If you’ve been listening to the podcast for a while, you will know that I’m a proponent of the laws of supply and demand. If you ignore the laws of supply and demand, you do so at your peril.
It’s always been the case that a new building will go through a process of offering leasing incentives for some of the first tenants and then remove the incentives at certain occupancy thresholds, and eventually raise starting rents as the building approaches stabilization. That’s a pretty standard process and applies equally to both residential and commercial buildings.
According to a recent study published by Costar, new properties in some over supplied markets are offering deeper and deeper leasing incentives in order to attract clients. Last year was a 40 year record year with new supply of over 950,000 multi family apartments entering the market. Some the hottest sunbelt markets can only be described as over supplied. It will take time for those markets to absorb the extra units.
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Host: Victor Menasce
email: [email protected]
