The Inland Empire multifamily market has been very dynamic for the year ending in Q3 2018, for both development and demand. Completions and absorption levels were elevated compared with recent quarters (785 units and 1,113 units, respectively).
With new supply, the vacancy rate of 3.4% edged down by 40 basis points (bps) from a year ago (and by 20 bps from Q2 2018).
The average monthly effective rent of $1,494 reached a new record level in Q3 2018, up by 4.5% from the prior year (one of the highest rent growth figures in the U.S.).
Multifamily asset acquisitions totaled $512.9 million in Q3 2018, reflecting a year-over-year increase of 40.5%. Cap rates ticked up 10 bps to 5.3% from Q2 2018, but remained near historical lows with stability projected through H2 2018, according to CBRE’s North America Cap Rate Survey.
The largest category of investors through the first three quarters of the year are private buyers looking for value-add opportunities. Purchases made by private buyers represented 73% of the investment total, up from 81% in 2017. Quiet since 2015, cross-border capital reappeared in the market and accounted for 18% of the total.