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Writer's pictureSuzette West

Marcus & Millichap 2021 U.S. Commercial Real Estate Outlook - Multifamily

Updated: Nov 25, 2021

In the latest Commercial Real Estate Outlook released for 2021, Marcus & Millichap opens with the expected uncertainty of the health crisis carrying well into 2021. The report mentioned how some sectors were hit hard, such as hospitality, senior housing, and brick and morter retailers. Also mentioned, were segments that thrived such as necessity-based retailers, medical offices, e-commerce retailers, life science, pharmaceutical firms, and many industrial segments.


Amidst this backdrop of uncertainty were demographic shifts that were intensified by the health crisis, as a wave of layoffs ensued and the remaining workforce was sent home to work remotely from home. This prompted an aversion to public transit, and caused many to move away from urban areas. The higher unemployment and economic uncertainty drove many to find lower- cost housing. With commute times not being a factor, suburbs and tertiary markets benefited.


Other Highlights from the report:

  • Economy jolted as coronavirus spread, as the federal government quickly infused cash into the market via the CARES Act and other legislation.

  • Immunizations provide a path forward, as Operation Warp Speed was established to fast track development of and approval of vaccines to combat virus. Immunizations were slow to ramp up. The anticipation of "herd immunity" required extra time. Uncertainty was prolonged.

  • Vaccine distribution to play a critical role in economic outlook.

  • Biden Administration weighs policy goals against stimulus needs while the Federal Reserve guides inflation.

  • Additional federal likely incoming holding significant implication on growth, as the $900 billion stimulus package passed at the end of 2020 serves as a vital stopgap.


The Effects on Multifamily Outlook for 2021

  • High unemployment among low wage earners burdens C class properties, yet remained resilient throughout 2020. Expanded unemployment benefits, rental assistance, and eviction moratorium helped bolster rent collections for C class properties, as well as the desire for lower cost housing options.

  • Class A segments experienced less impact of job losses with more workers able to work from home, but had limited move-ins when new builds were completed. Operators in overbuilt areas are expected to counter this with the use of concessions, although it is expected that class A demand will ramp up alongside recovery.

  • Solid performance shows promising outlook to sustain investment appeal.

  • Sunbelt metros that experienced growth in population, household formation, and employment face the strongest multifamily tailwinds.

  • Mountain region metros have significant demand due to fast-growing population growth and other underlying factors.


Markets experiencing the most demographic tailwinds:


Houston, Indianapolis, Riverside-San Bernardino, Sacramento, San Antonio, Seattle-Tacoma, Tampa-St. Petersburg


Markets that suffered mild setbacks due to the pandemic include:


Cincinnati, Columbus, Fort Lauderdale, Kansas City, Louisville, Miami-Dade, Minneapolis - St Paul, Portland, Washington DC, West Palm Beach.


Markets with the most protracted recovery:


Boston, Chicago, Las Vegas, Los Angeles, New York City, Northern New Jersey, Oakland, Orange County, Orlando, San Diego, San Francisco, San Jose.


Markets with the slowest growth:


Baltimore, Cleveland, Detroit, Milwaukee, New Haven - Fairfield County, Philadelphia, Pittsburgh, St Louis


For more details, please visit the 2021 Marcus and Millichap Multifamily Investment Forecast at:




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