New apartment construction across the country is starting to mirror the downward trend following the 2008 crisis, down 12 percent and hitting a five-year low for buildings of 50 units or more, according to a report from Rent Café.
The covid-19 pandemic is further complicating an already-visible slowdown in apartment construction since its 2018 peak.
The report says:
- Apartment construction is down, with around 283,000 new units expected to hit the market this year, considerably fewer than the 2018 peak.
- The San Jose metro is expected to double the number of projected units added last year, while Miami sees the biggest drop in new apartments year-over-year. Despite doubling its apartment construction, Silicon Valley is adding a relatively low number for a giant tech hub, 5,800 units.
- Overshadowing New York metro for the third consecutive year, the Dallas-Fort Worth area is first in the nation in terms of apartment construction, set to complete 19,300 new units by the end of 2020.
- 13 of the 20 most active large metros are expected to complete fewer units compared to last year. Miami metro is experiencing the biggest drop, 53 percent, down from a whopping 12,500 deliveries in 2019.
- At the city level, Austin is leading nationwide with the most apartment completions at 3,800 apartments, followed by San Antonio, Denver, and Charlotte. Brooklyn rounds up the top 5, having delivered around 2,100 units, on par with Chicago.
“The downtrend is mainly due to the slower pace of construction, as a result of a shortage of available construction crews, funding and permits, along with some temporary bans on construction projects in certain states,” the Rent Café report says. “With projects dragging and some new projects hitting pause, many U.S. metros are likely to see fewer new apartments in the coming years.”
Apartment construction uncertainty
“As the United States begins to recover from its steepest economic downturn in history, the construction industry is faced with unprecedented levels of uncertainty,” said Doug Ressler, manager of business intelligence at Yardi Matrix.
“How that uncertainty and broader macroeconomic conditions will affect the industry to date, and the shape of the recovery to come, depends on multiple factors.
“Around the U.S., we have seen a variety of states, counties, and cities choose to close nonessential businesses, or stay-at-home or shelter-in-place orders. For the most part, construction activity has been included as an essential activity that can continue with business as usual during these orders.
“Construction starts have begun to increase from their April lows and there is cautious optimism that as the year progresses, construction markets around the country will begin a modest recovery,” Ressler said.