This year has been off to a strong start, surpassing our initial expectations. Our team is busier than ever helping our clients underwrite potential acquisitions, advising on operational challenges, and helping clients save on ever-rising expenses with our vendor relationships. On the operations side, we continue to see green shoots—an encouraging bright spot amid the grim headlines. The market has pulled back from the 2021 levels, but our portfolio’s performance does not reflect recessionary conditions. We’ve noticed a rebound in trade outs, resilient occupancy, reduced concessions, and even better performance among the more than 8,000 units we manage in the build-to-rent (BTR) space.
The Cushman & Wakefield Asset Services team provides third-party management services for over 182,000 units nationally, making our team one of the largest in the country. This operation generates a trove of data and analytics, which we share regularly through articles like this and our multifamily newsletter, Multifamily Digest. Because this data is proprietary to our clients, we do not share aggregate levels among most metrics, but broader trends are instructive with respect to market performance.
Despite Elevated Supply, Occupancies Are Holding Up
Occupancies Are Holding Up Despite Record Deliveries
Resilient Demand Allowing Rent Growth to Rebound
Last quarter, we shared an update on lease trade outs, and December’s figure pointed to a turnaround, which is exactly what we’ve seen in the months since. In fact, lease trade outs have accelerated as we approach the peak spring and summer leasing seasons. This rebound has outperformed the broader U.S. average.
Trade Outs Are Improving Entering Peak Leasing Season
Much of the rebound can be attributed to new lease trade outs. Through the fall and winter, they dipped into negative territory, but they have rebounded with vigor in 2024. This too has outperformed the U.S. average, which also has shown a bounce back, albeit smaller than what our portfolio has demonstrated.
BTR Portfolio Update
Among the more than 8,000 units we manage in the BTR space, we are seeing that the sector is on fire. Investor interest continues to shine, highlighted by the take private of Tricon Residential earlier this year.
Cushman & Wakefield released two articles around the turn of the year—the first highlighting the Growing Case for Build-to-Rent, and the second summarizing the current State of Build-to-Rent. To learn more about our capabilities and team, visit our BTR services website.
Trade Outs: The Strength In BTR
As overall rent growth faded across the U.S., the BTR sector has been a true bright spot. Rent growth has broadly outperformed the national benchmark, despite more than 20% of the existing inventory being under construction. According to CoreLogic’s Single-Family Rent Index, rents are up by 3.4% over last April, the highest rate of growth since last spring. Contrast that with the overall multifamily rent growth of 1.5% year-over-year (YOY) in the first quarter, and it’s clear that fundamentals within single-family rentals are holding up better than traditional multifamily apartments.
We also see that same outperformance within our BTR portfolio. Aggregate trade outs are 100 bps stronger in our BTR product compared to our overall portfolio. The rebound in new leases is clearly a significant factor in the resurgence—and a great sign for owners heading into the peak of leasing season. It also demonstrates the relative resilience in the subtype that we underlined in the “Growing Case for Build-to-Rent" article.
BTR Trade Outs Outperforming Overall Portfolio
Delinquencies Have Also Outperformed
Although our BTR units typically command higher nominal rents compared to their traditional multifamily peers, we see a stronger resilience among our residents. Today, we see a difference of 185 bps in the delinquency rate between our BTR units and broader portfolio. That compares favorably to the delta of 140 bps we have seen over the past year—a delta of 175 bps when excluding the jump in December.
It is worth highlighting that in both our overall and BTR portfolios, both delinquency metrics continue to fall. Portfolio-wide, our delinquency is down 140 bps from this time last year, as more bad debt has been resolved, and the backup in local court systems has worked itself out. This is an encouraging sign given the headaches this line item has presented over the past few years, and we are hopeful that the worst is in the rearview mirror.
BTR Delinquencies Have Also Outperformed Overall Portfolio
Today, we see a roughly 185 bps difference in our delinquency rate between our BTR units and our broader portfolio. While the market is not as robust as it was in 2021 and the first half of 2022, operating fundamentals across the Cushman & Wakefield Asset Services portfolio remain healthy.
With more than 180,000 units managed nationwide, the Cushman & Wakefield management team is constantly diving into the data gleaned from our boots-on-the-ground experience and knowledge of property management. We look forward to sharing these insights with you in future quarters.
