'Rental Renaissance' right on target
Two good articles on rental apartments in today's 12-21-11 Wall Street Journal.
"Big Developers Dabble in Apartment Market," by A.D. Pruitt and Dawn Wotapka, tells of 25.3% bump in multifamily construction starts in November vs. October. Key point: commercial office/retail property developers like Boston Properties Inc., SL Green Realty Corp., Mack-Cali Realty Corp., and Macerich Co. see multifam as a hot market.
Boston Properties just finished a 335-unit apartment complex in D.C. and an 86-unit rental apartment building in Boston, with rents starting at $3,000/month.
Macerich is building a 430-unit apartment tower in Tysons Corner Mall, in Fairfax, Va.
WSJ's Robbie Whelan describes "Demand for Rental Drives Big Rise in Home Building" in another piece today. Key point: mega-homebuilders like Lennar Corp., Toll Brothers, and Hovnanian Enterprises are jumping into the multifam construction biz. "The next 'boom' in residential construction is under way, especially in the South and West, but it is in multifamily rather than single-family homes," according to Steve Blitz, senior economist with ITG Investment Research.
Only caution: Will multifam be another bubble, with overbuilding leading to even more unproductive inventory? Ivy Zelman, of Zelman & Associates, the housing market consultant, says 2011 should yield 173,000 new apartment units, with 225,000 in 2012 and 280,000 in 2013 - well below the 352,000 in 2005.
Both WSJ articles reaffirm Building Design+Construction's Jan 2012 cover story, "Rental Renaissance: Rebirth of the Apartment Market." Look for it in your newly designed issue of BD+C, on its way in the New Year.