Freddie Mac Predicts a Strong Year for the Multifamily Sector

The multifamily sector is poised to enjoy a vibrant year, according to a new analysis released by Freddie Mac.

The Freddie Mac Multifamily Outlook predicted an increased additional construction and a supply of multifamily units, although some markets will start to moderate while others remain robust. The increased volume of supply is expected to raise the national vacancy rate slightly, but rent growth will remain above the historical average until supply meets demand. The annual industry originations will grow to between $250 billion and $260 billion, while the cap rate spreads will tighten to between 300 to 330 basis points.

"We started 2016 with good momentum on the heels of a strong year," said Steve Guggenmos, Freddie Mac Multifamily vice president of research and modeling. "This year more multifamily supply will enter the market at a pace not seen since the 1980s."