The design and construction outlook for Multifamily Housing is again moving in the right direction, according to the PSMJ Resources’ Quarterly Market Forecast (QMF).
After a first quarter that saw the multifamily market suffer its lowest level of proposal activity in nearly a decade, PSMJ’s quarterly survey of architecture, engineering, and construction firm executives reported a +7% net plus/minus index (NPMI), up from the -2% recorded in the first three months of the year.
PSMJ’s NPMI expresses the difference between the percentage of firms reporting an increase in proposal activity and those reporting a decrease. The QMF has proven to be a solid predictor of market health for the AEC industry since its inception in 2003. A consistent group of over 300 firm leaders participate regularly, with 171 contributing to the most recent survey.
As unimpressive as multifamily’s second quarter NPMI is—particularly considering that it experienced seven consecutive years of quarterly NPMIs above 40% through the end of 2019—the upturn is significant. The market’s negative NPMI in the first quarter was its lowest since it capped 11 consecutive quarters of negative proposal opportunity growth with a -5% in the third quarter of 2010.
Multifamily Housing Market Proposal Activity – 1Q08 to 2Q20 (NPMI)
The multifamily rebound was part of overall improving conditions for most of the Housing market. Even with the COVID-19 crisis slowing down the overall economy, housing’s rebound may be driven in part by historically low mortgage interest rates.
Housing’s NPMI increased from -19% in the first quarter to +2% in the second quarter, making it one of only four major markets with a positive NPMI among the 12 assessed in PSMJ’s QMF. Water/wastewater (20%), energy/utilities (15%) and healthcare (10%) were the others.
Among the firms that work in the multifamily sector, 31% said that proposal activity increased in the second quarter, while 24% said it decreased. The remainder said the market was relatively flat.
PSMJ Senior Principal David Burstein, PE, AECPM, predicts that single-family housing will rebound faster and stronger than multifamily in the coming months.
“Overall, the housing market is very strong,” says Burstein. “For many years, this market has been dominated by multifamily housing as people moved into cities. Recently, that trend has reversed. Single-family housing in suburbs is now stronger than multifamily housing in large cities. This is even more true for new condominiums than for new apartment rental housing.”
Among housing’s other submarkets, single-family properties (individual) saw its NPMI improve from -31% in the first quarter to +9 in the second quarters.
Single-family developments remained well into the negative at -12%, but that was up from -28%.
Senior/assisted living ticked up from -3% to -1%, while condominiums continued to struggle (-28% in Q1 to -26% in Q2).
Related Stories
Multifamily Housing | Mar 18, 2024
YWCA building in Boston’s Back Bay converted into 210 affordable rental apartments
Renovation of YWCA at 140 Clarendon Street will serve 111 previously unhoused families and individuals.
Adaptive Reuse | Mar 15, 2024
San Francisco voters approve tax break for office-to-residential conversions
San Francisco voters recently approved a ballot measure to offer tax breaks to developers who convert commercial buildings to residential use. The tax break applies to conversions of up to 5 million sf of commercial space through 2030.
Apartments | Mar 13, 2024
A landscaped canyon runs through this luxury apartment development in Denver
Set to open in April, One River North is a 16-story, 187-unit luxury apartment building with private, open-air terraces located in Denver’s RiNo arts district. Biophilic design plays a central role throughout the building, allowing residents to connect with nature and providing a distinctive living experience.
Affordable Housing | Mar 12, 2024
An all-electric affordable housing project in Southern California offers 48 apartments plus community spaces
In Santa Monica, Calif., Brunson Terrace is an all-electric, 100% affordable housing project that’s over eight times more energy efficient than similar buildings, according to architect Brooks + Scarpa. Located across the street from Santa Monica College, the net zero building has been certified LEED Platinum.
MFPRO+ News | Mar 12, 2024
Multifamily housing starts and permitting activity drop 10% year-over-year
The past year saw over 1.4 million new homes added to the national housing inventory. Despite the 4% growth in units, both the number of new homes under construction and the number of permits dropped year-over-year.
Affordable Housing | Mar 11, 2024
Los Angeles’s streamlined approval policies leading to boom in affordable housing plans
Since December 2022, Los Angeles’s planning department has received plans for more than 13,770 affordable units. The number of units put in the approval pipeline in roughly one year is just below the total number of affordable units approved in Los Angeles in 2020, 2021, and 2022 combined.
MFPRO+ Research | Mar 6, 2024
Top 10 trends in senior living facilities for 2024
The 65-and-over population is growing faster than any other age group. Architects, engineers, and contractors are coming up with creative senior housing solutions to better serve this burgeoning cohort.
Multifamily Housing | Mar 4, 2024
Single-family rentals continue to grow in BTR communities
Single-family rentals are continuing to grow in built-to-rent communities. Both rent and occupancy growth have been strong in recent months while remaining a financially viable option for renters.
MFPRO+ News | Mar 2, 2024
Job gains boost Yardi Matrix National Rent Forecast for 2024
Multifamily asking rents broke the five-month streak of sequential average declines in January, rising 0.07 percent, shows a new special report from Yardi Matrix.
MFPRO+ News | Mar 1, 2024
Housing affordability, speed of construction are top of mind for multifamily architecture and construction firms
The 2023 Multifamily Giants get creative to solve the affordability crisis, while helping their developer clients build faster and more economically.