Although rental vacancy rates rose over the course of 2002 and the pace of new household formation stagnated, the number of permits issued for apartment/condominium unit construction held up well. The total number of dollars spent on constructing new multifamily buildings was about 10% greater last year than in 2001, a reflection of the larger average size and more upscale nature of the units being added. Through the first eleven months of 2002, building permits were issued for a total of 299,249 units in new buildings with 5 or more residences — a modest 1.3% increase over the total number of multifamily building permits issued over the same period in 2001. Across the four quadrants of the nation, we saw permit volumes rise in the Northeast (+10.6%), the Midwest (+8.2%), and the South (+4.7%), while in the West, an estimated 11.6% fewer permits were issued for multifamily construction. Within the West region, the steepest decline was recorded in the Rocky Mountain states, where about 20% fewer multifamily units were permitted last year than during 2001.
A total of 62 metropolitan areas nationwide issued 1,000 or more permits for the construction of new multifamily units through November 2002. Atlanta was by far the highest-volume metro market again last year, with 14,529 housing units permitted through the first eleven months of 2002. This was about 37% more units than had been permitted for new construction in runner-up New York. Other metro areas that issued 7,000 or more permits through November 2002 for apartment/condominium construction included Chicago, Houston, Washington, D.C., Orlando, and Los Angeles.
Permit growth between 2001 and 2002 was impressive in a large number of metro areas, but a lot of these areas were working from small volume bases and thus even with strong growth had issued fewer than 2,000 permits. Nevertheless, percentage gains were particularly noteworthy in the small markets of Little Rock, Ark.; Melbourne and Fort Pierce, Fla.; Albuquerque, N.M.; Omaha, Neb.; and Des Moines, Iowa. Among medium- and large-market areas, over-the-year increases were most impressive in Orange County, Calif; Norfolk, Va.; Houston; Sacramento; Sarasota, Fla.; and Minneapolis.
Of course, a nearly equal number of metro areas recorded steep declines in multifamily permit volumes between 2001 and 2002, especially in the West region. Denver, for example, recorded 47% fewer permits. Losses of 25% or more were also recorded in San Jose (-41.3%), Salt Lake City (-30.6%), and Riverside-San Bernardino (-25.5%).
Strongest growth, steepest declines in multifamily permits in 2002*
|*Based on percent change in units permitted through November 2002 compared to first 11 months of 2001
Source: U.S. Department of Commerce
|1.) Little Rock, Ark. (+455.2%)||1.) Raleigh-Durham, N.C. (-64.0%)|
|2.) Melbourne, Fla. (+167.3%)||2.) Kansas City (-57.2%)|
|3.) Orange County, Calif. (+139.0%)||3.) Myrtle Beach, N.C. (-48.8%)|
|4.) Fort Pierce, Fla. (+117.9%)||4.) Denver (-47.0%)|
|5.) Houston (+75.3%)||5.) San Jose (-41.3%)|