Yardi Matrix has released its Q4 2023 Multifamily Supply Forecast, emphasizing a short-term spike and plateau of new construction. According to the report, Yardi finds that construction starts have remained "relatively robust" in the first half of 2023, with the under-construction pipeline increasing by 7.6% in Q3.
Because of this, new activity is starting to slow. The forecast for project completions has increased by 5.8% for 2024 and 6.2% for 2025. Completions for later years are forecasted to decrease by roughly 5 percent, according to Yardi.
Long-Term Multifamily Supply Forecast
"We continue to expect a mild recession will start in late 2023 or early 2024," the report states. Yardi's forecast for 2026 has therefore been reduced by 5.8% to 377,622 units, while the baseline forecast for 2027 and 2028 completions has been similarly reduced by 4.7% and 5.4% respectively.
For the multifamily markets monitored by Yardi Matrix, there are currently 1.2 million units within the under-construction pipeline. Of these units, just under 480,000 are in the lease-up phase, which is in line with the trailing six-month average of 483,000 units but represents a substantial 15.9% increase from the figures of the previous year. Most of these units are expected to be finalized either by the end of 2023 or during the first half of 2024.
What does this mean for 2024?
Though short-term construction starts remained elevated through the first half of 2023, several findings from the third quarter suggest that new development activity is slowing. The near flat growth recorded in Q3 is a sharp departure from the growth the planned pipeline recorded post pandemic—another sign that development interest is slowing, according to Yardi.
Overall, Yardi Matrix anticipates an uptick in construction completions in the next two years. Yardi's construction start data reached its year-over-year peak in May 2023. Both planned and prospective pipelines plateaued in Q3.
"Our baseline forecast envisions new supply bottoming in 2026 at around 377,000 units, while the alternative downside forecast models new supply bottoming in 2026 at 335,000 units," writes Ben Bruckner, Senior Research Analyst, Yardi Matrix.
Review the latest Multifamily Supply Forecast here.
Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, industrial, office and self storage property types. Email matrix@yardi.com, call 480-663-1149 or visit yardimatrix.com to learn more.
Related Stories
| Jan 4, 2011
Grubb & Ellis predicts commercial real estate recovery
Grubb & Ellis Company, a leading real estate services and investment firm, released its 2011 Real Estate Forecast, which foresees the start of a slow recovery in the leasing market for all property types in the coming year.
| Dec 17, 2010
Condominium and retail building offers luxury and elegance
The 58-story Austonian in Austin, Texas, is the tallest residential building in the western U.S. Benchmark Development, along with Ziegler Cooper Architects and Balfour Beatty (GC), created the 850,000-sf tower with 178 residences, retail space, a 6,000-sf fitness center, and a 10th-floor outdoor area with a 75-foot saltwater lap pool and spa, private cabanas, outdoor kitchens, and pet exercise and grooming areas.
| Dec 17, 2010
Luxury condos built for privacy
A new luxury condominium tower in Los Angeles, The Carlyle has 24 floors with 78 units. Each of the four units on each floor has a private elevator foyer. The top three floors house six 5,000-sf penthouses that offer residents both indoor and outdoor living space. KMD Architects designed the 310,000-sf structure, and Elad Properties was project developer.
| Dec 17, 2010
Vietnam business center will combine office and residential space
The 300,000-sm VietinBank Business Center in Hanoi, Vietnam, designed by Foster + Partners, will have two commercial towers: the first, a 68-story, 362-meter office tower for the international headquarters of VietinBank; the second, a five-star hotel, spa, and serviced apartments. A seven-story podium with conference facilities, retail space, restaurants, and rooftop garden will connect the two towers. Eco-friendly features include using recycled heat from the center’s power plant to provide hot water, and installing water features and plants to improve indoor air quality. Turner Construction Co. is the general contractor.
| Dec 17, 2010
Toronto church converted for condos and shopping
Reserve Properties is transforming a 20th-century church into Bellefair Kew Beach Residences, a residential/retail complex in The Beach neighborhood of Toronto. Local architecture firm RAWdesign adapted the late Gothic-style church into a five-story condominium with 23 one- and two-bedroom units, including two-story penthouse suites. Six three-story townhouses also will be incorporated. The project will afford residents views of nearby Kew Gardens and Lake Ontario. One façade of the church was updated for retail shops.
| Dec 7, 2010
Prospects for multifamily sector improve greatly
The multifamily sector is showing signs of a real recovery, with nearly 22,000 new apartment units delivered to the market. Net absorption in the third quarter surged by 94,000 units, dropping the national vacancy rate from 7.8% to 7.1%, one of the largest quarterly drops on record, and rents increased for the second quarter in a row.
| Nov 3, 2010
Senior housing will be affordable, sustainable
Horizons at Morgan Hill, a 49-unit affordable senior housing community in Morgan Hill, Calif., was designed by KTGY Group and developed by Urban Housing Communities. The $21.2 million, three-story building will offer 36 one-bed/bath units (773 sf) and 13 two-bed/bath units (1,025 sf) on a 2.6-acre site.
| Nov 3, 2010
Rotating atriums give Riyadh’s first Hilton an unusual twist
Goettsch Partners, in collaboration with Omrania & Associates (architect of record) and David Wrenn Interiors (interior designer), is serving as design architect for the five-star, 900-key Hilton Riyadh.
| Nov 1, 2010
Sustainable, mixed-income housing to revitalize community
The $41 million Arlington Grove mixed-use development in St. Louis is viewed as a major step in revitalizing the community. Developed by McCormack Baron Salazar with KAI Design & Build (architect, MEP, GC), the project will add 112 new and renovated mixed-income rental units (market rate, low-income, and public housing) totaling 162,000 sf, plus 5,000 sf of commercial/retail space.
| Nov 1, 2010
Vancouver’s former Olympic Village shoots for Gold
The first tenants of the Millennium Water development in Vancouver, B.C., were Olympic athletes competing in the 2010 Winter Games. Now the former Olympic Village, located on a 17-acre brownfield site, is being transformed into a residential neighborhood targeting LEED ND Gold. The buildings are expected to consume 30-70% less energy than comparable structures.
