COVID brought to day-to-day practices on-site and in the back office. After addressing safety issues for both employees and residents, the first moves often were to introduce or expand virtual leasing capabilities and to address rent payment options.

Lots of changes continue, as operators are assessing how their resident profiles are evolving and how the needs and preferences of their customers are shifting. The use of technology to move processes offsite is accelerating, and many operators are taking a hard look at expenses and how those costs might be trimmed.

Multifamily Investment Sales Broker at Marcus & Millichap
P: 630.570.2246
Randolph Taylor
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About 79,000 units were absorbed in the final three months of 2020, a far stronger performance than normal as demand that typically would have registered during the 2nd quarter was pushed to later in the year. Before 2020, the decade’s strongest 4th quarter demand performance was in 2014, when absorption reached a notable 37,000 units.

After apartment leasing slowed drastically in the spring and early summer of 2020, due to the COVID-19 pandemic, demand rebounded in the last half of the year. Adding in the 3rd quarter total, absorption in the final six months of 2020 came to over 234,000 units, a big portion of the total annual volume.

In fact, after an unpredictable year, with atypical highs and lows, annual apartment demand shook out to be rather average in the end. Apartment absorption in calendar 2020 came in at a little over 296,000 units, shy of 2019’s total by only 9% and essentially identical to the average annual demand posted in the previous five years.

The demand performance in calendar 2020, however, was split down market lines. Solid absorption registered throughout most of the Sun Belt, led by Dallas/Fort Worth, Atlanta, Houston, Phoenix, Denver, and Charlotte. On the other hand, New York and the Bay Area suffered sizable net move-outs, and there was minimal demand in other gateway locations.

While the nation’s late-in-the-year demand comeback was impressive, apartment absorption still didn’t quite keep pace with rising completion volumes. Like demand, completions bumped up in the last half of the year, after project timelines were delayed. In total, nearly 345,000 market-rate units wrapped up construction in 2020. This was the biggest annual block of deliveries since the mid-1980s.

Over the past decade, average annual completion volumes were elevated, but still under current levels, at 230,000 units. In the decade before that, annual deliveries were even more modest, at under 197,000 units.

Moving forward, there still are about 583,000 market-rate apartments under construction, with nearly 404,000 of those scheduled to complete in 2021. That’s roughly 50,000 more than the already elevated construction volumes from 2020. Even assuming some delivery delays will continue, completions in the coming year could well exceed those volumes. The biggest increases in new supply scheduled for delivery in 2021 are slated for the struggling coastal gateway markets.

Apartment demand should remain robust as the economic recovery continues in 2021. However, leasing activity will struggle to keep pace with such elevated delivery volumes, especially in the gateway markets. For the nation overall, any potential supply-demand imbalance in the year ahead should be modest, as Sun Belt markets continue to bolster U.S. demand totals.

Apartment Demand Surges to Strongest Third Quarter on Record
Multifamily Investment Sales Broker at Marcus & Millichap
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Randolph Taylor
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Tenants are moving to the suburbs in droves, according to CoStar’s latest apartment report, and downtown landlords are cutting rents.

CoStar tracked several novel trends in the multifamily sector during the past quarter, including an extended leasing season and a lot of pent-up demand for cheaper, larger suburban apartments during the pandemic and economic shutdown.

“Let’s start with some good news: Apartment demand came roaring back in the third quarter, topping 100,000 units. That’s easily the best third-quarter demand on record,” John Affleck, CoStar’s vice president of market analytics, said in a new video. The wave of leasing “confirms that many renters postponed moving into a new apartment until after lockdown measures imposed in the spring had lifted,” he said.

That sounds good. But the third quarter also saw some huge numbers of new apartments coming to market. And mostly, they opened in areas considered to be falling out of favor with renters: expensive, downtown neighborhoods that used to boast proximity to offices and now-restricted hangouts such as restaurants and bars.

“Downtown landlords are doing their best, though. Overall, they’ve slashed rents for downtown product by more than 6% from the March peak — even as rents for suburban product are trending above pre-COVID levels,” said Affleck. “And the rate of decline in downtown rents has yet to slow. Rents have fallen at a rate of about 1% per month since June.”

Renters have been voting with their feet, moving outside city centers.

“That third-quarter demand was powered by near-record absorption of suburban units, which offer cooped-up city dwellers more space at lower cost — and at least the perception of safety,” said Affleck.

The discounts on downtown rents appear to be having an effect. He noted, in the third quarter, downtowns saw more people moving in than moving out of apartments — the opposite of the second quarter. But those areas still have a vacancy rate that’s higher the historical average.

One indicator, search activity for rentals on, part of CoStar Group, the parent of CoStar News, increased in the suburbs and areas farther out in places such as Stamford, Connecticut; California’s Inland Empire; and Baltimore.

“Still, search activity is still running at above pre-COVID levels in every major market, and we’ve seen that activity turn into strong demand last quarter,” he said. “Could the fourth quarter also bring a record number of new leases in a leasing season that never ends?”


Source: By John Doherty CoStar News October 6, 2020 | 11:19 AM

call for offers Due: Wednesday 10/7/2020 @ 5 PM



Victorian Apartments

800-834 Victoria Dr. Montgomery, IL 60538

Listing Price: $14,500,000

Cap Rate 6.38%
Number of Units 152
GRM 8.30
Occupancy 96%
Price/Unit $95395
Price/Gross SF $135.14
Gross SF 107200

View Listing Documents

Investment Highlights

  • 152 Unit Suburban Multifamily Property
  • 32 Studios, 72 One-Bedrooms & 48 Two-Bedrooms
  • Clubhouse with Office, Laundry Facilities, Fitness Area, Outdoor Pool, and Courtyard
  • Located in Montgomery Illinois | 40 Miles Southwest of Downtown Chicago
  • Many Upgraded Kitchens and Baths
  • Tenant Paid Electric Baseboard Heat
  • Value-add component, upside in rents

Map Overview

Investment Overview

Marcus & Millichap is proud to present to market Victorian Apartments, a 152-unit apartment community located in west suburban Montgomery, Illinois bordering Kendall County to the South, the fastest growing county in Illinois, and the City of Aurora, IL to the East, the second-largest city in Illinois. The subject property is approximately 40 miles southwest of downtown Chicago.

Victorian Apartments consists of 16 two and three-story apartment buildings and clubhouse spread out over almost 10 acres; offering 32 large studios, 72 one-bedrooms, and 48 two-bedroom apartment homes.​​​ Community amenities include a clubhouse, an on-site management office, laundry facilities, a fitness area, an outdoor pool, a central courtyard area with a playground, and ample off-street parking.​​​

Each unit has separately metered, tenant paid, low maintenance, electric baseboard heating, and ac sleeve units.​​​ Approximately 60 percent of units have recently updated kitchens & baths as well as other capital improvement made including new windows, parking lot repairs, replacement of all deck footings & supports and updated intercom system with integrated Alexa. Roofs are in good condition approximately 10-12 years old.

There is investor upside in this multifamily offering through the continued renewal and releasing of under-market rents. Further upside may also be realized in future years from job growth and economic development in the area through the redevelopment of the recently sold 350-acre former Caterpillar manufacturing complex minutes from the property.


Multifamily Investment Sales Broker at Marcus & Millichap
P: 630.570.2246
Randolph Taylor
Latest posts by Randolph Taylor (see all)
Multifamily Investment Sales Broker at Marcus & Millichap
P: 630.570.2246
Randolph Taylor
Latest posts by Randolph Taylor (see all)