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
| Aug 11, 2010
REDD and Corcoran Group Real Estate developing eco-friendly boutique condos in Brooklyn's Vinegar Hill
REDD and Corcoran Group Real Estate are developing 100 Gold, a 10-unit boutique condominium complex in Brooklyn's Vinegar Hill that consists of (6) one bedrooms, (2) duplex studios—one with a private yard, and (2) penthouses—duplex apartments with one bedroom and loft, and private terraces.
| Aug 11, 2010
AECOM, Arup, Gensler most active in commercial building design, according to BD+C's Giants 300 report
A ranking of the Top 100 Commercial Design Firms based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
Turner Building Cost Index dips nearly 4% in second quarter 2009
Turner Construction Company announced that the second quarter 2009 Turner Building Cost Index, which measures nonresidential building construction costs in the U.S., has decreased 3.35% from the first quarter 2009 and is 8.92% lower than its peak in the second quarter of 2008. The Turner Building Cost Index number for second quarter 2009 is 837.
| Aug 11, 2010
AGC unveils comprehensive plan to revive the construction industry
The Associated General Contractors of America unveiled a new plan today designed to revive the nation’s construction industry. The plan, “Build Now for the Future: A Blueprint for Economic Growth,” is designed to reverse predictions that construction activity will continue to shrink through 2010, crippling broader economic growth.
| Aug 11, 2010
PCL Construction, HITT Contracting among nation's largest commercial building contractors, according to BD+C's Giants 300 report
A ranking of the Top 50 Commercial Contractors based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
Webcor, Hunt Construction lead the way in mixed-use construction, according to BD+C's Giants 300 report
A ranking of the Top 30 Mixed-Use Contractors based on Building Design+Construction's 2009 Giants 300 survey. For more Giants 300 rankings, visit http://www.BDCnetwork.com/Giants
| Aug 11, 2010
Report: Fraud levels fall for construction industry, but companies still losing $6.4 million on average
The global construction, engineering and infrastructure industry saw a significant decline in fraud activity with companies losing an average of $6.4 million over the last three years, according to the latest edition of the Kroll Annual Global Fraud Report, released today at the Association of Corporate Counsel’s 2009 Annual Meeting in Boston. This new figure represents less than half of last year’s amount of $14.2 million.
| Aug 11, 2010
First CityCenter projects earn LEED Gold
CityCenter announced today that it has received three Leadership in Energy and Environmental Design LEED Gold certifications from the U.S. Green Building Council for: 1) ARIA Resort's hotel tower; 2) ARIA Resort's convention center and theater; 3) Vdara Hotel. ARIA and Vdara will open in December on the Las Vegas Strip and are the first of CityCenter's developments to be LEED certified.
| Aug 11, 2010
Oldcastle Precast Building Systems wins PCI 2009 Sustainable Design Award
Oldcastle Precast Building Systems was part of the award winning team behind the affordable housing development Melrose Commons Site 5 situated in the South Bronx. PCI (Precast Concrete Institute) recently selected Melrose 5 for the “2009 PCI Design Award for Best Sustainable Project”.