Developers of multifamily apartment buildings remain mostly positive about their markets’ current conditions, according to the latest quarterly tracking data that the National Association of Home Builders released on February 26.
NAHB’s Multifamily Production Index (MPI), based on responses from 93 developers across the country, stood at 54, on a scale of 0 to 100, in the fourth quarter of 2014. The Index—a composite measure of developer sentiments about construction for low-rent units, market-rate rentals, and for-sale condos—registered above 50 for each quarter last year, and has been hovering at 50 or higher since the first quarter of 2013.
The latest reading “is in line with our view that the multifamily segment of the industry has largely recovered from the downturn,” said NAHB Chief Economist David Crowe. “After increasing steadily over the past several years, multifamily production has now reached a healthy, sustainable level.”
Developers’ attitudes are also reflected in their willingness to take on future projects. In January, permits issued for buildings with five or more units rose by 13.8% to an annualized rate of 372,000, according to the Census Bureau.
A closer look at the numbers finds that developers’ sentiments about current conditions for market-rate starts, at an index of 62, were more robust than their sentiments for either low-rent starts (52) or for-sale condo starts (50).
NAHB’s Vacancy Index, which measures the industry’s perception about apartment vacancies, stood at 39 in the fourth quarter of 2014, compared to 38 for the same quarter a year earlier. (The lower the index, the fewer the perceived vacancies.) Interestingly, developers perceived lower vacancies for Class B apartments compared to either Class A or C apartments.
Developers’ attitudes are also reflected in their willingness to take on future projects. In January, permits issued for buildings with five or more units rose by 13.8% to an annualized rate of 372,000, according to preliminary estimates released by the Census Bureau on February 18.
Multifamily starts in January were up 24.5% over the same month a year earlier to an annualized rate of 381,000 units. In 2015, NAHB expects multifamily starts ultimately to increase modestly to around 358,000. “Because of strong job growth, we expect to be able to keep building for the foreseeable future,” said W. Dean Henry, CEO of Legacy Partners Residential in Foster City, Calif., and chairman of NAHB’s Multifamily Leadership Board.
Financing projects should not be an issue, as more lenders are jumping into this sector. Banks and Commercial Mortgage-Backed Securities lenders increased their market share of lending for multifamily projects through 2014, and are expected to be even bigger players this year, as Fannie Mae and Freddie Mac pull back. “Capital is plentiful and many lenders are expanding their target markets for investments,” observed Faron Thompson, head of Jones Lang LaSalle’s multifamily debt finance team.
It’s worth noting, though, that Fannie and Freddie expect demand for multifamily housing to soften a bit over the next two years, and for most of the growth to occur in a limited number of metro markets.
Related Stories
| Aug 11, 2010
10% of world's skyscraper construction on hold
Emporis, the largest provider of global building data worldwide, reported that 8.7% of all skyscrapers listed as "under construction" in its database had been put on hold. Most of these projects have been halted in the second half of 2008. According to Emporis statistics, the United States had been hit the worst: at the beginning of 2008, "Met 3" in Miami was the only U.S. skyscraper listed as being "on hold". In the second half of the year, 19 projects followed suit.
| Aug 11, 2010
Structure Tone, Turner among the nation's busiest reconstruction contractors, according to BD+C's Giants 300 report
A ranking of the Top 75 Reconstruction 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
Skanska completes $74 million Harbor Towers project six months ahead of schedule
Skanska USA Building Inc. announced the completion of a $74 million rehabilitation project at Harbor Towers, a 40-story luxury condominium complex comprising two towers located on Boston’s waterfront. Skanska served as Program Manager and oversaw the repair and replacement work that dramatically enhanced the reliability, cost-effectiveness, and energy efficiency of the buildings’ MEP systems.
| Aug 11, 2010
Best AEC Firms of 2011/12
Later this year, we will launch Best AEC Firms 2012. We’re looking for firms that create truly positive workplaces for their AEC professionals and support staff. Keep an eye on this page for entry information. +
| Aug 11, 2010
Manitoba Hydro Place, Tornado Tower among world's 'best tall buildings,' according to the Council on Tall Buildings and Urban Habitat
The Council on Tall Buildings and Urban Habitat last week announced the winners of its annual “Best Tall Building” awards for 2009, recognizing one outstanding tall building from each of four geographical regions: Americas, Asia & Australia, Europe, and Middle East & Africa. This year’s winners are: Manitoba Hydro Place, Winnipeg, Canada; Linked Hybrid, Beijing, China; The Broadgate Tower, London, UK; Tornado Tower, Doha, Qatar.
| Aug 11, 2010
Call for entries: Building enclosure design awards
The Boston Society of Architects and the Boston chapter of the Building Enclosure Council (BEC-Boston) have announced a High Performance Building award that will assess building enclosure innovation through the demonstrated design, construction, and operation of the building enclosure.
| Aug 11, 2010
CampusBrands Inc., NYLO Hotels team to launch student housing franchise brand
Which would you choose: the cramped quarters, thin mattresses, and crowded communal bathrooms of dormitory life or a new type of student housing with comfortable couches, a game room, fitness center, Wi-Fi in every room, flat-screen televisions and maybe even a theater?
| Aug 11, 2010
Portland Cement Association offers blast resistant design guide for reinforced concrete structures
Developed for designers and engineers, "Blast Resistant Design Guide for Reinforced Concrete Structures" provides a practical treatment of the design of cast-in-place reinforced concrete structures to resist the effects of blast loads. It explains the principles of blast-resistant design, and how to determine the kind and degree of resistance a structure needs as well as how to specify the required materials and details.