Apartment markets in major coastal cities underperformed the national average in 2021, as they were more heavily impacted by lockdowns and the move of some households to cheaper, sunbelt cities. But as long as Omicron doesn’t throw a spanner in the works with cities now open again that situation will reverse somewhat in 2022, and most cities will catch-up and outperform national average total returns from 2022-26. In particular a strong labour market and less opportunity to work from home in D.C. means total returns there will be just under 7% p.a. from 2022-26. NYC will lag slightly as finance firms revaluate office need and some offices are converted to apartments to meet the demand for larger units. But the main exception is San Francisco, where an exodus of footloose tech workers and growing concerns over crime have cut demand. Total returns there will average under 2% p.a. from 2022-26. In view of the wider interest, we are also sending this US Commercial Property Major Apartment Markets Outlook to clients of our US Housing service.
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