There are over 1,400 large-scale rental apartment projects under construction in the biggest metros in the U.S. In buildings that will have 50 or more apartments, 321,177 units are projected to be completed by year’s end, representing a 50% increase over the 214,108 completions in 50-plus-unit structures in 2015, according to RENTCafé, a nationwide apartment search website.
This is the highest point for apartment construction in the past five years.
Apartment construction in the country's 50 largest metros is the highest it's been in five years. But with so much new inventory coming on line, rent appreciation has slowed in several of these markets. Image: RENTCafe
Drawing from data captured by its sister company, Yardi Matrix, RENTCafé examined the construction pipelines in the country’s 50 largest U.S. markets. It found that two Texas cities—Houston and Dallas—rank first and second among the top 20 hottest metros for apartment construction. Houston expects to deliver 25,935 apartment units in 95 developments this year. That total includes Tate at Tanglewood, which will add 417 units to Houston’s Galleria/Uptown submarket.
Greater Houston is expected to have nearly 26,000 new apartment deliveries this year. Texas's four largest metros combined should add 69,000 units. Image: RENTCafe
RENTCafé estimates that more than 69,000 new apartments will be delivered in Texas’s four largest cities, Houston, Dallas, Austin, and San Antonio, representing 22% of the total estimated increase in inventory within the 50 largest metros that include New York (21,177 deliveries), Los Angeles (20,205), and Washington D.C. (18,027).
One-bedroom apartments will account for more than half (51%) of the new rental stock that comes online this year. RENTCafé indicates that studio apartments rank lowest on developers’ preferences for bedroom distribution, whereas two-bedroom apartments are expected to account for 37.5% of new deliveries.
RENTCafé attributes low inventory levels and increased demand as the drivers of this construction boom. However, it cautions that “the plethora of new rental units coming online may finally turn the tables in the renters’ favor: where there’s choice, there’s competition and, in this case, competition translates into concessions, lower rents, and a more-relaxed housing landscape in general.”
The website points out that while average rents are at all-time highs, rent growth slowed in 2015 to 5.6%, and is projected to increase by only 4.4% this year.
RENTCafé also notes that hot rental markets like Washington D.C. have cooled over the past year. The city proper will see about 5,100 new apartment units this year, “furthering the prospect of an even more relaxed housing market in the future.”
In this competitive environment, rental properties are attracting tenants with deals and incentives. For example, JOYA, a 431-unit community under construction in Miami, has reduced its rates and is offering a rent-free month. Its amenities include a 3,000-sf 24-hour fitness center, a yoga studio, resident-reserved garage parking, and a resort-style pool.
That being said, RENTCafé expects Dallas to remain a hot rental market primarily because of its nearly 4% annual employment growth rate. In pricey San Francisco, nearly 9,500 apartment units are projected to be added this year, a 125% increase over 2015 completions, which could eventually provide some much-needed rent relief. (The average monthly rent in San Francisco is expected to rise by 8% to $2,469 this year.)
Is San Francisco is testing the limits of how much rent appreciation any market can bear. Image: RENTCafe
In other markets, like Sacramento, Portland, Ore., and Seattle, apartment construction still isn’t keeping up with demand.
It would appear that the country’s 50 largest markets are where the bulk of new-apartment construction is occurring. The Census Bureau estimated that, in June, apartment completions in structures with five or more units were tracking nationally at an annualized rate of 386,000 units, a 21% increase over Census’s June 2015 estimate.
Related Stories
| Aug 11, 2010
RMJM unveils design details for $1B green development in Turkey
RMJM has unveiled the design for the $1 billion Varyap Meridian development it is master planning in Istanbul, Turkey's Atasehir district, a new residential and business district. Set on a highly visible site that features panoramic views stretching from the Bosporus Strait in the west to the Sea of Marmara to the south, the 372,000-square-meter development includes a 60-story tower, 1,500 resi...
| Aug 11, 2010
'Feebate' program to reward green buildings in Portland, Ore.
Officials in Portland, Ore., have proposed a green building incentive program that would be the first of its kind in the U.S. Under the program, new commercial buildings, 20,000 sf or larger, that meet Oregon's state building code would be assessed a fee by the city of up to $3.46/sf. The fee would be waived for buildings that achieve LEED Silver certification from the U.
| Aug 11, 2010
Colonnade fixes setback problem in Brooklyn condo project
The New York firm Scarano Architects was brought in by the developers of Olive Park condominiums in the Williamsburg section of Brooklyn to bring the facility up to code after frame out was completed. The architects designed colonnades along the building's perimeter to create the 15-foot setback required by the New York City Planning Commission.
| Aug 11, 2010
U.S. firm designing massive Taiwan project
MulvannyG2 Architecture is designing one of Taipei, Taiwan's largest urban redevelopment projects. The Bellevue, Wash., firm is working with developer The Global Team Group to create Aquapearl, a mixed-use complex that's part of the Taipei government's "Good Looking Taipei 2010" initiative to spur redevelopment of the city's Songjian District.
| Aug 11, 2010
Recycled Pavers Elevate Rooftop Patio
The new three-story building at 3015 16th Street in Minot, N.D., houses the headquarters of building owner Investors Real Estate Trust (IRET), as well as ground-floor retail space and 71 rental apartments. The 215,000-sf mixed-use building occupies most of the small site, while parking takes up the remainder.
| Aug 11, 2010
Housing America's Heroes 7 Trends in the Design of Homes for the Military
Take a stroll through a new residential housing development at many U.S. military posts, and you'd be hard-pressed to tell it apart from a newer middle-class neighborhood in Anywhere, USA. And that's just the way the service branches want it. The Army, Navy, Air Force, and Marines have all embarked on major housing upgrade programs in the past decade, creating a military housing construction boom.
| Aug 11, 2010
Loft Condo Conversion That's Outside the Box
Few people would have taken a look at a century-old cigar box factory with crumbling masonry and rotted wood beams and envisioned stylish loft condos, but Miles Development Partners did just that. And they made that vision a reality at Box Factory Lofts in historic Ybor City, Fla. Once the largest cigar box plant in the world, the Tampa Box Company produced boxes of many shapes and sizes, spec...
| Aug 11, 2010
World's tallest all-wood residential structure opens in London
At nine stories, the Stadthaus apartment complex in East London is the world’s tallest residential structure constructed entirely in timber and one of the tallest all-wood buildings on the planet. The tower’s structural system consists of cross-laminated timber (CLT) panels pieced together to form load-bearing walls and floors. Even the elevator and stair shafts are constructed of prefabricated CLT.
| Aug 11, 2010
CityCenter Takes Experience Design To New Heights
It's early June, in Las Vegas, which means it's very hot, and I am coming to the end of a hardhat tour of the $9.2 billion CityCenter development, a tour that began in the air-conditioned comfort of the project's immense sales center just off the famed Las Vegas Strip and ended on a rooftop overlooking the largest privately funded development in the U.
| Aug 11, 2010
Giants 300 Multifamily Report
Multifamily housing starts dropped to 100,000 in April—the lowest level in several decades—due to still-worsening conditions in the apartment market. Nonetheless, the April total is below trend, so starts will move progressively back to a still-depressed 150,000-unit pace by late next year.
