Over the last few months one of the most popular topics of discussion at commercial real estate conference is when will the current rush of U.S. apartment construction slow down. Although the number of new single-family homes starting construction dropped in January 2015, construction starts on multifamily structures with five or more units increased to 372,000 , up more than 12% from December 2014. The renter lifestyle seems to appeal to both older and younger cohorts as homeownership rate continues to lag.
CoStar’s forecasts project to see apartment vacancy increases through the end of 2015 over the next 12 months in 49 of the top 52 markets. While developers remain optimistic they’ll keep a lid on new units and lenders continue to provide liquidity, there is now no guarantee that the construction spurt will let up next year.
Excerpts from the Article:This wave of high-end new supply is most apparent in the vacancies of 4 and 5 Star properties, which have risen more than 100 basis points in Boston, DC and Houston at year end. Markets like Phoenix and Chicago, where new product has already been delivered and is leasing up, could be the next to see vacancy spikes. Over the next 12 months, 49 of the top 54 markets in CoStar’s forecast are projected to see apartment vacancy increases through the end of 2015. Markets like Denver and Houston will see record deliveries over next two years, with each market have upwards of 20,000 units in the construction pipeline.
Citation and link:
Drummer, Randyl. “Apartment Construction Boom Could Extend Well Into 2016.” CoStar News., 18 Feb. 2015 Web. 19 Feb. 2015. http://www.costar.com/News/Article/Apartment-Construction-Boom-Could-Extend-Well-Into-2016/168975