flexiblefullpage -
billboard - default
interstitial1 - interstitial
catfish1 - bottom
Currently Reading

New report predicts double-digit multifamily delivery rebound in 2021

Multifamily Housing

New report predicts double-digit multifamily delivery rebound in 2021

Yardi Matrix also foresees rent inflation “persisting” in some metros for months ahead.


By John Caulfield, Senior Editor | July 27, 2021

Having weathered the coronavirus pandemic somewhat better than the single-family home construction sector, new supply of multifamily housing delivered in 2021 is expected to increase by around 17% to 334,000 units, according to Yardi Matrix’s latest U.S. Outlook.

“Some 174,000 units were absorbed nationally through May, which puts 2021 on track to be among the hottest years since the 2008 recession,” states the report. 

As of mid-year, some 863,500 multifamily units were under construction, representing 6% of the existing U.S. stock. That’s good and bad news, suggests Yardi Matrix, because such a large number of projects could impede the overall rent recovery in so-called “gateway” markets like Miami, whose forecasted deliveries are projected to equal 3.7% of its existing stock; Boston (3.6% of existing stock), San Francisco (3.3%), Los Angeles (2.6%), Washington D.C. (2.3%), New York (1.8%) and Chicago (1.3%).

“These new projects might have a difficult time leasing up, as there is already much supply in these metros with limited new demand, especially in the Lifestyle segment,” states the report.

The leaders in multifamily completions over the past 12 months include Austin (4.4% of total stock), Charlotte (4.3%), Minneapolis-St. Paul (3.7%) and Raleigh (3.6%). Yardi Matrix points out that among these four metros, Charlotte has been the only one able to sustain strong rent growth and deliveries simultaneously. Still, rents in all four metros have picked up in recent months, driven by a surge in migration and demand for apartments.

Forecasted completions by metro

Yardi Matrix foresees Dallas leading the country in multifamily completions this year. Image: Yardi Matrix 

 

SMALLER MARKETS, BIGGER DEMAND

Yardi Matrix looked at 136 markets, and found robust growth in tertiary metros like Northwest Arkansas (home to Walmart’s headquarters city of Bentonville) that led the list with 8.8% of its stock expected to be delivered this year from new construction. Next were Wilmington, N.C. (with 7% of its stock expected to be delivered), and the Southwest Florida Coast (6.8%). These metros had limited existing multifamily housing stock to begin with.

Measured by sheer units, Dallas is forecast to have the highest number of completions in 2021 (21,318 units), followed by Phoenix, Houston, Washington DC, Austin, L.A., Atlanta, and Miami. Yardi Matrix believes that while Dallas, Phoenix, and Houston should have little trouble absorbing new deliveries, “Washington DC might struggle,” because demand is lagging in part due to remote work requirements or preferences, and out-migration.

Material price hikes are the “wild card” in prognostications about apartment development, says Yardi Matrix. The extreme volatility of lumber prices over the past several months, coupled with increases in the cost of other building materials, could slow new starts and force developers “to choose between raising rents and reducing profit margins.”

 

RENTS RISING AT UNSUSTAINABLE RATES

Through the first six months of 2021, national asking rents rose 5.8%. Yardi Matrix estimates that year-over-year asking rent growth, as of June, stood at 6.3%, “well above the [country’s] pre-pandemic performance.” Rent inflation is even more pronounced in tech hubs and tertiary metros, and asking rent growth in the Southwest and Southeast has been at levels “not seen in decades.”

While this escalation for multifamily units probably isn’t sustainable, Yardi Matrix expects conditions for above-average rent growth to persist in many metros “for months.” The report points out that rents are driven by “buoyant” demand. In the 12 months through May, 378,000 multifamily units were absorbed nationwide. The top markets for absorption as a percentage of total inventories were Miami (8,500 units, or 2.7% of stock), Charlotte (4,500, 2.4%) and Orlando (4,900, 2.1%).

Rent growth by metro through June 2021

Through June of this year, rent growth in Phoenix was nearly three times the national average. And despite its year-to-year rent decline, New York bounced back in the first half of 2021. Image: Yardi Matrix

 

By units, Chicago topped the list with almost 7,800 multifamily units absorbed, or 2.2 % of the Windy City’s stock. And for all the talk about New Yorkers evacuating in droves during the pandemic, rents actually rose by 6% during the first half of this year, and more companies are now requiring employees to return to office work. Rent recoveries through the first half of 2021 were also in “full swing” in Chicago (up 6.5%), Miami (6.4%), Boston (5%), Los Angeles (4%) and D.C. (3.3%).

Yardi Matrix’s report offers an economic outlook that foresees a flat labor participation market, and questions about rising inflation. Economic volatility “is likely to continue” globally until markets get a handle on controlling their virus outbreaks. “However, that does not mean there won’t be strong economic growth in certain sectors and geographies in the short term,” the report states.

Related Stories

Sponsored | Multifamily Housing | Apr 19, 2024

5 Reasons to Opt for Wood I-Joists in Multifamily Construction

From versatility to reliability to adaptability, engineered wood I-joists offer builders, designers and developers numerous advantages in multifamily construction. Discover the top five benefits and handy installation tips.

MFPRO+ News | Apr 18, 2024

Marquette Companies forms alliance with Orion Residential Advisors

Marquette Companies, a national leader in multifamily development, investment, and management, announces its strategic alliance with Deerfield, Ill.-based Orion Residential Advisors, an integrated multifamily investment and operating firm active in multiple markets nationwide.

MFPRO+ New Projects | Apr 16, 2024

Marvel-designed Gowanus Green will offer 955 affordable rental units in Brooklyn

The community consists of approximately 955 units of 100% affordable housing, 28,000 sf of neighborhood service retail and community space, a site for a new public school, and a new 1.5-acre public park.

MFPRO+ News | Apr 15, 2024

Two multifamily management firms merge together

MEB Management Services, a Phoenix-based multifamily management company, and Weller Management, a third-party property management and consulting company, officially merged to become Bryten Real Estate Partners—creating a nationally recognized management company.

Mixed-Use | Apr 13, 2024

Former industrial marina gets adaptive reuse treatment

At its core, adaptive reuse is an active reimagining of the built environment in ways that serve the communities who use it. Successful adaptive reuse uncovers the latent potential in a place and uses it to meet people’s present needs.

MFPRO+ News | Apr 12, 2024

Legal cannabis has cities grappling with odor complaints

Relaxed pot laws have led to a backlash of complaints linked to the odor emitted from smoking and vaping. To date, 24 states have legalized or decriminalized marijuana and several others have made it available for medicinal use.

Multifamily Housing | Apr 12, 2024

Habitat starts leasing Cassidy on Canal, a new luxury rental high-rise in Chicago

New 33-story Class A rental tower, designed by SCB, will offer 343 rental units. 

MFPRO+ News | Apr 10, 2024

5 key design trends shaping tomorrow’s rental apartments

The multifamily landscape is ever-evolving as changing demographics, health concerns, and work patterns shape what tenants are looking for in their next home.

Mixed-Use | Apr 9, 2024

A surging master-planned community in Utah gets its own entertainment district

Since its construction began two decades ago, Daybreak, the 4,100-acre master-planned community in South Jordan, Utah, has been a catalyst and model for regional growth. The latest addition is a 200-acre mixed-use entertainment district that will serve as a walkable and bikeable neighborhood within the community, anchored by a minor-league baseball park and a cinema/entertainment complex.

Multifamily Housing | Apr 9, 2024

March reports record gains in multifamily rent growth in 20 months

Asking rents for multifamily units increased $8 during the month to $1,721; year-over-year growth grew 30 basis points to 0.9 percent—a normal seasonal growth pattern according to Yardi Matrix.

boombox1 - default
boombox2 -
native1 -

More In Category




MFPRO+ News

Two multifamily management firms merge together

MEB Management Services, a Phoenix-based multifamily management company, and Weller Management, a third-party property management and consulting company, officially merged to become Bryten Real Estate Partners—creating a nationally recognized management company.

halfpage1 -

Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021