The news is simple: People want to live in downtown Cleveland and in the urban neighborhoods surrounding the city’s center. And that means that demand for multifamily properties in the city remains high.
That’s the takeaway from the 2017 Cleveland multifamily overview released this week by Marcus & Millichap.
According to Marcus & Millichap, the new apartment buildings rising to meet this demand will mostly be located in the center of Cleveland. This isn’t a surprise; a growing number of renters want to live neaer transportation, workplaces, retail centers and entertainment options, and these options are plentiful in the heart of the city.
Developers in Cleveland are not only building new apartment towers, they are also converting outdated office product into multifamily. These efforts should give renters looking for modern apartments in Cleveland a greater number of options.
Marcus & Millichap estimates that developers will add 1,600 new apartment units in Cleveland this year, a boost from the about 700 that came online last year.
The vacancy rate in the multifamily sector in Cleveland should hit 3.9 percent, according to Marcus & Millichap. That’s low, but it’s actually up 60 basis points from 2016. Marcus & Millichap credits the rise to the larger number of apartment units that are hitting the market.
The low vacancy rate means that apartment rents in Cleveland will go up in 2017. Marcus & Millichap predicted that the average effective apartment rent in the market will rise 3.8 percent to an average of $913 a month in 2017. That’s a bit of a slowdown from the 5 percent jump in effective rents that the market saw in 2016.