The brief downturn in the Multifamily-for-Rent market outlook is clearly over as PSMJ’s forward-looking proposal activity metric reached its highest level for the sector in nearly two years. Proposal activity in the 4th Quarter, as measured by PSMJ’s Net Plus/Minus Index, climbed to 58% in the 4th Quarter, up from 40% in the 3rd Quarter. This is the sector’s highest NPMI since it hit 76% in the 1st Quarter of 2018, according to PSMJ Resources’ Quarterly Market Forecast (QMF). Multifamily had plummeted to -2% and +7%, respectively, in the first two quarters of 2020, coming off a 4th Quarter 2019 NPMI of 54%. Its 1st Quarter 2020 performance was its lowest in almost a decade.
PSMJ Senior Principal David Burstein, PE, AECPM, noted that the turnaround in the Multifamily-for-Rent and Condominium markets are part of an overall upward trend for all Housing markets. “The significant turnaround in both of these multifamily markets are attributable to an increase in personal savings resulting from the government’s stimulus checks as well as significant movement of many people from cities to suburbs – which is shifting the location of the demand,” he said. “So we believe the Multifamily market will continue to be strong into the foreseeable future.”
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 architecture and engineering (A/E) industry since its inception in 2003. A consistent group of over 300 A/E firm leaders participate regularly, with 132 contributing to the most recent survey.
The Condominium and Assisted/Independent Living markets also continued their rebound. Condos’ NPMI crept up to 15% from 11% in the 3rd Quarter, off dismal results in the 1st (-28%) and 2nd (-26%) quarters. The 4th Quarter performance for Condos was still off from the 22% it recorded in the 4th Quarter of 2019. Similarly, Assisted/Independent Living showed minor improvement in the 4th Quarter (up from 26% to 27%, quarter over quarter) and down from the 52% the survey reported for the sector a year ago. It was also negative in the 1st (-3%) and 2nd (-1%) quarters of 2020.
The two other Housing markets measured in the PSMJ survey also show long-term promise for design and construction activity, according to the QMF. Single-Family Homes (59%) and Single-Family Subdivisions (51%) both reached their highest NPMI since PSMJ began collecting survey data for submarkets in 2006.
Among the 12 major markets surveyed, Energy/Utilities unseated Housing with an NPMI of 47%, though Housing’s runner-up NPMI of 43% was an improvement from 38% in the 3rd Quarter. Water/Wastewater, another stand-out during COVID, slipped to 6th among the 12 markets measured. Its NPMI of 23% is down from 37% the prior quarter. Healthcare’s outlook remained steady at 35% (up from 30%), as did Light Industry (35%, up from 27%). Heavy Industry had the greatest gain, rocketing to 32% from 0% due to strong scores in Product Manufacturing (40%) and Pharmaceutical Production (35%).
Proposal activity for Education projects trailed again at -29%, though it improved from -37%. Commercial Users (-29%, up from -31%) and Commercial Developers (-13% up from -23%) rounded out the dozen.
PSMJ Resources, a consulting and publishing company dedicated to the A/E industry, has conducted its Quarterly Market Forecast for more than 17 years. It includes data on 12 major markets and 58 submarkets served by A/E firms. For more information, go to https://www.psmj.com/surveys/quarterly-market-forecast-2.
Related Stories
Market Data | Nov 29, 2016
It’s not just traditional infrastructure that requires investment
A national survey finds strong support for essential community buildings.
Industry Research | Nov 28, 2016
Building America: The Merit Shop Scorecard
ABC releases state rankings on policies affecting construction industry.
Multifamily Housing | Nov 28, 2016
Axiometrics predicts apartment deliveries will peak by mid 2017
New York is projected to lead the nation next year, thanks to construction delays in 2016
Market Data | Nov 22, 2016
Construction activity will slow next year: JLL
Risk, labor, and technology are impacting what gets built.
Market Data | Nov 17, 2016
Architecture Billings Index rebounds after two down months
Decline in new design contracts suggests volatility in design activity to persist.
Market Data | Nov 11, 2016
Brand marketing: Why the B2B world needs to embrace consumers
The relevance of brand recognition has always been debatable in the B2B universe. With notable exceptions like BASF, few manufacturers or industry groups see value in generating top-of-mind awareness for their products and services with consumers.
Industry Research | Nov 8, 2016
Austin, Texas wins ‘Top City’ in the Emerging Trends in Real Estate outlook
Austin was followed on the list by Dallas/Fort Worth, Texas and Portland, Ore.
Market Data | Nov 2, 2016
Nonresidential construction spending down in September, but August data upwardly revised
The government revised the August nonresidential construction spending estimate from $686.6 billion to $696.6 billion.
Market Data | Oct 31, 2016
Nonresidential fixed investment expands again during solid third quarter
The acceleration in real GDP growth was driven by a combination of factors, including an upturn in exports, a smaller decrease in state and local government spending and an upturn in federal government spending, says ABC Chief Economist Anirban Basu.
Market Data | Oct 28, 2016
U.S. construction solid and stable in Q3 of 2016; Presidential election seen as influence on industry for 2017
Rider Levett Bucknall’s Third Quarter 2016 USA Construction Cost Report puts the complete spectrum of construction sectors and markets in perspective as it assesses the current state of the industry.
